Rapidly increasing domestic demand for rental property boosts Spain’s buy to let market
It’s become something of a well-known fact that the traditional ‘fly to let’ rental market in Spain is suffering from over saturation. Coastal resorts are certainly as popular as ever with Spain remaining one of the top holiday hotspots with British and European tourists, but when a situation of over supply hits the holiday property market it certainly makes it harder for investors to make money from properties that they wish to earn a rental income from.
However, the good news is that there are some lesser explored, more profitable pockets of the buy to let investment property market in Spain that previously were the well kept secrets of professional and institutional investors only. Now that real estate prices on average have adjusted and fallen across most of the Spanish market, it makes it a very positive time to explore these alternative buy to let approaches in Spain.
According to Mike Hamilton, Sales Director at Casas de Lorca and an expert on the Spanish investment property market: “the main investment approach that has seen larger investors profit substantially on an ongoing basis is buying properties for rent within the larger commercial and university cities in Spain where domestic demand is not abating. In fact, the city based buy to let property market in Spain has suffered nothing of the negativities of over supply, with many urban areas actually suffering from a restriction of supply leading to increased demand. In the capital Madrid for example we are hearing reports that 62% of apartments which become available are being rented within the first month alone.”
“The low supply of good quality rental property is also affecting rental prices. For example, average monthly rents in Lorca have gone up from 400 euro a month to 550 euro over the period of the last 3 months, and as the date for the opening of the new University of Lorca approaches, so demand is expected to further intensify. Therefore, property investors looking for a market where there is strong demand for property, more attractive underlying real estate prices and strong potential for consistent year round rental income should be focusing their search on Spain’s most in demand cities. Each day we are turning down clients looking for rental apartments. When one becomes available it is rented within the week, sometimes the same day!”
Spain’s local population has suffered in much the same way as the British population from rising property prices in recent years. This has led to a situation where more Spanish than ever are seeking rental accommodation because they cannot get onto the housing ladder. The Spanish Prime Minister has pledged significant financial help, not just to first time buyers, but more interestingly for buy to let investors too. Direct monthly financial contributions of 200 euros a month are being offered by the Spanish government to people under 30 years old to help with rental payments; proposals have also been made to help tenants raise deposits; and for landlords who agree to rent properties to under 35s to help them get into private accommodation, attractive taxation incentives have been proposed.”
In Lorca in the Autonomous Community of Murcia where a new university campus is about to reach completion, demand for city based rental accommodation has already pushed average rental rates up significantly. The new university is the fourth campus for the already expansive University of Murcia with its 31,500 students, and when it opens in 2009 demand from professors, lecturers, administration staff and of course students is expected to have an overall positive and dramatic effect on the local housing market.
Property investors quite possibly have a once in a lifetime opportunity to buy property off plan at below market prices as developers work hard to sell off stock, or to buy resale units in what is very much a buyer’s market, and earn rental income year round from the domestic market who are being aided and therefore encouraged to rent. What’s more, in an area like Lorca where there is a specific and undeniable reason for demand to surge, a buyer making a purchase today has an unprecedented opportunity to profit significantly from rising rental rates, and from potentially appreciating assets whose values will likely be increased as the property market in the city becomes more in demand.
Casas de Lorca have 1, 2 and 3 bedroom apartments for sale in Lorca from just 78,000 euro, they are located just 3 minutes from the university and come with guaranteed rental income for the first 3 years making them an exceptionally interesting long-term investment opportunity. Interested parties are invited to contact Casas de Lorca for more information on 0844 734 8057 or visit www.casasdelorca.net.