Inflation and with it, the rise in interest rates and the disappearance of Russian clients after the outbreak of the war in Ukraine have not been enough to kill off the luxury housing market. Thanks to the foreign demand that Spain sees as one of the most attractive countries to make investments, the real estate sector that is dedicated to ‘high standing’ maintains its pulse despite the macroeconomic prospects.
Although sales and prices may be attenuated this year, the experts consulted by EFE insist on the robustness of a market that has shown more resilience than others to political and economic changes and in which foreign fortunes, which do not usually have financing problems, have an essential role.
The director of expansion and operations of Engel & Völkers for Spain, Portugal and Andorra, Constanza Maya, foresees stability and understands that it is usual for the number of transactions to fall first and then the prices. However, the most exclusive market moves with independent rules and is more stable to changes.
The Knight Frank Residential Director, Carlos Zamora, considers that this market remains robust despite the risk of entering a recession and given that Spain continues to be attractive to national and international clients, 2023 is likely to present many opportunities.
Gilmar believes that this segment will maintain the same levels of activity and although the foreign buyer or investor will continue to be the protagonist, it will not be the only one.
The president of Caledonian, Enrique Lopez, highlights the increase in prices due to the cost of materials and the lack of labor. In addition, he ensures that the 2% limit on rentals makes a dent among those who buy to rent, causing the product to leave the market or direct investment to other markets.
buy without mortgage
According to Gilmar, these buyers do not usually have financing problems, although on occasions they can request a mortgage loan on a part of the house that seeks deductions. In fact, operations above 2 million are rarely closed with bank financing, according to Engel & Völkers, which indicates that the period for the sale is around 130 days.
With a sales ticket that goes from 500,000 to 11 million, the president of Caledonian points out that in properties of more than 5 million, whose demand is foreign, it is paid in cash and where the rise in rates can affect is in the national clientele that needs a mortgage.
The director of Lucas Fox’s Barcelona office, Mohammad Butt, agrees, adding that housing continues to be a refuge value and financing costs in Spain are attractive compared to other European countries.
First choice among the great fortunes
According to Knight Frank, Spain is among the first three options for the world’s great fortunes to acquire property. The main points of interest are Madrid, Malaga (city), Barcelona, Costa del Sol, Costa de la Luz, the Canary Islands or the Balearic Islands.
Among the most prominent nationalities are the British, despite Brexit, Germans, Swiss, Norwegians, Italians, Belgians, French and Latin Americans (from Mexico, Colombia, Peru, Chile or Venezuela).
According to Gilmar, the North American buyer has joined Marbella/Puerto Banús, where the one from the Middle East is also gaining presence, which until now was practically non-existent in Spanish luxury.
Caledonian points out that Madrid is more attractive than ever for foreign investors, especially Latin American millionaires, and points out that after the pandemic there are many foreigners who want to spend months in our country, not just on vacation. For this reason, he understands that prohibiting the purchase of housing by foreigners, as Canada has done, would destroy the market.
Little impact of the Golden Visa
From Engel & Völkers, Gilmar or Caledonian they do not perceive an increase in operations for the Golden Visa, which grant the residence visa for buying real estate from 500,000 euros and believe that its effect has been diluted over time.
From Lucas Fox they detect that the Americans, British, Argentines, Chinese or Swiss were the most interested in this program in 2022.