How the Spanish real estate market changed during the coronavirus pandemic. Expert opinion
In March 2020, the real estate market in Spain got frozen for a period of quarantine waiting for buyers. What is interesting is that despite forecasts, there was no rapid drop in prices. As early as in June, the deferred demand was triggered when the borders with the EU countries opened and buyers began to arrive. As it turned out, for many global changes in the world have become an incentive for their decision-making.
After having spent time in quarantine, people started to appreciate life in country houses. Realtors have started to receive requests from Spanish clients for long-term rent and purchase of villas, as well as clients from other European countries. In major cities, there is a growing interest in suburban housing, and in Marbella, in any house with its own land plot, because here all housing is located in green oases. The apartments are also in demand, but a large terrace and a sea view are becoming more and more important for the buyers.
At the same time, the focus shifted from the goal of investing in real estate to the purchase of a second country house for living. The instability of the situation in the world and confidence in the future has motivated many to find a new place to go in case of a new lockdown. The same quarantine may happen this fall in Spain, but spending time at home with a private pool and a sea view is much more pleasant.
With the transition to the remote format of work, which is gradually becoming more familiar, customers have started to demonstrate one more preference. The requests include a large area of the house and a big number of rooms because having a study is already a necessity nowadays.
Today the discounts in Spain are offered mainly by the sellers of secondary real estate. You can find objects with a 5-10% discount. However, this real estate is likely to be the one with the cost being inflated initially. Prices for new buildings have not been lowered and are not planning to drop — the demand for them is still high, so developers do not see any reason in changing them yet.
During the quarantine, transactions were made online. Most of the buyers were thinking of buying property earlier but hesitated or did not manage to buy it before the borders got closed. The process of making such a transaction is a bit different from the usual one. The only difference is that the lawyer must obtain a notarized power of attorney from the buyer. Then all the steps can be performed by a representative:
- opening a bank account,
- getting NIE,
- signing a purchase and sale agreement, etc.
At the moment, it is difficult to predict how the real estate market will change. Even professional economists and political scientists have different assessments of the situation. Although they unanimously agree on one thing — a serious economic downturn is expected in Europe in winter. As a result, the real estate market should respond by lowering prices. It is impossible to predict how strong it will be since we have never been in such situation before.
Although there is another point of view of the big players in the real estate market, who do not expect a significant drop in prices. And they give quite logical arguments. There are many people with significant savings in the world, and now they are more likely to invest in a new home for living, fearing a fall in financial markets and a crisis in the banking system. Among their preferences, there were the southern coasts of Spain, Italy, and France. In addition, as long as Spain continues the program of issuing Golden Visas for the purchase of real estate worth 500,000 euros or more, the interest in the country will not decline. In fact, this is an opportunity to get a residence permit and a pass to Europe for the whole family, which for many is a significant advantage.
So, the situation in the real estate market will depend not only on the state of the economy, as it usually happens, but also on the demand dictated by huge changes around the world.
Author: Natalia Kiyan (Spain, Marbella / Czech Republic, Prague) — lawyer, specialist in currency legislation of the Russian Federation, consultant on tax residency and declaration of income of Russian citizens living abroad.
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