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Market Report – 1st Quarter 2018

This is our 17th Quarterly Report. We have kept it brief and specifically relevant to the locations where the clients of the Survey Spain Network are most active. As part of the research, we have identified a number of wider and national property comments.

independent property valuations spain

The Overall Market – Increasing optimism with the first quarter being better than last year’s.

  • Generally, the agents we’ve talked to have been upbeat regarding sales and the future market. They all report that new properties are selling well, but that older, ‘classical’ properties are struggling, and prices continue to drop for those, except in the best locations. 
  • We have recently been asked to value a property on the beach side of Marbella’s Golden Mile. The purchasers intend to demolish the nearly 1,000 sq m property and build a new style, which illustrates the premium that can be gained for new. However, given that new build licences in Marbella are taking up to 2 years to be granted, due to the continuing planning hiatus, extensive remodelling would appear to be the better course as licences for that are understood to be available within 3 to 6 months.
  • As stated in the last few Reports, despite the comments above, we are still concerned at the amount of new construction being carried out, all along the Costa del Sol, with the probability of much of it coming onto the market at approximately the same time. 
  • There is still a considerable gap in price between the equivalent new and resale properties, which means that most purchasers of new property are going to be finding themselves in immediate negative equity. However, it appears that the presence of new materials and design is sufficient to encourage buyers to succumb to the superior marketing and elect for the new property. They are also being encouraged to view these properties by incentive furniture and other packages and agents encouraged to bring their clients by higher than standard agency fees.
  • Along the Costa del Sol, several agents report that they are finding that many older properties are coming onto the market due to families growing and spreading, leaving largely unused the increasingly elderly parents’ holiday or retirement home. The elderly owners prefer to have the money available to live on and are either going back to their countries of origin or renting smaller, ideally single floor homes and thus joining the already crowded rental market.
  • The market for inland properties is reported to be beginning to pick up at last. Again, the properties must be exceptionally located and to have no planning or building problems. In addition, increasing relaxation of the Regularisation (DAFO) possibilities for properties built illegally, is making it possible for all the paperwork to be brought up to date and owners able to live or sell with confidence that there will be no further fines or demolitions. 
  • Two agents have stressed the importance of having all the paperwork up to date, no matter how legal the property is. One agent instanced the situation where the historic title documents gave a size less than one-third of the actual size. It took 6 months and some costs to correct the situation, even though it wasn’t contentious and only the administrative bureaucracy had to be gone through. By that time the potential buyer was long gone and the property was being shunned as a ‘troublesome’ property by agents showing properties in the area. Unfortunately, this is a situation that we have found when valuing a number of mortgaged properties and could delay debt recovery and make it costlier in the event of a bank requiring to liquidate the security.
  • Brexit is now less than a year away at 29th March 2019. The reality of the change that is coming and the dashing of hopes of a change of mind by the UK will be increasingly concentrated into this short period.  Agents report that whilst there has been a slow down by some UK buyers, there has also been an increase in those wanting to make the move before the transition period starts.
  • Any slacking of demand by UK buyers has been ably taken up by other Northern European nationalities, with Estepona town alone seeing the opening of 4 or 5 specialist Nordic estate agencies to cater for demand from those countries.
  • The Spanish demand continues to recover, with many buying investment properties and the traditional town nucleus continuing to expand and new suburban areas created. As the local economies expand, so new buyers and especially tenants arrive to fill the employment opportunities created.

Pending legal changes that could affect property values?

This will be included when appropriate. However, we stress that we are not lawyers and thus can only comment to the best of our knowledge.

We are not aware of any new legislation directly affecting the properties. However, as local legislation can be created by the various government authorities in which the properties lie, there may be relevant legislation of which we are unaware.

Analysis of Statistics

  • Survey Spain is recording prices and valuations throughout our Network. Due to the limited number of properties and the even fewer number of reliable sale figures, we are only able to provide a meaningful analysis of prices and values for some Municipalities this quarter. However, as before, we have commented on the majority of the areas, with the opinion sourced from our valuers, agents and other sources in the areas.
  • Where we have insufficient information, we have combined information into larger areas.
  • As requested and also as this is the area with most activity, we have been able to provide more information on the Costa del Sol market.
  • Note that the rates per square metre may be averaged from a small number of properties in some cases. We have continued to supply these as we believe that they will show a trend over a number of quarters, whilst the variation between one quarter and the next may be ‘out of step’ with the perceived trend 
  • It should be borne in mind that we have few valuations of new property, with the majority being resales.

