Always do your own due-diligence
A friend of mine told me an interesting yet slightly worrying story last night. He was sitting in the Myramar shopping centre in Fuengirola having a coffee while waiting for a children’s party to end.
On the table next to him was a young English couple discussing property in Fuengirola. They had clearly just spent some time with a real-estate agent and, unfortunately, the agent in question was a liar and was obviously using his lies to try and force a sale.
The couple said “So if we buy now he said we will double our money in 12 months, more if we wait another year. I don’t see why we shouldn’t buy now.”
My friend excused himself for butting in and asked where they had heard that they will double their money. The answer worried him (he also works in real-estate and, like me, was here long before the crisis) because it sounded like the agent had flown in direct from 2001 and had no clue about what he was saying, or he did know and cared only about his commission.
The couple said that the agent had:
- “assured” them that “experts” were forecasting a steep increase in property prices in Fuengirola,
- said that if they bought an apartment now they would easily double their money if they sold it next year,
- further suggested that prices in that area have already increased over 30% since the start of this year.
All of those statements are false. There has been no steep increase, in fact barely any increase at all, in property prices in Fuengirola in the last five months. The average price of property across Spain currently sits only 1.5% above the prices of early 2015, lower in some areas. There are certainly no predictions that prices in the tourist town will do anything but remain stable for the rest of the year and no way would anyone double their money on an apartment in the next 12 months.
When my friend asked the couple what they were looking for their answer made him laugh out loud; “We want peace and quiet”. And your agent suggested central Fuengirola? Good luck with that! Fuengirola is not a peaceful area. Sure, there are parts of it that are away from the screeching nightlife, but for the most part Fuengirola is a party town for teenagers, not a relaxing town for retirees (that is personal opinion based on my 12 years on the coast).
This adds further weight to my assumption that the agent had no interest in helping the couple to get what they wanted, where they wanted, for the price they wanted. He wanted his commission, and that was all that mattered.
But, the referendum?
Of course, nobody really knows what will happen once we get the results of the UK’s EU referendum; if they stay, the pound is likely to soar against the euro meaning Brits will be able to get much more property for their money – likely, not certain. If the Leave camp wins then nobody knows what will happen. Nobody. There isn’t a person on earth who can accurately predict that, despite the rhetoric of Gove, Johnson, and friends (nor their so-called experts – the very same ones who failed to predict the financial crisis). There are too many variables. Will Mariano Rajoy (Spanish PM) kick us all out of Spain, and in return, will Cameron expel the 200,000 or so Spanish who reside in the UK? Unlikely.
There are also many businesses in Spain that are run by Brits and which employ Spaniards. Do they really want to put all those people out of work? In the area around the frontier town of La Linea, which borders Gibraltar, there are hundreds, if not thousands of Spaniards who commute into Gib daily for work. Will they too suddenly find themselves unemployed?
More likely, in my opinion, is that nothing will change. There will still be property for sale in Spain and British people will still want to buy it. Will the Spanish government really turn away 25% of their real-estate market? I doubt it. That would be a terrible decision for the Spanish economy, which really doesn’t need any more terrible decisions.
Will prices soar if the Remain camp get their way? There will likely be increases. Many people are currently holding off on their decision to buy pending the outcome of the referendum and if it goes their way they will continue with their purchase and this could cause a sudden, short-term increase in prices, but to double your money in 12 months is not going to happen.
The days of Spanish property prices rising 10% month after month are gone. Too many people got burned the last time around and buyers, although growing in confidence, are still much more cautious than they were back in the late 90’s and early 00’s. Adding to it is the oversupply of property. So many were built in the pre-crisis years that many still sit empty today. Entire developments sit like ghost towns. Some even have the spaghetti-western style tumbleweeds rolling around as the only sign of life.
So to the couple who were lied to I say this – you can make money on your property purchase. However, you will not double your money in 12 months. You will not. In Fuengirola there is not a shortage of property so the supply is not being outstripped by demand, meaning you have choice and that means you are in control of the negotiations.
If you want peace and quiet, may I suggest your search begins in Elviria, and then moves west along the coast. Skip over Marbella and Puerto Banus to San Pedro, Benahavis, Selwo and Estepona. Peace, tranquillity, stunning landscapes, close to the beach and lower prices. Or, if you are happy to be a little further from the beach I suggest looking a little further inland – Monda, Coin, Ojen, Ronda.
Be careful. Do not take the word of any agent without doing a little due diligence of your own. Ask people who already live in the area, ask behind the bar of the local chiringuito.
To the agent who lied and who lives for his commission – it is lies like yours that cost many thousands of people their homes and their livelihood. You are a disgrace and if I only knew your name I would shame you on here. People who are shopping for a property are not necessarily rich. They will probably require a mortgage to purchase their sunny new home and if you get them into that massive debt based on lies they are likely to suffer because of it. Get out of real-estate, start selling second hand cars, then people will expect and be ready for your lies.
The Truth
Few countries have so much to offer
The Costa del Sol is recovering from the crisis which crippled it. The last two or three years have seen nothing but positivity, not amazing-stand-out-fantastic positivity, but all the pointers are moving in the right direction.
Property prices have been up and down for years but the monthly and annual variations have slowed to a point that many analysts have used the word “stable” over recent months, including myself.
You could make money by investing in Spanish property but my advice would be that there are probably quicker ways. If you want a holiday home, a property to rent out as a business, or you intend to live here then sure, come and buy in Spain. However, if you are thinking that you can buy today and make millions over a few months, then you are mistaken. Those days are over.
Construction is back with investors and buyers all looking for the best location for their money. Unemployment is down. The sun is up! I wouldn’t want to be anywhere else.
There are plenty of agents on the coast who are consummate professionals. They have amazing knowledge of the coast and those who have been here long enough well remember the pre-crisis good times. They also know full well that those days are unlikely to return, and an honest agent will tell you that. If they give you amazing figures that seem too good to be true, they probably are. If they throw around huge ROI’s over short periods, or spectacular rental-returns, walk away.
Look for an agent that has been on the coast for more than a few years, who has an office and a reputation. Many people simply throw a website online and call themselves real-estate agents. They know nothing of ROI, pricing trends, where to buy, or the history of the coast. Find someone who has been around, someone who will help you find what you’re looking for, not simply try to close you on the property that suits them (and most likely pays higher commission).
Spanish property is still, and probably always will be, an attractive prospect to many. Not just Brits, but to many nationalities. There are few places in the world which offer the same weather, quality of food, friendly locals, beaches, low cost of living, amazing sights, and unrivalled views, as Spain, especially down here on the coast.
