Spanish Property Update – Focus on Murcia
By: John Green – Managing Director Hacienda Golf Properties SL
When you think of Murcia Southern Spain, you might think of Spanish luxury villas, the beautiful Murcia golf courses, or maybe even the comfortable weather all year around but what most people miss these days is, the profitable investment for the long term. Less than 10 years ago, the price of Murcia properties were exploding. You couldn’t find a comfortable place for a reasonable price without knowing someone. Usually even if you did know someone, they wouldn’t be selling. Since the economy began to struggle, the demand for Murcia villas, and Murcia golf properties slowed down a bit, and the property values cycled back to a great investment price.
In only 2008 the average house price in Murcia was at €215K. Bear in mind, this isn’t a villa with private pool, or a Hacienda Del Alamo golf property, even the rich had to spend a little time thinking about the price on those properties. Over the last few years the prices ended up dropping on a consistent basis, from €202K(2009) down to €182K(2010) down to €163K(2011) bottoming out at €160K(2012). Did you notice the deceleration of the price decline. During 2010 and 2011 it would have been awfully scary to have invested in a Murcia property, even if the value should be higher than it was, most real estate investors would keep their hands off until the prices stopped declining so fast. From 2011 to 2012, the prices only declined a fraction of what they did the years before. Now is the time that investors want to get into Murcia, while the prices are very low, and the demand for luxury is beginning to rise back up.
The major price drops were an intimidating issue for the people that were already in Murcia properties. Naturally, when the market begins to get scared, it tends to overreact. It can be seen in a shorter period of time on the stock market. What happens after a crash? The prices explode back up, maybe not to where they started before but the overreaction of the market can be seen clearly. That overreaction can be a great time for the properly informed investors to make a healthy return.
The housing market in Spain had a similar overreaction. As unemployment around the world was rising and the demand for luxury started to decline, a lot of people began to question their ability to keep their Murcia villas. Some people ran into real financial troubles where they lost their jobs or they lost their investments. Once that first wave of sales came, the fear in the market naturally took over and prices dipped a little lower than many peoples comfort zones. That just led to a cycle of unnaturally declining prices as everyone tried to sell at once. Eventually though, the cycle ended.
The European market and currency issues are stabilizing. It was a very scary time for even most major investors in the world. Even those not effected directly, feared that something could happen to ruin their financial situation. No one knew whether they’d lose their job the next day or if their whole portfolio value would collapse over a week. Even those that wanted to purchase Murcia villas or Murcia golf properties decided to put it off until the market recovered. The demand for these properties is set to explode at the first signs of economic recovery.
In fact, the number of property sales in Spain has actually been going up. The smart money is preparing for the economic recovery. Any real estate agent can also tell you that the number of people starting to ask questions about Murcia properties is going up dramatically. Most people that have been sitting on their money are just waiting for the right moment to get back into the market. The only problem is, most people wait too long. By the time the majority of people get into the market, the profits have already been made. With the bad bank, Sareb, coming into the market, we should expect to see this trend to start to develop even faster.
Private and institutional investors have shown heavy interest in the Sareb plan to improve the overall markets. It’s just started but it’s already beginning to make a difference in the market. The banks are going to be cleared of their toxic property assets. Many of the bank repossessions are going to be included in those assets. These are valuable properties that the banks just didn’t know what to do with. They’re not in the real estate business. The opportunity to sell them all to an agency that focuses on this process is expected to cause a great stabilization. Sareb is going to increase the liquidity of the housing market with that reduction in bank owned property and that should open the market up for anyone that’s been having doubts. Real estate is the most important focus of this bad bank to help recovery and 2 months in it is already the largest real estate company in Europe. That makes it the best market to be getting into right now.
One of the great things about an investment property in a place like Murcia is that the demand for the property can be seen in just about anyone’s desire to live there. There will always be a need for these properties, whether the market is representing it or not. People love the lifestyle. Many people dream of living in a place like Murcia. There will always be a bigger market for a desirable property in a beautiful location where sunshine is a given.
The desire for property in Southern Spain is increasing rapidly. Everyone loves the beautiful weather. Everyone loves the great atmosphere. All the golfers out there, know that Murcia golf courses are the place to be. Economic recovery is not an instantaneous process. There is still some time to get into the market before the big recovery. If you’re like many of the investors today, you can just buy the property and take a few nice long vacations before the economy explodes back up. Actually, a few days on the greens or feeling the atmosphere of Spain and you might start doubting that you’ll ever want to sell the property for a profit.
By: John Green – Managing Director Hacienda Golf Properties SL
Thursday, 31 January 2013
Hacienda Golf Properties SL
Tel Spain: +34 618 086 285
Tel UK: +44 7836 385310
Hacienda Golf Properties is a Spanish Limited Liability Company whose registered offices are in Fuente Alamo, Murcia Spain.
John Green is the company Managing Director and Administrator, previously a UK company Director for 25 years prior to coming to Spain he is also a musician and Professional Tour Golfer.