Russian visa change won’t save Spanish property market
The Spanish governments plan to allow residency for non-EU nationals who purchase a property worth more than ?160,000 is welcome news for the industry but the impact on the property market is likely to be marginal.
The move is aimed primarily at attracting wealthy Russians and Chinese into the country. Russians are currently the fourth largest buying group after the British, German and French, according to the Fuente Colegiio de Registores. However, they still account for less than a third of the British total, despite a record drop in British buyers in Spain since 2008.
The Brits bough 12419 properties in 2008. In 2010 the Russians bought just 1378 compared to Brits who bought 4649. Although Russian tourism is increasing in Spain, there is clearly a long way to go before Russian buyers take up the slack left by the British buyer.
Having chaired Russian Summit for three years, it’s obvious to me that there is common misconception among international companies that Russian buyers will purchase anything (most likely with brown envelopes full of cash). They don’t.
If anything the conclusion from this year’s conference was that Russian buyers are among the most astute and slowest to trust on the planet. The move by the Spanish government will help those with access to the right products in locations which already have reasonable Russian tourist numbers, but this is a small niche compared to the huge glut of empty holiday homes in Southern Spain.
Rajoy appears to have deliberately undercut other overseas property locations (you must invest ?300,000 in Cyprus for example) and is aiming to pull in Russian buyers at the lower end of the market. It’s a clever ploy and this is where the volume is. However, there are limited resorts which appeal to this market.
Larger developments with water views (ideally with beach access) and top class facilities including 24 hour concierge and security should profit from the change, especially if they are within 45 minutes drive of airport served by Russian budget airlines.
In short, it's the completed developments that are already doing relatively well that stand to benefit. Selling off-plan will be almost impossible without a great track record and attractive finance.
The new rules are yet to be defined (does the change only affect just cash buyers for example?) but even at their most favourable, there are likely to be a limited number of developments that stand to benefit.