Foreign tycoons bet on luxury homes in Spain without a mortgage
Inflation and with it, the rise in interest rates and the disappearance of Russian clients after the outbreak of the war in Ukraine have not been enough to kill off the luxury housing market. Thanks to the foreign demand that Spain sees as one of the most attractive countries to make investments, the real estate sector that is dedicated to ‘high standing’ maintains its pulse despite the macroeconomic prospects.
Although sales and prices may be attenuated this year, the experts consulted by EFE insist on the robustness of a market that has shown more resilience than others to political and economic changes and in which foreign fortunes, which do not usually have financing problems, play an essential role.
The director of expansion and operations of Engel & Völkers for Spain, Portugal and Andorra, Constanza Maya, provides some stability and he understands that the usual thing is that the number of transactions falls first and then the prices. However, the most exclusive market moves with independent rules and it is more stable to changes.
The Knight Frank Residential Director, Carlos Zamora, considers that this market remains robust despite the risk of entering a recession and given that Spain continues to be attractive For the domestic and international client, 2023 is likely to present many opportunities.
Gilmar believes that this segment maintain the same levels of activity and although the foreign buyer or investor will continue to be the protagonist, they will not be the only one.
The president of Caledonian, Enrique López, highlights the increase in prices due to the cost of materials and the lack of labor. In addition, he ensures that the 2% limit on rentals makes a dent among those who buy to rent, causing the product to leave the market or direct investment to other markets.
They buy without a mortgage
According to Gilmar, these buyers they do not usually have financing problems, although sometimes they can request a mortgage loan on a part of the house looking for deductions. In fact, operations above 2 million are rarely closed with bank financing, according to Engel & Völkers, which indicates that the period for the sale is around 130 days.
With a ticket of sale that goes from 500,000 to 11 millionthe president of Caledonian points out that in properties of more than 5 million, whose demand is foreign, it is paid in cash and that where the rise in rates can affect is in the national clientele that needs a mortgage.
The director of Lucas Fox’s Barcelona office, Mohammad Butt, agrees, adding that the house continues to be a safe haven and attractive financing costs in Spain compared to other European countries.
First choice among the great fortunes
According to Knight Frank, Spain is among the first three options for the world’s great fortunes to acquire property. The main points of interest are Madrid, Malaga (city), BarcelonaCosta del Sol, Costa de la Luz, Canary Islands or Balearic Islands.
Among the most prominent nationalities are the Britishdespite Brexit, Germans, Swiss, Norwegians, Italians, Belgians, French and Latin Americans (from Mexico, Colombia, Peru, Chile or Venezuela).
According to Gilmar, the North American buyer has joined Marbella/Puerto Banús, where the one from the Middle East is also gaining presence, which until now was practically non-existent in Spanish luxury.
Caledonian points out that Madrid is more attractive than ever for foreign investors, especially Latin American millionaires, and highlights that after the pandemic there are many foreigners who want spend months in our country, not only in vacation period. For this reason, he understands that prohibiting the purchase of housing by foreigners, as Canada has done, would be destroying the market.
Little impact of the Golden Visa
From Engel & Völkers, Gilmar or Caledonian they do not perceive an increase in the Golden Visa operationswhich grants a residence visa for buying real estate from 500,000 euros and they believe that its effect has been diluted over time.
From Lucas Fox they detect that the North Americans, British, Argentine, Chinese or Swiss were the most interested in this program in 2022.