Sean Woolley, drector of real estate agency Cloud Nine Spain and author of From the Ground Up – The Insider’s Guide to Buying Spanish Property
Let’s start with how we’ve coped during the pandemic and what we’re seeing as travel restrictions ease.
In Spain, COVID caused a dramatic pause in the real estate market in the Marbella area for the months of March and April 2020, with no activity whatsoever. However, as soon as travel restrictions lifted and the very strict Spanish lockdown came to an end, the market reacted very well and the summer was strong. We saw a six-week burst of activity in the summer of 2020, where people arrived very determined and ready to buy. During lockdown, they had clearly done their research and so when they turned up they were in a much stronger position and our conversion rate doubled at this time.
During 2020, we also noticed a shift in budget and the mid to high end of the market was very busy, whereas the lower end of the market was slow.
There was a drop in activity during the autumn and winter, as restrictions returned, but there were still people determined to buy and move over before the Brexit deadline. Throughout 2020 and to this day, virtual viewings have become the “new normal” for overseas real estate agents. We have been using them so that our buying clients can effectively shortlist properties from the comfort of their own home, with the aim of physically viewing their selected options when they are able to comfortably travel to Spain. For clients who are already well-researched and familiar with the areas, there has sometimes been no need to physically visit. Armed with a high-quality camera, a gimbal and a wide-angled lens, we have been able to conduct live walk-throughvideo chats and to produce edited videos which are almost as good as the real thing. We have been able to sell a number of high value properties purely based on virtual viewings and we expect this trend to continue even when travel restrictions lift completely.
At the beginning of 2021, we were expecting at least another 6 months of COVID chaos, a paucity of clients and huge market uncertainty. However, this has not been the case at all. In fact, many of the Costa del Sol real estate agents are now reporting record sales volumes achieved in the first and second quarter of the year. Enquiry levels are stable, buyers are coming from all over the globe, with no one dominant market and while appointment levels have declined mainly due to travel restrictions, many more ‘viewings’ are now being conducted virtually, which means when people arrive they are ready to buy and conversion rates have doubled or even tripled from the norm.
In terms of buyer profiles, we have noticed a marked shift in typical budgets into the HNW and UHNW brackets. The most active segment of the market is the super-high end, i.e. transactions of €3 million+. In fact, one Marbella-based promoter alone was responsible for over €90 million worth of property sales in the first 3 months of 2021. That´s a staggering achievement, and is probably testament to these types of clients being the fortunate ones that can more freely travel and take time away from the workplace or their business.
Our feedback from these client groups is that the COVID pandemic has accelerated their overseas purchase plans, and that the budgets for their purchases have increased as they seek a home that can now offer the space and homeworking solutions that these strange times have forced upon us.
What impact has Brexit had on UK buyers?
When the UK announced its decision to leave the EU, we did see a slight drop in the number of British buyers (especially due to sterling’s weakness against the euro since the Brexit referendum result). However, British citizens still account for the largest proportion of buyers on the Spanish Costas. They love the idea of a jet-set lifestyle, and especially now with the opportunities created by increased home-working, the idea of living and working from a Spanish base, at least for some of the time, is offering greater appeal and possibilities than ever.
There has been a similar level of enquiry levels from Brits during and after Brexit, however it is difficult to gauge whether these enquiries will turn into buyers as travel restrictions remain in place. However, we are holding virtual viewings and progressing well with British buyers, so we expect these to convert if and when Brits can get here without the red tape.
No firm decision has been made by the UK and Spanish governments regarding visas for British nationals travelling to Spain. Bearing in mind that the Spanish government are especially eager to attract foreign tourism and investment, it is widely expected that tourism visas will not be required for British nationals entering Spain. Currently the rules are that non-EU visitors to Spain may stay for up to 90 days within a 6-month period without needing a visa and this seems likely to apply to British visitors as well. The cloudy issue surrounds those who wish to stay for longer than 90 days at a time. This needs to be decided, and there is a possibility that a residence visa of some sort will need to be applied for.
These uncertainties are understandably causing concern for British buyers, but we expect many to use the Golden Visa scheme to secure residency. This is a scheme for non-EU buyers which offers them the chance to apply for a Golden Visa which includes resident permits for the buyer and their dependents in exchange for making an investment of at least €500,000 in property. One of the advantages of this scheme is that you do not actually have to live in Spain or pay taxes here, although you will need to visit once a year if you want to renew it.
We expect the final six months of the year to be very active, especially as the skies start to open up to Northern European and especially British buyers. The dream of owning an overseas property in the sun is more attractive than ever for this client group, and we expect the continuation of this surge in demand. The problem we foresee is that the supply of well-located, well-priced, quality homes may come under pressure from this increased demand, and this could force some upward pressure on prices in some of the most popular and most exclusive areas.