THE prolific real estate industry in Spain has contributed much to the economy of the country. Through the decades, holiday homes have sprouted in this country where millions of Western and Northern European tourists buy and ultimately live in. Most of these holiday homes are merely that – holiday homes. Tourists such as the British only inhabit the places during summer and for the most part of the year; they are being leased to other tourists. This is where the government can siphon off huge revenues from the owners of these holiday homes. Real estate law in Spain dictates that owners of homes must pay their yearly income tax to the national government. A total of 1.2 billion euros are collected annually from a total of 900,000 holiday homes. Not surprisingly, one third of this number is located along the Mediterranean coastline. Catalonia has the largest number of holiday homes for rent comprising 24.5 percent of the total. It is followed by Andalusia, the Canary Islands and Valencia.
Comparable statistics from the past two years show that Valencia has the most significant rise in holiday homes among all other regions of Spain. This is largely due to two huge international sports events that Valencia City has hosted recently and will continue to do so for the next two years. America’s Cup, the premier sailing race in the world, has just docked upon Valencia’s harbor last summer. America’s Cup will come back by the summer of 2009. In August 2008, Valencia City will play host to the Spanish Grand Prix in the Formula One series. The Spanish Grand Prix will be a crowd-drawing event for two reasons. Fernando Alonso, a Spaniard, is the reigning Formula One champion and the race track in Valencia is not a specially-made chicane but is composed of the main thoroughfares of the city. Thus, holiday homes along the route of the race track will surely be a boost to the real estate industry in the city.
But the 900,000 holiday homes stated earlier is just part of the bigger pie. There are as many as 1.6 million properties that have been built over Spain for the last three years. Foreign investment in Spanish property has likewise increased by 19.2 percent from January to May 2007 as compared to the same period in 2006. That’s a total of 2.25 billion euros of investment. All in all, there are a total of four million Britons who currently have properties in Spain. There are also 170,000 companies who have invested in the real estate industry in Spain one way or another. It is likewise observed that prime properties in urban areas such as Madrid, Barcelona and Benidorm have increased to as much as 5 percent as compared to that of last year’s. And it’s not just the number that is increasing. The price of real property has increased from 2001 by 50 percent to 2007. No wonder the United States mortgage crisis across the Atlantic has never been felt here.
IT’S so easy to go to Spain if you’re from another European country. The European Union mandates that any citizen of any member country does not need a visa to cross into another member country. And Spain is a member of the European Union. This situation is further supplemented with Spain being a signatory of the Schengen agreement. Under that agreement, all land borders in Europe are open without border crossings. Thus, if one foreign European goes to Spain in his or her own private vehicle, the person just easily passes through the highway. With this unique agreement, Spain has one of the liveliest tourism industries in this part of Europe with most of its visitors as the British. Complementary to the boom of the tourism industry is the boom of the real estate industry.
The Spanish government has made it sure that individual foreign ownership of properties is certainly welcome and that taxes be kept at a minimum level. Most of those who own villas there are British who would lease their properties to other vacationers. Under this scheme, the British owner has to pay an annual income tax to the Spanish government but taxes are low enough for the British to enjoy owning his or her property. Some of these properties are even utilized by the British owners themselves during summer and they are then leased to other tourists for the rest of the year. For that reason, most of these manors, located either hillside or seaside, are fully furnished. And since these are used by the owners themselves during summer, all appliances, furniture and other amenities found inside are obviously not just in good but superb condition. The other tax that property owners pay is the monthly garbage collection tax which is remitted directly to the local governments where your property stands.
Another reason why the British and other Western Europeans would like to buy properties at this point is because of the relative temperate Mediterranean climate in Spain. Spain enjoys a maximum of 22 degrees Celsius of temperature every summer, perfect for vacationing Europeans who cannot withstand the heat of the tropics. Still another reason why the British would like to buy a piece of Spain at this time is because of Spain’s robust economy. Its current nominal GDP is $1.24 trillion, making it the ninth richest country in the world. Today, unemployment is at its lowest since 1978. Most of the British tourists here are retirees from their home country but they do like to have some odd jobs because reclining at your front lawn every day can sometimes be very boring. At this time of the year, good properties are found in Andalucia, Seville, Cordoba and Jaen. There, you can negotiate both with your real estate broker and the property owner for a 15 percent discount of the advertised price. Or you may hop into the islands across the Spanish mainland such as the Balearic archipelago which contains the resort island of Ibiza. In 2006 alone, sale of both brand new and second hand properties there have exceeded a whooping 4 billion euros.
SPAIN being a premier summer destination, it is no surprise that lots of other Western and Northern Europeans come here to retire for the rest of their lives. An added attraction is the relative laxity of real estate laws towards foreigners who wish to buy a piece of Spain. All they need to have are the necessary documents and the right price of course. Some even go to the extent of making business out of purchasing properties by leasing it to their countrymen for a period of months. The owner will have to see that during summer, his property is vacant because he will move in there along with his family or girlfriend (usually a native Spanish) for a two-month period. Then when they go back to their home country of Spain, the property is then leased to other vacationers.
As with any other place in the world, the best tip to buy Spanish real estate is never to do so in haste. You have to stay in the community where the targeted house is located for at least a week to get a feel of the place. If there are friendly neighbors around, then it wouldn’t hurt to get acquainted with them, right? Spaniards have been known to be friendly people whether they are Basques or Castilians. This can come in handy later on when you’ll later become a member of the village association. You can rely on these neighbors to help you out in any aspect like business referrals, etc. With this, you must have a command of the local dialect. Different regions in Spain offer different language studies too. If you’re in the Basque region, the dialect is Basque and there are crash courses to grasp the basics of the language. Before purchasing a piece of property, you must also know the location of the nearest hospital and the nearest police station. You must know the emergency phone numbers of these entities. And if you plan to live alone, you must weigh too whether you need a butler or a maid or a gardener. If you need a butler, make sure he knows how to plumb and how to fix damaged electric wires. To be sure of his credentials, you must let him present his certificate as a certified electric technician. If you want to hire a gardener, then just hire one who will work for you in four days or so. To save on expenses, you don’t necessarily have to let him sleep in the house. Or you may double your gardener as a butler who can also assist you in times of emergency. Don’t worry, Spaniards tend to be honest and crime rate here is low so you don’t have to apprehensive about your gardener.
Another reason why one needs to sleep near the community where one intends to buy a house so that he can know the difference between day life and nightlife of that particular neighborhood. There really is much of a difference because day life in a street suburb tends to be noisy but will eventually wind down at night. The only exceptions are the coastlines where the reverse is true – traffic is at its peak during the night and all through dawn. In the rural areas, there’s extreme serenity both during the day and during the night. The only disadvantage is rural areas don’t usually have cable television and DSL Internet access. One has to rely on satellite television and Internet access which tends to be costly.
