Is it now time to buy?

I've just moved to my winter home here in Dubai. Have left the folks in Soller to make the changes we want to out 'new' Malloraca home and hope they are ready for March 2011 and now have time to look at where to invest next.

We have just sold and are about to sell more of our investment properties in Barca and want to know if it's a good time to buy on Costa Del Sol?

We have advise from the agents -- but they are on a percentage -- so I'm using this forum to tap into real local knowledge and current market experience of  CdS property investors and owners.I guess the question is -- will I make agood  turn on my coin by investing on the CdS or should I look else where?

David and Marion

Personally I wouldn't be buying on the coast for investment.  If it's for personal use then fine, there are many bargains around, but as an investment no, unless you are prepared to wait many years for a return on that investment.

I am aware that there are many speculators looking at the market again but there are still no signs of any sort of recovery here, no matter what the offical data shows!

Justin

I would disagree with Justin's view. Two years ago we wanted to sell one of our two villas in Costa Blanca and after having it on the market for quite a while we withdrew it at the beginning of this year. The reason? We thought: If we're going to sell it at a huge discount (which was the reality at the time and still is), why not "sell" it to ourselves? After all, there would be no additional costs involved. In all honesty, we would be happy to buy another property (at the right price, of course), convinced as we are that things can only get better.

This approach has suited us perfectly, both because we love our houses and their location (on this I concur with Justin: there's got to be something in it for you) and because both have rented very well. 

I guess it depends on your time frame. If you're looking for a relatively short term return, I would agree with Justin; it will be a long, long time before you can sell for a profit again. Judging by the impression I get, that you are somewhat worldly, like to travel a bit, and can perhaps afford to speculate a little, maybe you should have a peek at an emerging market such as Brazil? Just had elections, new president same as the old so politically stable, burgeoning middle class, economy growing much quicker than many, World Cup & Olympics in the next few years......... 

The key here is the word 'investment'.  Justine is absolutely right...if you buy property on the Spanish Costas, it will be a very long time before you'll see a worthwhile return and with so much property for rent (some of it very cheap) there is too much competition out there.  Buying a property for your own use is different altogether.  As is often pointed out on this site, do your research...and you'll soon get to understand just how dire the Spanish property market is on the Costas.  As Honeywater pointed out...had they not sold their place to themselves, they would have had to let it go at a huge loss.  Mallorca...Barca...you knew when and where to invest in Spain when you made these choices.  Sounds like you don't need anyone's else's advice as far as Spain is concerned.  What about your place in Dubai?  I guess this was for your own use rather than an investment? Just curious.  We are in the fortunate position of having a little money to invest but we have ruled out Spain altogether (much as we love it) as a place to buy property.  We just don't want to take the risk...not only because a Spanish property could be very difficult to sell on (should we need the cash within the next few years)...but we have completely lost our faith in the Spanish system as far as property sales are concerned. 

Now Justine

anything you would like to share with us ??????????

not the first time you have been feminised???

Ahhh, the secret is out!

Justin(e)

Justin and Honeywater -- thanks for the info.

Justine -- now it's out in the open, I hope the operation was worth it!!!

Roberto -- thanks for the pointer to Brazil. my brother lives in the US and has invested in Brazil over the past 10-years and done really well out of it. that might be the way to go through his contacts.

All our affairs in Barcelona should be completed before the end of the year. It was a great step as we had been investing there since the early 80's. we still invest in the London market where flats can be picked up for £100 and rent easily achieving a 7% return plus growth even in the current climate.

We have reseached the market inthe CdS through a number of agents. But as has been identified many times on the site you really need to sk people who have real day to day experience to get the real picture. If it was as 'good' as was being painted by some agents I wonder why they are not investors?

We rent our property in Dubai, we orgionally thought of buying some 6-years ago but would have taken a real bath if we had probably looking at some 50% loss on capital with a property we are not able to rent due to the over supply of good quality builds.

Now we have brought into Mallorca, which we hope to be our main home once the renovations have been completed, we are only looking at the investment in the CdS as a way of gaining income.

Thanks for all the good advice, just off to Dubai Ski for a couple of hours skiing.

David

Oooops...sorry Justin! 

Well spotted Peteha.  I just hope it wasn't me that feminised Justin the last time it happened.  Maybe I was thinking of the Spanish pronunciation...?