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Quarterly Market Report – Autumn 2017 – 10th January 2018


This is our 16th Quarterly Report. As requested, we have kept it brief and specifically relevant to the locations where our Network is most active.

As part of the research we have a number of wider and national property comments.

The Overall Market – Concern as to the amount of new construction.

  • As stated in the last two Reports, we are concerned at the amount of new construction being carried out, all along the Costa del Sol. We carried out research in an area of 1,000 ha close to our office and the result edited slightly, was published
  • As before, agents confirm that there is continuing demand, but we have difficulty in believing that there will be sufficient long-term interest to absorb all the new property in addition to the many resale properties that are available.
  • There is still a considerable gap in price between the equivalent new and resale properties, which means that most purchasers of new property are going to be finding themselves in immediate negative equity.
  • As indicated previously, there is evidence that certainly lower value developments are struggling to find occupiers, with promoters offering full furniture packages as an incentive to buyers. Only this morning, we received notice from a developer indicating that commission to agents had been increased from 5% to 7% of the purchase price, again indicating that properties were not selling.
  • Against that concern, some agents report that they are having successes and are looking forward to 2018 being as good as the latter half of 2017. They tend to be specialist agents, either in a particular property value or restricted ‘always popular’ location. In addition, the number of agencies working on the coasts continues to increase and so any grumbling that there might be may just be a reflection of a larger cake being sliced more thinly to provide for more mouths to feed.
  • An example of this is an agent involved in La Zagaleta, arguably the prime location certainly on Costa del Sol, indicated that he has sold four villas, each in the region of 4 million €, within the last year. He then stated that if the 100 or so princes in Saudi Arabia who have been arrested, were banished from that country, it would create a boom in high-value properties and he was sure that the Costa del Sol, and La Zagaleta in particular, would benefit from that! Perhaps an outside bet, but stranger things have happened.
  • Brexit has still not taken full effect, with the actual date at the end of March 2019. Our opinion is that over the next 3 to 6 months, which will be during the time that businesses and individuals have to make decisions for the normal planning period of a year to 2 years ahead, the effects will become more obvious. Tax will be one of the long-term ones as is summarised below.
    • Tax that has to be paid due to just owning the property – the Non-Resident Income Tax. For owner/occupiers, it is calculated on 2% of the cadastral value of the property and the general rate for non-residents is currently 19% for EU residents and 24% for the rest of the world.
    • If the property is leased, the Non-Resident Income Tax, is –
      • EU resident: 19% of the net income obtained (rent received minus deductible expenses, which are in general are all those inherent to the property, including interest if there is a mortgage, and amortization).
      • Non-EU resident: 24% of gross rent (that is, without deduction of expenses).
  • That’s a 25% tax increase for all those holding holiday homes and if you rent out, it is substantially more than that. It’s going to be a great windfall for Spanish tax authorities, but make it much less attractive for UK residents to own a second property in Spain.
  • The Spanish market, in general, appears to be recovering as can be interpreted, perhaps, from this graph. It does show the unreliability of ‘official’ statistic and the need to take a balanced view of them all.
  • As has been mentioned in the past, fast Internet access is increasingly important to buyers. They will be pleased to hear, though perhaps not be overly trusting, in that Spanish President Rajoy has said that he intends to give a definite push to plans to extend fast connections to all towns, cities and villages in Spain if possible, or at least leaving no more than 15% of the country’s inhabitants without access.

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Home-building boom on the Costa del Sol, but is it sustainable?

I’m waiting and waiting for a gap in the traffic so that I can pull out onto the A7 coastal highway that links up all the main towns and cities from Malaga to Sotogrande, including Marbella and Estepona. Where is all this traffic coming from and where is it all going? This is the end of November, for goodness sake. There shouldn’t be anybody here. They can’t all be golfers, though the courses are certainly full at present. No, there are far too many white vans, concrete delivery trucks, and containers around. This is business, principally construction business, and it looks like it’s going to be the new norm all year round, and not just in the warm tourist season. The Costa del Sol (Sunshine Coast) is increasingly becoming the Ciudad del Sol (Sunshine City).

On the skyline to East and West, cranes once again bristle above urbanisation and villa developments. The building consultants, professionals and tradesmen who were laid off 10 years ago are now flooding back and completing shell buildings that have been abandoned for years, or building anew on sites that developers who survived were able to hold onto or have acquired cheaply from the banks. Some of the banks, of course, are partnering with developers in these projects and, just as after previous recessions, their ‘prudence’ in holding onto ‘called in’ securities will be rewarded by profits on the new development. Conveniently, the crisis and bailout is fading from corporate memory.

