Due to the Corona crisis, the Spanish property market has witnessed a fall in demand in 2020. But in 2021, with the arrival of vaccinations in the country, it is expected to recover in the course of the year. The Costa del Sol should be no exception to this, so if you have a property on the Costa del Sol, you can expect prices to start rising again.
Many Spanish property owners have seen their revenues dwindle and some are even considering selling their properties and switching to other investment opportunities. But with the approval of several COVID-19 vaccines and the subsequent worldwide roll-out, there is renewed optimism among property rental companies in Spain.
The recovery will be mostly come from domestic demand by Spanish nationals and the holiday property market by European citizens. There are several extraordinary measures being implemented by the Spanish Government to mitigate the consequences of a long term crisis. One of the suggested measures is a reduction of VAT on newly built property from an average 10% in most areas to 4%. This was put forward by the APCE (Association of Promoters and Constructors in Spain) and would benefit all buyers, regardless of their nationality.
Spanish property prices are beginning to rise
After 11 months of a virtual standstill, prices for existing houses rose again for the first time in November 2020 after 11 months of declines. The increase is small (0.7%) but it puts an end to a string of 11-month straight declines since December 2019. In other words, now is the time to buy homes for sale Spain Costa del Sol or in other coastal areas!
Very low property financing costs
More good news is that the financing costs are low with interest rates at an all-time low. On the other hand, banks have tightened credit conditions since the start of the pandemic. But most households have less debt than during the time of the financial crisis (2008-2013). It is expected that many loans for the purchase of a home will be granted in 2021.
Where should I buy a property to rent in Spain in 2021?
The price development will depend on where the house is located. Good revenues can be expected in areas where foreign home buyers account for a large part of the property rental market. Your best bet: the tourist areas and big cities. There is still an abundance of apartments and villas for sale in Spain at competitive prices, so buyers should not wait too long.
Many international home buyers have held back on buying a home in Spain due to Covid-19 restrictions. 2021 will see renewed interest property for sale on the Costa del Sol, Costa Brava, Costa Blanca as well as in Madrid and Barcelona. Price in these areas could increase areas by around 2.3% for the year 2021.
Right now people are first and foremost looking for safe destinations and safe places to spend their holidays. The Costa del Sol is a destination where Covid-19 incidence is relatively low. Safety regulations are strictly observed and there’s an excellent public health system in place. In addition, Malaga was awarded the ‘Safe Travel Stamp’ by the World Travel and Tourism Council (WTTC). This places the Costa del Sol capital on the list of destinations with the highest guarantees to travel in the world. And it is reassuring to travellers who are looking for holiday rentals in Malaga.
So what’s the secret to successfully renting your property in the present circumstances? Put yourself in the shoes of holidaymakers and you’ll understand that they want to make sure that:
The holiday home they rent it is located in an area where Corona is as low as possible
There are good hospitals, clinics and other health services in the direct vicinity
Your property offers a safe haven for travellers with regard to hygiene and social distancing.Should you invest in rental property in Spain?
Rental yields in 2019 were considerable as 35% of the 82 million tourists visiting Spain used private accommodation, according to the Ministry of Tourism. Vacation rental accommodation should still be a good source of income once vaccination has reached a majority of the population and restrictions are eased.
Choose the right property management company
An important consideration when you decide to invest in a Spanish property for rental purposes is the coice of an experienced property management company. There are literally thousands of these operating in Spain, many simply run from home and without the proper experience or credentials. Some of them require high commissions up front without any guarantee of a decent revenue.
What you can expect from a professional property management company is a detailed contract, fair prices and transparency as to the channels they use to market your rental property. These should include a proprietary website as well as marketing platforms such as AirBNB, Booking or Tripadvisor, amongst others.
Another key element of a professional approach is careful selection and rigorous cleaning of rental properties. Because travellers are now looking for villas and apartments that meet the highest health and hygiene standards. Therefore both the owner and the rental company should follow standard cleaning instructions and always inspect holiday rentals before they are rented out.
Safety information and service
When advertising your property, it’s important that the property management company addresses these issues and provides all the necessary information to potential tenants. In the case of a villa or detached house, they should describe how it guarantees privacy, what cleaning measures are taken and what services are available to minimize contact with others (e.g. home delivery). In case of an apartment in a complex, information should be provided about hygiene regulations and restrictions (e.g. Mandatory face masks, pool closure, etc.).
Make sure that the property rental company includes a high level of service in your fees. Increasingly, holidaymakers want to be assured that someone is always available (preferably 24/7) to help with any problems that concerning COVID-19 or otherwise. Services could include anything from supplying the relevant phone numbers to providing (translation) assistance when travellers need to contact the authorities, arrange airport transportation etc.
Also consider (maybe as a joint effort by the owner and the property management company) providing holiday makers with other information that allows them to have a a safe and enjoyable holiday. Examples are where do I find quiet beaches, which restaurants are safe to dine at and what are quiet rural sites where my party can avoid crowds.
Daniel Devon de Voogt is a resident of the Costa del Sol and writes about travel and property management n Spain.