Spain’s Golden Visa
Spain’s Golden Visa scheme is picking up speed. After a lacklustre start to the initiative, investment soared 62.8 per cent last year, according to reports from newspaper Cinco Dias.
The scheme offers permanent residence in the country, which includes travel within the Schengen area, to investors who spend a minimum of €500,000 on real estate. While similar schemes in other countries have enjoyed strong success, Spain’s Golden Visa scheme has struggled to generate a strong response. Despite that initially slow start, though, new figures suggest that the scheme is picking up speed, with Golden Visa investment jumping 63 per cent in the year to October 2016: from €1.05 billion in October 2015 to €1.71 billion.
Real estate accounts for 94 per cent of all Golden Visa transactions, with Chinese and Russian buyers leading the way. The number of purchases by Chinese buyers jumped 75 per cent year-on-year, while Russian investment volume rose 46 per cent. Madrid and Malaga were the most popular destinations respectively, followed by Alicante, Valencia and Barcelona.
The surge in Golden Visa transactions highlights Spain’s diverse international appeal. Indeed, the country is normally associated with British buyers, keen to retire on the sunny Costas and turn as pink as lobsters alongside other UK expats. With the UK voting to leave the European Union, though, the pound’s weakness against the euro appears to have sapped some of the momentum from British buyers in Spain.
According to data received, British buyers are now increasingly looking to budget options to counter the more expensive currency exchange rate. Demand for properties below £50,000 on the Spanish site is now “hugely outstripping” supply by four to one.
Richard Speigal, Head of Research at Kyero, comments: “There are a host of factors pushing buyers towards ruin renovation at the moment. We’ve seen from the huge boom in searches for Spanish property that the Brexit vote seems to have, if anything, whetted Brits’ appetite for Spanish homes rather than driving down interest. At the same time, buyers from the UK are looking for cheaper solutions as a result of the pound’s decline, so buying a dilapidated farmhouse and doing it up is an attractive option.”
While Russian and Chinese buyers step up their activity, meanwhile, Swedish investors are also moving in to fill any spaces in the market.
“Swedish demand is important in Alicante and the Costa del Sol, where they are the second biggest group of foreign buyers behind the British. Indeed, Swedish sales at the end of 2016 (2,797) outstripped 2015 (2,755), with home purchases in the last two quarters each reaching around 1,000. Like Russian and Chinese buyers, Swedish purchases are also focused on Alicante and Malaga. Swedish buyers are “loyal and less impulsive” than British buyers.
With overall enquiries for Spanish property doubling towards the end of 2016, wherever they come from, whether high-end or on a bargain budget, Spain’s housing market does not look to be short of foreign buyers in the near future.
2016 was a good year for Spain’s property market, with reports indicating there was a 15% increase in property transactions in 2016 over those of 2015. Real estate forecasts have predicted a continued healthy growth over the year 2017. After the 2008 financial crisis drove property prices to rock bottom in Spain, there was nowhere to go but up. The Spanish property market crash officially ended mid-2014, after which the market has experienced 10 consecutive quarters of steady growth. At this point for Spain, there’s no looking back.
International interest in Spanish property remains high for both those who are relocating as well as those looking for holiday homes. Indeed, one in five homes is purchased by a foreigner with British nationals ranking as the top buyers in Spain. While there was some concern that the Brexit vote and the decreasing value of the pound would lessen interest from the UK, this is not the case as Spanish property is still in high demand from UK buyers. In addition, as UK property prices continue to increase, many British retirees are starting to sell and move to Spain where their saved earnings can purchase better properties.
Aside from the Brits, non-European buyers are also to thank for the growing Spanish property market. Spain’s Golden Visa Program was introduced in 2013 in an effort to help boost the country’s waning economy. In return for an investment in Spain, foreign nationals obtain a temporary resident visa for one year, renewable for two-year periods thereafter. This temporary visa can lead to permanent residency after five years, and citizenship after ten. Investors through this program have helped carry Spain out of its economic slump post-financial crisis.
While there are many investment options available through Spain’s Golden Visa Program, the property investment option is always the most preferred by investors around the world. First, the minimum investment price is only EUR 500,000 compared to the EUR 1 million plus requirement of other available options. Second, with the Spanish property market forecasts continuing to look up, savvy investors with an appetite for risk are buying properties at low prices now to be able to make sizeable capital gains on future resale.
The minimum property investment must be EUR 500,000 excluding tax and other conditions in order to qualify. Mortgages (financing) may be obtained on properties purchased above the required value. In other words, if an investor has his or her eyes set on a EUR 750,000 property, a mortgage can be obtained on the excess amount of EUR 250,000. The minimum EUR 500,000 value can be spread out over multiple properties if desired.
Benefits of the Golden Visa
Holders of the temporary resident permit through the Golden Visa Program will be granted access throughout Europe’s Schengen zone without visa requirements. Further, they can stay within the Schengen region for a duration of 90 days in every six-month period. Another advantage of the Golden Visa Program is the requirement to only visit Spain for one day during each residency period. There is no obligatory physical residence in the country as with other similar programs.
An investor’s spouse and children under 18 years old can be included in a single application. All visa holders receive the right to live, work, and study anywhere in Spain. In addition, applications are processed very quickly, within two months.
Spain’s housing market has made a remarkable turnaround since 2014 from its former state of despair. Spain’s government established the Golden Visa Program to help pull the country out of recession and toward economic recovery. Foreign investors have fuelled the resurgence of the real estate market in Spain; however, with its still ridiculously low real estate prices, profit is the likely outcome. Although growth is steady rather than spectacular, prices will rebound to former highs nonetheless.
The most important aspect of applying to Spain’s Golden Visa Program is finding the right property to suit your needs. Will it be a vacation home or a permanent residence? Will it be rented out for supplementary income? Is it located in an area expected to see continued growth in the foreseeable future? Before committing any funds, one must be sure that the selected property is a solid investment. Our office can assist you with every step of your application process, including the property purchase. Allow us the opportunity to guide you to a Spanish Golden Visa while simultaneously investing in a property (or properties) with great future potential. Now is the time to invest. Look at one of the opportunities we have below that qualifies you for the Spain Golden Visa today! Contact our office today!
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