Speculative or real demand?

Concerned that all this development might be speculative and always wondering, “are these places just being built speculatively or are ‘real’ people buying them?”, Survey Spain have carried out research on a 1,000-hectare area centred around La Resina on Estepona’s New Golden Mile.

The area stretches from the AP7 toll road to the sea and is bounded to the east excluding Cancelada and Los Flamingos, and to the west by the road up to Selwo Safari Park. Within and on the fringe of that area, our research identified at least 26 new developments, and that’s excluding private new build single villas. Is this the start of a second Nueva Andalucia? Travelling along the coast as we do, this is by no means exceptional, and even in Marbella, with its planning restrictions, there are many more cranes than there were a year ago. Continue reading

Exchange Rates Impact on Property Budgets

Survey Spain - Bank Lending Upside DownThe current market value of a property is just that: it’s what someone will pay for the property at that particular moment. In addition to the normal vagaries market, of increasing and decreasing supply and demand and changes locally, we are increasingly finding that there can be radical changes ‘overnight’, as exchange rates fluctuate significantly.

Looking at the UK market, the loss in value of the pound and the parallel apparent increase in euro economies, have combined to reduce the exchange rate significantly, with it being above 1.40 euros to one pound within the last two years, whilst now it’s down at 1.09 Euro to one pound, a loss of almost a quarter. Despite previous concerns about the long-term survival of the euro, forecasts are that there should be parity soon with the pound, perhaps going even more and the euro becoming the strongest currency. Looking at currencies of other buyers in Spain, the fluctuations of the Nordic countries have been smaller, whilst of course, others such as Russians have seen the value of their home currency half compared with the euro. All this uncertainty will be having a profound effect upon the property market.

British expats who depend upon sterling income from pensions or the like will be finding that life is becoming increasingly expensive here and may well be considering that they have to go back to the UK to survive financially. However, to balance that, the value of their property here in the Eurozone is increasing relative to sterling. With property values appearing to have peaked in the UK, the sale of their euro property will move them up to a higher price bracket back in the UK where they will be able to live in the same currency as their income. Perhaps they will consider renting in the UK and keeping and renting out their property in Spain in the hope of value is continuing to rise here. Continue reading

How to inspect an off-plan property overseas

The Sunday Times

Q My off-plan property in Malaga is due to be completed in the next few months, and I will be inspecting the property soon. What should I look out for, and what are my rights if I find any defects? J Harrison, by email

A Before making the final payment to a developer or builder — usually the remaining 70% at this stage — you need to ensure your home is finished to the required specification. When the builder contacts you to arrange an inspection, commission a chartered surveyor’s report to UK standards, which starts at about €400 (£350). Try the Rics-governed Survey Spain (

Your snagging list should include any damp patches or mould growths; the state of the plasterwork and paintwork, which should be well finished, with no cracking; whether all the appliances you have paid for have been installed; and whether doors and windows open and close properly. Check that the taps and loos run and flush, that electric, phone and internet points are as specified, and that amenities are as promised.

Off-plan buyers are covered by various construction-defect guarantees under Spanish law, but negotiations on flaws must take place before completion, so you have leverage.

Raymundo L Nesbitt, director of Larrain Nesbitt Lawyers;

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Quarterly Market Report – Spring 2017

q-reportThis is our 14th Quarterly Report. As part of our research we have identified a number of wider and national property comments.

The Overall Market – Concern as to amount of new construction.

  • As reported last quarter, building activity is undoubtedly continuing and increasing, and the concern is that we may be heading for another ‘bubble’. Yes, there is demand, but there is also a substantial amount of existing property on the market. As always, developers have the selling advantage of larger marketing budgets to bring in the buyers, but we are seeing signs of some discovering that all is not as fast as they expected, with ‘free’ cars being offered to buyers and 10+% commission offered to agents. See the article “Are we heading for another Bubble” in
  • As before, Brexit, and its effects upon the UK buyer and existing British residents, is still an unsettling force, with other EU nationalities becoming increasingly frustrated at the disruption it is causing. However, there are still many UK buyers.
  • The EU and UK have now put forward their proposals for the other’s residents in their countries. Whilst there is a general agreement in principle, there are many details still to be clarified, especially for what happens with expatriates who arrive after the as yet unspecified ‘Specified Date’. See the article “Is the future becoming a little clearer”.
    • In that I state that it is my opinion that those residents here before the Specified Date, assumed to be March 2019, will have special rights of residence, but others arriving after that date will be treated in the same way as all those of other non-EU nationality.
  • The reduction in UK buyers is adequately being replaced by those of other countries, with Nordic, German, French and others being active in the market.
  • As stated before, the market dependent upon Gibraltar, both due to proximity and business, is undoubtedly the most nervous of all. We are seeing prices and values dropping in this area, counter to most of the Costa del Sol.
  • Tourism is still very strong, with record numbers being expected over the summer. Hopefully, there will be enough water freshwater for them all!
  • The requirement for licences to legitimately offer individual properties to let, is likely to reduce the number of buyers who are depending upon rental income to afford the running and finance costs of their purchase. This will especially be the case should there be publicity of draconian fines to people discovered to be acting illegally.
  • In the background, there is the thought that if interest rates should rise, many owners may find that they cannot afford their second property in the sun and that there could be a significant increase in properties being offered for sale.

