If we haven´t hit the bottom yet, we will very soon. This opinion sums up the prevailing view expressed by several leading Spanish real estate agents including Nick Stuart Managing Director of Spanish Hot Properties and Simon Jones marketing director of Sundream Estate.
According to a recent report from Knight Frank, a property consultancy, international investment fund firms could invest up to 14,000 million euros in the Spanish property market in 2014, and they are particularly keen on acquiring offices and hotels but this is small fry when compared to the big Investment and Pension funds who have recently bought substantial assets from SAREB (The bad bank of Spain)
Andrés Escarpenter, managing director at Jones Lang Lasalle, thinks that Spain is currently experiencing a spring thaw, although this is not necessarily based on an improvement in key economic indicators such as GDP, inflation, or the rate of unemployment. He went on to point out that adjustments in house prices have triggered a surge in investor interest. And how far have property prices fallen? On this point there is a diversity of opinions. Santiago Aguirre, Chairman of Aguirre Newman, estimates that prices have fallen around 50% in general terms, although this figure may vary, depending on the particular sector of the market.
However, in general terms, the experts are confident that as soon as the economy starts to rally, house prices will start to go up again. Several reports published over recent weeks predict an upturn in prices. For example Caixa Bank thinks that house prices will start to recover in 2015. This opinion is shared by the rating agency Standard & Poor’s, which also believes that prices will improve in that year. This is a view shared by Spanish Hot Properties and a message that is reguarly sent to all it’s clients.
There are several reasons to be optimistic about the housing market. One is that the total stock of housing has begun to fall, as a result of increased sales of completed homes and a slowdown in the construction of new build homes. Sales are highest in coastal areas of Spain while in other areas, where there is a shortage of available housing, developers are beginning to renew their activities. Banco Sabadell alone has 60 housing developments currently under construction.
In short, the sluggish Spanish real estate sector is beginning to stir and investors, such as international investment fund firms, are showing renewed interest in the market, although no large investment deals have been completed so far. Spain is once again considered to be a good place to invest, although this change in the trend is not based on economic indicators, but rather on a shift in investors´ perceptions, and how they view Spain. For this reason the main challenge now is to ensure that property continues to be seen as an attractive investment option for a long time, so that investors do not decamp to other countries such as Greece, Italy, China or Latin America. According to the experts.
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