When we bought our first house in Spain we did so with the intention to enjoy it ourselves and eventually retire there, and that's still the plan, which is what I mean by "there's got to be something in it for you”. In the meantime, though, as long as rental money keeps coming in and all the bills get paid we’re happy to continue to ride out the storm.

We’re encouraged by the level of interest in long-term winter lets this year, both from previous guests and new enquirers and if this is anything to go by, we’re confident that the properties will take care of themselves. For us it is just a matter of enjoying all that Spain has to offer and making sure that our guests have happy, inexpensive holidays or find very cheap, comfortable shelter from the cold, dull winter months in the northern hemisphere – Anything that adds to ours and others’ quality of life!

The idea of Brazil sounds appealing (not least of all because of our Latin souls). We invested in Panama 4 years ago and haven’t regretted it one bit. This tiny Central American country has been rated amongst the world's 5 top retirement destinations by International Living for 10 years running (any search engine will throw up loads of information, including details of the best retirement program on the planet). The expansion of the Panama Canal, which will make way for the megaships that don’t fit through the existing lanes, is due for completion in 2014. It is this huge project, as well as the new metro, a 70-storey  financial tower, its Swiss style financial center, the second largest free zone in the world,  its Hong Kong-style skyscrapers and the Frank Gehry museum that have placed Panama on the map.

Honeywater, sounds like your requirements are being met. I feel sure after last winter many more people will take the opportunity to move to Spain for the winter. As you say so long as your outgoings are covered that's the main thing for you (and I suspect most who have properties on CDS). Afetrall it's will be your home one day.

I have my main home in Mallorca but for tax reasons have to limit my stays both in Soller and the UK. Our requirements is solely for investment. We have Euros from the sale of several properties we sold in Barcelona over the past 18-months and were looking at the easy option to reinvest in the Eurozone and the CDS looked like an easy possibility.

Thanks for the tip on Panama. I'll contact my brother (as he is in the US and has interests in Brazil) to find out more about Panama. We have some funds in dollars so will not have to go through the pain of converting currency.

Thanks again for the tip.

David

Here's a snippet from an article I've just put on my blog

The British weekly The Economist calculated recently that Spanish properties remained 46.7 percent overpriced. The European Commission estimates they are overpriced by 17 percent.

The Economist's figures look about right to me.  Even after the falls, property in Spain is still not cheap.  In the areas that I look at (Costa del Sol and Madrid city), rental yields are 4% at best.  They were about 2% at the peak of the bubble.

When you can get 7% rental yields in the UK, and only 4% in Spain, something doesn't add up.

Sanchez1, you have it right. It looks like the CDS market is well over priced from the perspective of an investor/developer. It is really easy to get good returns in London so I'll not investigate Spain any further. I had a really good tip about Panamar and have already set a hare running, It looks good, property is of good quality, good price and has a wide catchment area in The Americas.
 

Thanks for your input.

Just waiting for my flight back to dubai after watching the AD F1 race.

David

 I am surprised that no agents have commented here, but then again should I be surprised?

We, Blue Ocean Estates are based in the Marina Alta region of the northern Costa Blanca. We seem to take a different approach to most agents. That's maybe due to the fact that we were not agents at all until fate set us on this path just over a year ago.

We would agree with most of the comments here. So I go back to the original thread I would say that there is no simple answer to the question "Is now the right time to buy?" because it depends what you are trying to achieve. I also agree that properties are still overpriced and we inform or owners of that point, yet still the majority of them ignore us. What percentage overpriced. I would say 70% of properties listed on out books are 30% overpriced.

The question is what is at that you the buyer want to achieve.

Rental income - Then you need to be savvy and maybe buy a bank distressed property and spend some money on renovation or be patient and strike on a property when the owner becomes desperate to sell. Harsh but true.

To live here. - That s an easier option. If you are not looking for a short term gain then you will probably be OK. Find the area that you feel comfortable in. Find the house that you feel comfortable in and MAKE AN OFFER. After all you have probably sold your house with a reasonable return in your homeland and it is lifestyle change that you are looking for not gain.

As a holiday home. Then similar to above but if it is for short term gain as well the you need to buy cheap. Are is also important for resale. So do your research. Make your agent work for you.

The market at the €150,000 to €250,000 price range is fairly bouyant but shop around, be patient and you will find what you are looking for. Above the €250,000 then you have masses to choose from and if you have the budget that is where I would suggest that you look. We have owners desperate to sell and just not getting any interest. Have a look and make offer. This is where you can and will get a bargain that will stand the test of time.

