Coastal Development Revival in Southern Spain
Southern areas of the Costa Blanca were amongst the hardest hit by the collapse in Spain's residential property market however, according to Spanish newspaper 'El Mundo', construction of new developments has surged in the first quarter of 2014.
Developers have commenced construction of 52 urbanisations, with 1800 homes scheduled to be completed within the year in response to increasing interest from foreign investors, principally from Scandinavia, Belgium and Russia.
According to Spain's most popular daily, new projects differ from the vast projects built around golf courses during the boom years. New developments are relatively small with less than 150 homes but the main feature is much better quality construction.
Current developers are mostly local companies who have learned major lessons from the crash: "We can’t make the same mistakes as we did in the past, when we sold to clients, especially foreigners, homes made of match sticks," one local developer told El Mundo.
The new properties in the Costa Blanca will also be priced at around 20% to 30% below pre-crisis boom prices with a front-line beach house starting at ?225,000 and properties inland at around ?125,000.
However, the news has come as a surprise in light of the volume of empty homes that litter the Spanish landscape that have been the subject of extensive debate for the last few years. With demand increasing for affordable housing, legislators have been trying to encourage financial institutions to offer empty homes to low-income families in favour of building for the foreign investment market.
Despite these concerns there are tangible signs of underlying stability in the Spanish property market. According to latest figures from the National Institute of Statistics (INE), the market grew by an annualised 26% in March 2014.
Coastal areas posted particularly strong gains due to increased foreign interest boosting resales by 36% and new sales by 7%, which reflects the general lack of new construction to date in other parts of southern Spain.
The INE report raised concerns that the types of property people wanted to buy were simply not being built although the latest news coming from El Mundo suggests that this situation is about to improve.
The only losers would appear to be Spanish citizens, particularly those on low-incomes. As can be seen in around the world, the recovery of the property market is largely in the hands of foreign investors and this is an issue that will at some point come to a head and need resolving by the Spanish government.
From the perspective of a foreign investor, Spanish property would appear to represent extremely good value. With prices still hovering around 40% below pre-crash prices, there are many bargains to be found on the Spanish Costas.
An increase in new and better quality homes in coastal regions could bring about very beneficial economic rewards to Spain and so it is not surprising that foreigners with a certain degree of liquidity are being actively courted in favour of Spanish citizens.
In general, the shoots of growth in the construction sector and the continued expansion of the property markets, albeit in tourist zones, is welcome news to an economy still crawling its way back from recession. Increased employment and strengthening of tourist markets will assist Spain in making strides towards recovery which is positive news for those invested in Spain.