Return Of The Iberian Giant—Spain Poised For Recovery

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Plus: Long-term Rentals In Cuenca | More On The Nicaragua Canal

After the death of dictator General Franco in 1975, Spain quickly rose to become the number one destination of choice for Europe’s sun-seeking vacationers and expats.

From flamenco to fiestas, Spain is one of the most culturally rich nations in Europe. Its language, food, dance, and traditions survive in various forms in the nations that once made up its colonial empire, but there’s something special about experiencing the Spanish lifestyle in the mother country.

Spanish food is surprisingly varied depending on what part of the country you visit. However, you can expect to experience things like high-quality, simply-prepared seafood, mouth-watering cured meats and treasured Spanish traditions like tapas, paella and Spanish tortilla all over.

And don’t forget—the Spanish are old pros at turning out superb wine.

Then there are the enchanting country towns…bustling modern cities…and fabled beach-side resorts. And you get to enjoy all this while bathed in Mediterranean sunshine.

But I’m not here to talk about Spain’s weather. Everyone already knows it’s fantastic. Same with the lifestyle; with expats and visitors numbering in the millions, its appeal is undeniable.

The reason why I’m recommending Spain is this: Its real estate market is set to explode.

Let’s begin with a little background. A Spanish apartment or villa has long been a must-have for middle- and upper-class Germans and Brits, and the country’s real estate market boomed for much of the last three decades. The stream of visitors and expats pouring into the country by the millions continued largely unabated for decades until the 2008 financial crisis.

Virtually overnight, demand from overseas buyers dried up. Economies around the rest of Europe hit the skids, and people just couldn’t afford second homes in Spain. More still could no longer afford to vacation there. Spain’s domestic economy—racked by mismanagement and massive unemployment—became one of the Eurozone’s worst.

Spanish real estate became something nobody—foreign or local—wanted any part of. At the beginning of this year, a third of the value of the average Spanish property had disappeared versus precrash peak prices. But at the same time, I began to note signs that a Spanish recovery might be in the cards.

In my view, Spain is another Ireland waiting to happen. As soon as a touch of growth is registered in the country’s real estate market, the flow of interest will turn into a flood and prices will skyrocket. And make no mistake—that day is coming soon.

At the start of 2014, real estate price tags were still falling and the economy was in decline. But there was reason for cautious optimism.

To begin with, Spain came out of the Eurozone’s bailout program at the start of the year and only wound up needing 41 billion euros of the 100 billion euros available. Klaus Regling, head of the European Stability Mechanism (through which Spain accessed the funds), said recently that the program did its job and that “Spain’s troubled banks… are today on a sound footing.” The German continued, “Spain’s program exit after one year is an impressive success story.” In other words, Spain’s banks were back in the game with funds to lend those looking for mortgages.

And that was superb news for the domestic market.

Things were shaping up well in other ways. Unemployment finally started to dip and the rate of decline in the country’s economy was slowing.

But perhaps the most striking element of the country’s embryonic property market recovery was this one: Spain ended last year with its best ever tourist spending figure. Visitors to the country spent a whopping US$80 billion during the year, a figure that was up 9.6% on 2012.

This all-time best was attributable in large part to a 5.6% increase in the number of people visiting the country. Tourism revenue is lifeblood for Spain—this is the third-most visited country in the world, and tourism spending accounts for a whopping 11% of the entire economy. In short, Europeans had money to spend again—and they were once again spending it in Spain.

Spain’s Momentum Is Continuing To Build

Right now, that trickle of positive news is turning into a flood. The Spanish Central Bank just reported that the country’s economy grew by 0.5% in the second quarter of 2014. That’s the most positive quarterly figure the country has seen in six years.

And the latest job figures show that 192,000 people had joined the country’s workforce in the 12 months ending in June.

According to Spain’s National Statistics Institute, residential property sales increased by 8.8% in June compared to the same month a year ago.

So where does that leave residential property prices? Well, at year end they are predicted to be down 2% for 2014—and that’s set against a 4.6% figure for 2013. That means Spain is still a buyer’s market. This slowdown in price declines is going to come to a halt during 2015, with the possibility of price rises in the third and fourth quarters.

Before 2016, investors are going to rush in and prices will shoot skyward. It won’t be long before today’s 30%-plus discount is whittled down to nothing.

Interestingly, a number of British and U.S. property funds have already started to move in to take advantage of the offers in the Spanish property market.