I hope that you find this helpful, we have several free Ebooks available for buyers and sellers. See our add in the Euroweekly news.

Regards Robert - owner of Blue Ocean Estates

We here in our little bubble of Mazarrón in Murcia are experiencing a new property boom.

Hi D_B_S.

Good luck with Panama.  Have you looked at UK commercial property companies and Investment Trusts?  You can still get 8-9% yields with most of their portfolios stuffed with top quality London and South East commercial property.

Sanchez1, we already have some exposure to the UK Commercial market through Investment Trusts and have made some investments in The UK Corporate Bond market over the past 2-years (Although retired I spent my working life in the investment market in London). I'm always suprised more people don't look at Corporate and Investment Bonds as the yields are good.

I was origionally looking at the CDS as we have Euros from the sale of our investment properties in Barca and was looking to reinvest in Spain. It seemed an easy option. The Panama opportunity came a bit left field. We have a Trust Manager looking into it.

We have had some direct email from agents which is of interest but doesn't meet our immediate needs.

As someone else asked -- I'm only interested in a return on the capital both in the short and medium term so am looking for  good rental income and the possibility of growth. I'm not interested in living on the CDS as I already have a home in Soller.

Interestingly two of the Spanish Banks we use are trying to off-load some repos and have been offering almost daily discounts. These we will steer well away from.

A lot of wise people use this site.Thanks for all the input.

David

We are working in both the Costa Calida and Cost Blanca area as property/rental managers and sales agents. This gives us a good deal of hands on experience of what happens with a property after the sale and a direct look into incoming and outgoing cashflows. I found this thread particularly interesting as we work with both investors and people who buy their home for pleasure. 

We only work with heavily discounted homes and excellent price-quality homes for sales nowadays as all the others are a waist of time for both potential buyers and ourselves. Within that framework we really only sell to people who like to enjoy their new home themselves, possibly with additional rentals for an extra income but not with the intention that the property pays for itself. For this group there are certainly some very interesting deals available and without doubt some very enjoyable properties.

I agree that for the not so long term property investment opportunities there are better places today. Brasil was mentioned here and we consider that some proyects that include catering for the fast growing middle class are highly interesting. For this reason we work for some of our investment clients with a Belgium company that does some very nice proyects in Brasil combining the better second home market with the local opportunites with excellent results so far. However I do want to mention, and as an input here, that proyects depending on just American and European clients like possibly others in Brasil or Panama have quite a high risk profile. Specially the Americans turn out enormously unstable as soon as there are problems in the world. A new teror attack or even a war somewhere. Any such event may ruin instantly a serious investment in this area. But when the proyect also has local potential the risk is not the same.

Finally my former statements brings me to remind potential buyers that a country like Spain is within Europe, flights are relatively short, millions of Europeans get older and love to get into the sun and some economies are picking up and money starts to roll again! Even the heavily discounted properties of today would have thought to be tremendously expensive 20 years ago.

dennis05, good input and advise to most people. The best advise always is to buy something that appeals and you might like to live in. People need to be careful and only put their money into properties which worst case they would be prepared to live in.

For me property is a commodity to be traded and has to earn it's keep whilst I'm the custodian. As such there is always an element of risk. We currently own over 40 London properties and 30 Oxford proerties all owned outright some 50% of which we brought unseen. They all made money from day one and over the years have built up a good long term investment (my pension fund). As had the Barca properties which we purchase sometime ago but decided that as we had moved from the area due to tax reasons.

It's aways best to spread your investments and the tip we were given (on this site) to look at Panama was unexpected but we think a real gem and we are 80% certain we will take a punt if for no other reason it sounds an interesting place to visit.  The contry has some very interesting tax advantages which we think we can use.

David

David, I am glad you started this thread as it opens up some new horizons. I spend some time today to see what is going on in Panama and its tax regulation. Indeed quite a bit is going on in the real estate market there. Few talk so far about capitals from other South american countries but I suspect that quite a bit of that may move in later on or has already moved in with little visibility but not necessarily "bad" capital. See what happened to Miami and what is happening for example in Curacao. In any case I wanted to suggest a link to you which you may have seen already but in any case is probably usefull to read before buying anything:

http://www.revealrealestate.com/blog/tag/panama-apartment/