Photo: Falling Prices of Spain's Luxury Homes Attracting Foreign Buyers
Spain’s luxury real estate market has become a magnet for wealthy buyers, especially foreigners and investment funds, looking for opportunities to acquire choice properties selling at discounts of nearly 20 percent due to the economic meltdown.
Foreign buyers are drawn by Spain’s climate and a change in government policy that allows investors acquiring real estate worth at least 500,000 euros (about $660,000) to apply for residence permits.
Nearly 85 percent of buyers, the majority of them foreigners, are buying for cash and the other 15 percent take out mortgages for tax reasons, Ignacio Fiter, of luxury real estate firm Engel & Völkers, told Efe.
The areas experiencing the biggest jumps in sales are the Mediterranean islands of Ibiza and Mallorca, and Puerto Banus on the Costa del Sol in southwest Spain.
Some 80 percent of buyers are foreigners because Spaniards are still dealing with the effects of the economic crisis or are being cautious, Jordi Puig, of CBRE, said.
Interest in Spanish real estate has been particularly strong among buyers from the United States, Mexico, Venezuela and Colombia, while traditional buyers from Britain and Ireland in areas like Marbella are not coming as they did before the financial crisis, real estate firm Knight Frank said.
Although the economic crisis is still casting a shadow over the Spanish real estate market, there are an increasing number of deals involving investment funds, most of them from Germany, interested in office and residential buildings, experts said.