10 reasons why Middle East investors should look at Spanish real estate
The Middle East investors are seeking to diversify their investment portfolio and today there are many possibilities and opportunities in the marketplace. But one of the countries that is attracting attention among private and corporate investors is Spain, thanks to the potential of price growth and the Golden visa rule that allows investor and their family to travel within the Schengen area without visas.
Here are 10 reasons why to invest in Spain’s real estate market.
#Low prices post-recession
Since 2007, the economy, and the real estate sector in particular, suffered a severe readjustment with a decrease of 30-40% in the prices across the country. This negative trend slowed down during 2014 and prices started going up in the big cities: Madrid and Barcelona. Therefore, opportunistic investors are taking advantage of these low prices in order to diversify their portfolio across diverse industries. Commercial, offices and residential, in this order, are the sectors that offer higher short-term returns and big potentials in the long term. Furthermore, the current dominance of the Dollar -and Dirham- over the Euro makes the investment even more accessible.
The growth of the Spanish economy during 2014 and the prediction of its GDP to grow on an average of 2% per year from 2015 onwards have favored the amount of transactions during 2014. In total, €7 billion have been invested in the non-residential real estate sector across last year, a huge increase from €2.5 billion during 2013, according to consulting firm Savills. Residential investments, dominated by foreign buyers, have reached €6 billion.
Spain remains as one of the most popular touristic attractions worldwide. During 2014 the number of visitors reached 65 million, 5 more million than in 2013, just behind the US and France. With a total of more than €1 billion in investments in the hospitality sector, an increase of 37% from 2013, Middle East investors have also targeted the Spanish market. Qatari groups, Qatar Armed Forces Investment Portfolio (QAFIP) and Katara Hospitality purchased the Renaissance Barcelona from Marriott International for €78.5 million and the Intercontinental Hotel in Madrid for more than €70 million.
# Opportunistic market
Whereas traditional Middle Eastern investment locations such as London or Paris are suffering from high prices that limit the ability to enter these markets, Spain offers lower barriers of entry for investors seeking opportunistic investments.
# Easier access to credit
The economic recovery goes hand-by-hand with the credit availability and investment opportunities for local and international investors. Banks are starting to lend more money since the beginning of 2014 and developers are slowly starting new developments. Demand never diminishes in the big cities.
Since 2013, non-resident investors that acquire real estate for a value of, at least, €500.000 are eligible to obtain a residency by investment which allows the investor and its family to travel within the Schengen area without visas. At the same time, it is possible to stay within the Spanish territory for as long as desired but there is no minimum stay necessary in order to maintain the residency.
#Increase of rental among nationals
Due to the economic downturn since 2007, many Spaniards do not still have the economic power to purchase a property and, consequently, renting has become more popular in this period. In the last decade the number of residential rentals has increased by a 36%.
Bill Gates, George Soros or Goldman Sachs are just a few of the big names who have invested heavily in the Spanish economy during 2014. Likewise, Middle East companies such as National Bank of Abu Dhabi, United Arab Bank, IPIC (International Petroleum Investment Company of Abu Dhabi), Emirates or Qatar Airways have made their moves to penetrate the Spanish market. The fact that these brands are investing in the country creates are trend that is being followed by investors worldwide.
#Prices increase potential
A big difference between investing in Spain and in other countries, like the UK, Germany or France is the potential for price growth. Whereas rental and selling prices are already reaching maximum levels in other European countries, Spain offers big margins for improvement in the short and long term.
#Direct flights from UAE
Direct flights from Dubai to Madrid and Barcelona and Abu Dhabi starting to fly from March 2015 to Madrid, makes the journey for UAE residents easy and short. Furthermore, Spain allows easy and short transit to all European countries by air, train and road.
The author of the article is the Co-Founder of Hispalux Consulting.
Note: The views expressed are the author’s own and do not reflect in any way, the views of Emirates 24|7. Readers are advised to carry out their own due diligence before taking any decision.
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