Property Sails Through International Waves
The Bank of England’s suggestion of an interest rate rise, to follow the next meeting scheduled for November 2017, pushed sterling to a 10 week high of 1.1430€ at the end of last month which provided some badly needed optimism given the lows of 1.0743€ just four weeks before. The Office for National Statistics‘ growth forecasts of the UK economy had confirmed that the first six months of 2017 saw the weakest start to the year since 2012 and that the UK economy grew by only 0.3%, the worst annual growth rate since 2013.
This was not only bad news for British people but for the Spanish property market as the UK has traditionally been its largest customer base. Even considering Brexit, and the fall in the value of sterling, British buyers of property throughout Spain still made up 15% of the foreign market share in the first quarter of 2017, with France second on 10% and Germany close behind on 8%. A robust but steady growth in house prices of 2.8% during the first three months of the year made the Balearics a wise choice for would-be investors. More of a certainty and less of a gamble when compared with the drop in value of 0.8% experienced on mainland coastal properties or the teetering high rise of 6.8% in prices on city housing in the provincial capitals for the same period.
British buyers are up against fierce competition today from nations with more spending power, although they still make up the largest group of homeowners in the Balearic Islands and mainland Spain. Investment from the UK saw a drop of 26.3%, but a greater domestic demand for property in Spain, with a rise of 14.2% in the first quarter of the year, suggested a healthier economy and renewed confidence with overall investment in property rising by 14.4%. The ‘rest of the world’, i.e. countries that have traditionally made less than 100 Spanish property purchases per year, saw their share of the market rise to 41% of overall foreign investment, however, caution has been urged over none EU investors in light of the, so called, ‘Golden Visa’ revelations uncovered in mid-September.
Following a joint investigation by the Portuguese weekly Expreso and The Guardian, it was revealed that several Brazilian businesspeople, who were linked to development scandals in their own country, had been granted permanent residence in Portugal. The European Commission has since said that there will be closer inspection of how such visas are granted in all member states. Although there have been no problems reported, so far, in Spain, spokesperson Margaritis Schinas said: ‘The EC will compile a report next year on the policies in individual countries for awarding citizenship and residence permits to investors to provide more guidance to member states’.
Under the Golden Visa scheme investors can get a residence permit, visa-free travel, and long-term path to citizenship after buying property valued at €500,000 or more. Most Golden Visas go to Chinese nationals, followed by Brazilians, South Africans, Russians and Lebanese in Portugal and by Russians, Turkish and Egyptians in Spain.