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Are we heading for another bubble?

Construction on the Costa del SolA recent article in Spanish Property Insight stated, “Building land market comes back to life, but recovery is patchy and town planning an obstacle”. Yes, only by looking round the skyline it’s good to see cranes moving to create buildings where people want to live and holiday. Yes, it is patchy, because the builders want to build in the ‘safest’ locations, where people want to live and holiday. There are still shells of developments in poorer locations, far from beaches and social and retail facilities, which were never going to be popular. Developments started there because builders were lent money to build, they were the only sites available and speculative buyers were lent money to reserve them. However, when the crash came, these buyers couldn’t sell on at a vast profit, especially considering the costs of purchase and sale. Too late they found they couldn’t rent the houses as nobody wanted to live there. Also, the costs and taxes on income made it impossible to cover all the running costs. So, they pulled out of the purchase and the whole deal collapsed leaving banks with empty shell apartments in a failed development.

The failure wasn’t of the building; it was of the location. Now we are seeing a rush to buy building land again, in poorer locations because the price is low. Then marketing starts, convincing naive buyers that they should be paying high prices for new, unsnagged properties. People buy new when, with internet research, they’ll find better existing properties, in better locations, as that developer had the pick of those.  Continue reading

Is the Future becoming a Little Clearer?

Brexit2-300x250With Brexit, we are all in the same boat. Writers based in Spain have the same concerns as readers, but with a slight advantage in that we focus on its effect upon our specialities. Mine are pre-acquisition building surveys and valuations, the latter being principally as an expert witness for UK and other countries’ courts regarding divorce, tax, inheritance, and other disputes relating to the value of properties in Spain.

When the Brexit result was announced, everyone, including many Leave supporters, were in shock. “What have we done?” and “How will it affect me?” For a year, we haven’t had an answer to either of those questions. Now, the UK government has put forward how they will treat EU nationals within the UK, assuming that similar arrangements will be made for UK nationals in Europe.  Continue reading

Ready to Sell?

Houses for sale in SpainWhen Survey Spain are asked to carry out a pre-acquisition survey of a property, it’s usually after it’s been marketed for some time and been inspected by the potential buyer at least twice. There will have been others looking round the property, reading the agents details, driving round the neighbourhood and selecting lawyers and estate agents.

The house will have been cleaned and tidied again and again, and there may even have been a Home Stager employed to bring the property to a decorative state where it is attractive to most. There will have been agents spending hours describing all the properties features in ‘breathless’ prose and they and friends advising on the price. The sellers, in between cleaning and tidying the house once again, will spend sleepless nights swithering, “will we, won’t we”, over a hundred minor and major decisions.

So, all should be perfect when we come along. I don’t mean the condition of the house as, except for the minor points, that’s usually on the basis of, “What you see is what you get”, and hopefully the surveyor won’t see too much wrong. No, I’m thinking of essential paperwork items.  Continue reading

Building confidence in Spain

Despite the recovery of the market, there are still some huge differences between what was loaned in the good times and the market value of the property now.

220px-nordiske-flagBuilding activity is increasing. Many new individual villas, though the financial rationale of those is uncertain as there are still so many available for sale, with those having had the choice of the best sites in the past.

New flatted developments are also being created with the developers presumably been reassured by the appropriate percentage of reservations off plan.

Older ‘skeleton’ developments that were not completed during the last boom are being acquired and completed by new developers.

‘No sign of housing market overheating’, says Bank of Spain. Generally, that is probably the case. However, in certain popular areas there must be a risk that everything is proceeding along a very similar course to before the last crisis. Continue reading