When does Spain become a "buy"?

B

BrendanK

Guest
While fully accepting the problems that Spain is experiencing, I'm tempted to take a punt on the area, partially as an invesment, and partially as a holiday home. Have been tracking a number of properties recently and they are coming down pretty rapidly.

Despite its well-chronicled problems, the sun still shines there, there's a good tourism infrastructure in place, and air access is reasonably easy and cheap.

On this basis, and assuming that we get another twelve months of property depreciation, are there any views out there regarding a purchase towards mid or late 2008?
 
I think spain is a major buy at present. rentals for villas with private pools are very good. We have one and are pretty much booked year round. That said appartment rentals are weaker and not such a solid investment.
It is a major buyers market. You know it is quite hard to begin a thread again on this topic without thinking of Auto320 who passed away. He was bullish also on the right type of property in a good location.
Go there yourself and investigate and whatever you do, do not buy at the "holiday fair" scams at local hotels here in Ireland as you will pay through the nose.
Good luck.
 
markowitzman said:
I think spain is a major buy at present. rentals for villas with private pools are very good. We have one and are pretty much booked year round. That said appartment rentals are weaker and not such a solid investment.
Click to expand...
On what basis is Spain a major buy?
On what basis do you think that rentals are good?

I was in the Costa del Sol a couple of weeks ago myself.

There were plenty of (empty) places that were available for long term lease at €700-800 per month. I paid around just €250 for renting a much better place (with sea view etc. etc.) for a week on short term holiday type lease. On this basis I cannot see how the rental market is attractive and bouyant for either long or short term. Check http://www.holidaylettings.co.uk/ for places that are actually booked to check the market rates for yourself. There's plenty of competition.

Equally IMHO the buy-to-let still does not stack up. The asking price for similar property in Spanish estate agents was still around €300K. So how do you translate a rental yield of ~€10K-€12K per year for 12 months into mortgage cover of 6% on 240k = ~€15K and still make a healthy return on your 60K investment?

My brother was in Almeria. Same story. Empty new builds. Cheap rentals.

Or should we be looking at let-to-let?

i.e. let one of those empty places long term @800 per month, and then sublet it out on a weekly basis to all of those holiday makers at 250 per week? And then you also have the advantage of not having any costs at all in the dead months. With strong capital depreciation of house prices at the moment, that looks better than buy-to-let.

As you may gather, I'm still sceptical until I can see rental yield significantly outstripping mortgage costs. So either the rental yield has to go up considerably, or the asking price come down considerably, or the mortgage rate has to drop. This is not yet an attractive investment in my book. As for a holiday home, why not just rent too? I don't think there's any rush whilst this unwinds.

I may of course be wrong.
 
martin if you buy a high quality villa with private pool in good location it will let.
We get year round rent and easily make 8-9% yield. Market is fantastic as far as we can see. We get rentals all over the world and the holidayrentals website is the best ...........period as it also shares with american french german danish websites.
I am so relieved I bought this a few years back as it was either this or a tax based property here but thankfully did not look that "gift horse" in the mouth!
 
markowitzman said:
martin if you buy a high quality villa with private pool in good location it will let.
We get year round rent and easily make 8-9% yield. Market is fantastic as far as we can see. We get rentals all over the world and the holidayrentals website is the best ...........period as it also shares with american french german danish websites.
Iam so relieved I bought this a few years back as it was either this or a tax based property here but thankfully did not look that "gift horse" in the mouth!
Click to expand...
I'm not saying that you did not get a good deal. I am saying that I do not believe that Spain is a major buy at present like you contend.

So you're now effectively telling me that I could right now make 5-6% rental yield by buying a villa in Spain similar to yours on Monday morning for just 2-3% more than you paid a few years back in real terms?

Please show me that villa and the numbers that go with it.

I'd be absolutely delighted to be proven wrong. I'd love a villa in Spain that yielded 6% never mind 9%.

Otherwise how do the numbers stack up about buying right at this moment? Because I probably won't get any more rent than you do for your similar villa because you already have year round rentals, and I almost certainly will have to pay the same or higher mortgage rate than you because we'll use the same bank. And holiday rents have only roughly gone up with inflation.
 
You must log in or register to reply here.
Back
Top