Following In Ireland’s Footsteps

As I mentioned, what we’re seeing coming out of Spain right now is remarkably similar to what happened in Ireland last year. The economy began to turn, unemployment started to fall, tourism went back on the up, and suddenly the real estate market exploded into life. A five-year downturn—like the one Spain is coming through—left huge pent-up demand for homes. People were waiting for a bottoming out and once it came, they dived in. Ireland is less than two years into its recovery, and the bargains are already becoming rare. Right now, the Irish real estate market is booming and the average house in the capital is increasing in value by some US$2,660 a month.

The lesson here is that getting in early is key to maximizing gains.

Those who got into Ireland a year ago—when the signs were there but growth had not yet returned—got some unbelievable properties at an absolute steal. Today, you can still buy a solid investment property in Ireland…but it’s going to cost you at least 15% more than it did a year ago.

What It Costs To Buy In Spain

There are a range of taxes and other transaction costs when you purchase a home in Spain. The value added tax (known as IVA in Spain) is 10% and applies to residential properties being sold for the first time.

Alternatively, if the home has been occupied before, then a transfer tax is payable. Nationally, this is set at around 7%, although it varies in some regions. Like IVA, the transfer tax is paid by the buyer.

The stamp duty is 1% of the price of the purchase (but can go up in some regions), paid again by the buyer. There are also notary expenses (around 1% or below), property registry inscription fees (around 1%), property survey costs (always worth having carried out), and agency fees.

So to be conservative, you should allow for up to 15% of the purchase price to cover taxes and other costs.

The Turnaround Is Happening Now

The bottom line is this: One of the world’s most desirable and culturally rich countries has turned the corner. And its sought-after real estate will remain at bargain levels for only a brief window of opportunity.

It’s an exciting time for Spain—make sure you keep it firmly on your radar. I’ll be back with some specific opportunities durin the next few weeks.

Rob Carry
For Overseas Property Alert

Editor’s note: Journalist and writer Rob Carry has been working in the media since graduating with a Masters in Journalism in 2004. The Dublin native has worked in the media industry in Thailand and Australia, as well as for numerous Irish publications.

Rob, who also holds a degree in history and politics, has worked in investigative journalism, highlighting everything from the abuses of Burma’s military junta to the exploitation of foreign laborers in Australia’s Outback. He now specializes in travel, overseas living, and international real estate.

I’ve crossed paths with Rob before, years ago. And I look forward to receiving his in-depth reports from around the world. During the next few weeks, he’s going to zero in on some of the hottest Spanish real estate investment locations and make some recommendations for properties worth your attention.

Lee Harrison
Editor, Overseas Property Alert


Letters To The Editor


As a longtime resident of Granada, Nicaragua, I think it only fair to mention (when discussing the private islands Las Isletas) that Nicaragua has signed a deal with China to run the largest commercial boating canal in history right through Lake Nicaragua. Thus ends the tranquility and calm clear seas. Many of these islands will be viewing giant oil freighter’s and cruise ships.


The Nicaragua canal was first proposed by Napoleon III and was formally mentioned in a treaty signed by President Zachary Taylor in 1850…31 years before the French started digging the competing Panama Canal. So the idea of a Nica canal has been out there for a long time.

But who knows. Nicaragua has indeed signed a deal with a Chinese business man. The route is arduous, but maybe the canal’s time will finally come. And if it happens, the lake, as a whole, will not be the same.

There are two points to consider, however. First, a view of passing ships will raise a property’s value, not lower it. Also, the ships will likely pass 72 kilometers to the south of Las Isletas, as they emerge from Puerto Morrito and skirt south of Ometepe. Factoring in the earth’s curvature, the ship would need to be over 100 feet tall to see it from the top of your island…on a haze-free day…if you’re taller than six-foot-four.

So I think the tranquility factor in Las Isletas should remain about the same.



Can you give some advice on how to find long term rentals in Cuenca, Ecuador, from locals?

How do local property owners advertise their rental property in Ecuador?


Occasionally, you’ll find long-term rentals advertised by a real estate broker, but I’ve found that to be rare. Personally, I’ve had the best luck with the local newspapers (El Mercurio ( ) or El Tiempo ( )) and walking around the target neighborhoods. Look for signs in the windows and be prepared to make contact in Spanish. This will allow you to penetrate the local market. I found my own long-term rental by walking the streets and talking to the doormen in buildings we liked…it was a doorman who finally came through.

Have a question? You can write to Lee here.