Credit crisis brings bargains in Spanish real estate market
Cash is king now on Spain’s choking real estate market. Russians are ready to pay with real money and can get the best deals – says Svetlana Belousova of Spanish Paradise developers group.
“There is no doubt that the share of the Russian investors here will grow. A Russian investor is not used to living on credit, so he comes to Spain with real money. And real money on the table works miracles with developers now.”
With many properties unsold, developers are offering apartments at a 30 percent discount but it’s still a hard sell. The housing downturn in Spain has spread rapidly from new home sales on the overbuilt Mediterranean coast to residential properties across the country. It takes 200 days now to sell an apartment in a standard residential lock in Madrid, compared to 100, just one year ago.
Roger Cooke, Managing Director of Cushman and Wakefield Spain, points out that the problems on Spain’s real estate market started even before the credit crisis hit.
“If we look at the residential sector for instance, a lot of the initial problems it has suffered are not directly related to the turmoils on the global financial markets. There were other reasons leading to the so-called crisis, in that sector, more related to significant overbuilding, and coinciding with a reduction in demand. That produced certain pressures on the major developers, who were very heavily into residential.”
Market watchers say the Spanish real estate market now offers property at realistic prices and is a good long term bet. And they predict that getting in now, investors such as Svetlana Belousova’s clients, could double their money in the next five years.