Investment Properties on the Spanish Costas

Country:  Almeria Province; Andalucia; Costa Almeria; Spain

In recent years the TV and newspapers have been full of publicity about the investment potential of newer property hotspots like Bulgaria, Dubai and Estonia, and about high profile problems in the Spanish property market, including spiralling prices, town hall corruption in Marbella, and the Valencia 'land grab'.

So much so, in fact, that it can be easy to forget that the Spanish coast is still far and away the most popular location for British people to buy property abroad.

And whilst no reputable estate agent could deny that the Spanish Costas are no longer the place to look for rock bottom property prices, many remain bullish about the prospects for long term investors there - especially as the domestic market for property remains healthy.

Graham Carr, director of Dublin-based Premier Property, which sells property in countries as diverse as Brazil, Germany and Morocco, says that despite headlines about massive price rises in Spain's property market, houses are still affordable relative to properties in many other countries.

"If I had to put together a list of hotspots that offered steady, year in, year out profits, the Spanish Costas would be right at the top in the number one spot, as it just keeps rolling along, year in and year out," he says. Carr's reasons why the country remains a good buy include Spain's political and economic stability; the excellent infrastructure; ease of access; cultural factors like the country's respect for traditional family values, its rich history and the fact that English is widely spoken; a good healthcare system, and great weather.

Sue McMullen, head of media at Headlands International agrees that Spain is far from finished as Britain's favourite overseas property location: "People will always buy on the Spanish coast because it's familiar, has a great infrastructure and is incredibly accessible - it's really like a home from home. We've seen no sign of demand for Spanish properties abating; it's a safe bet and these days people are even basing themselves over there and commuting back to the UK for meetings."

She recommends Murcia as an area that is particularly good for investment, citing in particular the Corvera Golf and Country Club, a luxury golf resort featuring an 18-hole competition standard golf course designed by Jose Maria Olazabal, which is located at the foot of the Carrascoy mountain range, as an example of a development where investors could bag themselves a great property with excellent long term prospects.

Set in a rural environment, the resort offers a range of apartments and villas with a variety of excellent, on site services just 20 minutes away from one of the quietest, richest sea line areas on the Spanish coast. Facilities include a luxury hotel, restaurants, health centre, spa, indoor and outdoor pools and tennis club. Two bedroom properties are available from just under £155,000, with just 30 per cent of the price payable by September 2007 and the rest due on completion in March 2009.

Elsewhere, apartments on golf urbanisations on the Costa de Almeria can be found for less than £100,000, and James Dearsley, European sales manager at Atlas International, recommends the more well-established southern Costa Blanca as an area with plenty of investment potential, especially if you want to buy off-plan. He cites the Playa Golf development in Cabo Roig, where properties are available for less than £120,000, as an example of developers having listened to the market and created complexes that tick all the boxes for northern European buyers.

"Buyers in the UK have started to become used to the gated development concept, and here you get just such a setting, including an indoor gym and spa, and with ultra-modern design that also appeals to smart investors' tastes," he says.

Four or five years ago, prices in the Costa del Sol were rising at rates of 25 to 30 per cent a year, fuelled partly by the actions of speculative investors who bought multiple off-plan properties with a view to selling on before completion. In many cases it turned out that the developers of these properties had illegitimate building licenses rubber-stamped by corrupt town hall officials, and many buyers got their fingers burned, having insufficient equity to complete and yet at the same time being unable to sell.

This led to a fall in confidence and price drops in some areas, says Julian Merck, whose firm Merck Estates specialises in Costa del Sol property. But the recovery is starting to happen and the town hall is set to publish its plan for resolving the planning breaches in the summer. Prices generally are now rising by around ten per cent a year, says Mr Merck, who stresses that the infrastructure of the area and continued investment including the extension of Malaga airport mean this coastline will remain a good long term investment.

"If you buy off plan in a good development with good views and the right build quality, you'll have a very good return in three to five years' time," he says. "But it's important to have an agent who operates in the right way. There are some developers I won't touch with a bargepole and it's vital to deal only with companies that have legitimate licenses and properly drafted building guarantees."

He urges particular caution for anyone thinking of buying in the area from Estepona down to Manilva, where it is believed that similar corruption has yet to be uncovered and dealt with; but says that particular developments around Mijas and Nueva Andalucia offer 'extremely viable investments'.

Expect to pay for the cachet that much of the Costa del Sol retains, though. The new Marques de Atalaya development near Benahavis, in the heart of 'Golf Valley', for example, boasts stunning views over several prestigious golf courses and the coast, from the Rock of Gibraltar to the west through to Puerto Banus and Marbella to the east; and is set against the backdrop of the La Concha mountain peak and the sierra to its north; prices here start at almost £240,000. Nearby, Premier Properties is selling a four-bedroom villa set on nearly 1,400 square metres of private grounds, for just under £750,000.

In 2006 one of Spain's coastal provinces showing the highest increase in house prices was Cadiz on the Costa de la Luz, and strong appeal from Spaniards themselves means that - depending on the exact location and the property's condition - you may struggle to find decent resale properties for less than around £130,000. Immo-Andaluz is selling a brand new, two-bedroom apartment close to the centre and beaches of Conil de la Frontera, complete with garage, for £162,000.

However, it is to the Costa del Azahar, around Valencia, that many agents with a Spain-wide coverage recommend investors should head. Terry Walker of Property in Spain points out that the hosting of this year's Americas Cup has led to huge investment in infrastructure, including the building of a new airport at Castellon, due to be finished in 2008. This will cut journey times for the whole of this coast, benefiting off-plan investors at the burgeoning Marina d'Or resort, where two-bedroom apartments are currently selling for less than £125,000.

Wherever you look for a Spanish Costa development these days though, be unshakeable in your pursuit of a good deal, advises European Villa Solutions' director Adrian Medd: "The effect of competition from other countries in recent years has been to make buyers more demanding in Spain. That means the clever developers are now accepting lower margins, listening to their customers and offering more for the same money. So if you're buying off-plan you may now get free white goods or good rental deals thrown in, for example.

"And don't be afraid to look at resale properties as investments, because you can take a really good look at what they're actually like, rather than relying on a brochure - sellers may now strike a deal where a few years ago they didn't feel they needed to."

First published in May 2007.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.