Myths related to the purchase of real estate in Spain in 2022
Although the rules governing real estate markets in Europe are generally quite similar, each market has its own specificity. Everyone also has their own "mythology", that is, a set of common opinions that are often not true. In addition, these opinions evolve according to market developments at any given time.
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Get to know three myths about the property market in Spain in 2022
Myth number 1: "Brexit, the pandemic and the invasion of Ukraine have caused a flood of real estate on the Spanish market that can be bought for half the price"
Nothing could be more wrong.
Brexit indeed, for a moment confused the procedures and formalities necessary for the purchase or sale of real estate in Spain by British citizens. However, it did not deprive them of the honorable first place in any rankings. For years, they have been and still are the largest group of foreign investors buying property in Spain.
The pandemic and lockdown caused a decline in the volume of real estate transactions in Spain in 2020 by almost 50%. However, the market quickly recovered from this crisis. In the second quarter of 2021, the demand for real estate in Spain among investors from various countries was record-breaking and this trend continues. This year, the first quarter ended with a 25% growth in the real estate market. At that time, foreigners bought 21,638 properties, which is an increase by 73% compared to the same period last year.
Russia's invasion of Ukraine affected the property market in Spain, but the opposite of what might be expected. First, the Russian-owned properties did not flooded the real estate market. As Russian citizens have been subject to sanctions and are not allowed to accept more than EUR 100k on their Spanish accounts, they have been blocked from selling their property. Of course, some of them have already found the loopholes that make individual sales happen. However, most have their hands tied.
Adios myth number 1.
Myth number 2: "In Spain you can buy real estate with cash"
Yes, several dozen years ago there was El Dorado here for all kinds of entrepreneurs who derived profits from more or less legal sources. The Costa del Sol was a haven for mafia bosses from all over the world, and they invested considerable sums in legal (for a change) businesses here. Despite the efforts of the Spanish government to deal with this situation, coming to the notary's office with the proverbial suitcase of money was reportedly on the agenda here. Nobody checked where the money in the suitcase was coming from, so money laundering and corruption flourished. (For those who are interested: read about "Caso Malaya").
In 2004, the Spanish government passed a restrictive anti-money laundering and anti-terrorist financing law that, like everything in Spain, took time to enter into force. It was very unhelpful for many prominent politicians to introduce it, so they did their best to mitigate its impact. Despite their efforts, the act has been in operation for several years now and it clearly defines what cannot be done. One of the prohibitions is to make real estate purchases in cash. In Spain, banker's checks and transfers are used more and more often for this type of transactions - especially if the transaction is concluded with a developer. The non-cash form of settlements is one of the requirements of the aforementioned act. The second obliges developers to examine the professional and financial situation of their clients. Therefore, you must count with questions about the origin of the funds and be able to prove it. This process is a big surprise for most of our clients, because the documentation that the developer is required to receive from his client is not much different from the set of documents required by banks for mortgages.
There are also important restrictions in the ordinary course of cash. Cash transactions between individuals were first reduced to EUR 2,500 in 2012 and recently to EUR 1,000. So, there is no point in showing up in Spain with a suitcase full of cash.
Adios myth number 2.
Myth number 3: "In Spain, the construction quality is very low"
It depends. In fact, especially in Andalusia (learn more about this beautiful region), traditional white plaster is trowelled, walls are uneven and tiles are mossy. And that's how it should be! Let's add bars on small windows and we get the traditional Andalusian style (or neo-Mudejar - as specialists call it). This style scares many people, but quite a few of our customers like it. An interesting trend of combining it with a very modern style has also been noticeable for some time: white plaster, simple forms, large windows, glass and metal with elements of the neomudejar style. It seems that buyers of Spanish properties have gotten tired of the predictable modernity and are beginning to appreciate tradition. Anyway, the result of such a combination of styles are usually beautiful buildings, built using the latest technologies. Their quality is in no way inferior to similar buildings in other parts of Europe and they find buyers very quickly.
The best evidence of the quality of new development projects arising in Spain are certificates issued by independent companies that check the quality of construction and their impact on the natural environment. One of them is the BREEAM certificate. It is one of the most frequently used building certification methods in Europe. On its basis, it is estimated how much the building is environmentally friendly and how comfortable it is for its users. Currently, BREEAM is one of the world's most important elements that set standards in sustainable design and ecological construction.
Adios myth number 3.
Here we have dealt with the myths that we most often face when talking to clients about buying real estate in Spain. If you want to check whether any opinion you hear is a fact or a myth, contact us and we will verify it.