Long a favored destination for British property buyers, Spain is bracing for serious implication to its property market with the recent devaluation of the pound following the Brexit vote.
¨The most important and immediate impact of Brexit on Spanish property market is through the pound, as there is a very clear correlation between the strength of the pound and buying, ¨ said Mark Stücklin, the head of real-estate website Spanish Property Insight. ¨It won’t be long before the effects of the loss of value will show on the Spanish property market. ¨
The uncertainty provoked by the June 23 vote, which took some by surprise, stands to have notable impact on Spanish real estate, which had only recently begun to recover from the housing market crisis that hit the country hard in the late 2000s. Data from 2015 pointed to strong buying in the luxury segment of the Costa del Sol region on the back of a strong pound.
Now with Brexit, Spain´s Costa del Sol, historically a top draw for British buyers, is expected to bear the brunt of a drop in buying.
¨Despite the Spanish property market offering deep discounts, this is a wait-and-see situation for most buyers and a significant number of British buyers are going to sit on their hands,” Mr. Stücklin said.
Those buying second homes and investment properties are especially likely to adopt a cautious attitude, he added.
The uncertainty following the Brexit vote has already given the pound a thrashing, dropping it to levels not seen for three decades.
The strength of the pound has always had a direct correlation with property purchases, with a lag of one to two quarters, according to Mr. Stücklin.
Real estate experts in the region said they saw a pullback on investments even before the referendum took place on June 23.
¨The first half of the year has seen a decrease in the number of enquiries from British buyers for Marbella property,¨ said Pia Arrieta, partner and managing director of Diana Morales Properties, an associate office of the real estate brokerage Knight Frank. ¨The feedback we got was that clients wanted to wait for the referendum to take place and therefore did not want to commit to making an investment.¨
Knight Frank´s Costa del Sol office statistics show British buyers make up 20% of all buyers. In Spain overall, that number holds true as well and British buyers make up 21% of foreign buyers in the country, the largest group by far, according to real-estate website Spanish Property Insight, citing government land registry data.
Those in the industry remain hopeful the predicted drop in British buying will be made up by other nationalities, and perhaps that the British love affair with the Spanish Costas will ultimately endure.
More:Non-European Buyers Drive Recovery in Spain’s Luxury Housing Market
“The British represent quite a significant number and while we do expect to see a decrease in the number of British buyers in the short term, our market is more diverse and not solely dependent on them,” Ms. Arrieta said.
Other nationalities buying there are Norwegian, Swedish, Belgian, Dutch, Middle Eastern and to a lesser degree, Russians, according to data from Ms. Arietta’s brokerage.
¨While the pound now hovers around €1.20 and the market for British buyers will undoubtedly be affected by Brexit, we think that over time their long-lasting love of Marbella is likely to continue.¨ Ms. Arrieta said.
Spanish property market -- British buyers are the largest group of foreign buyers by far.
