International investing, especially in the case of property, can minimize investment risk, since property investment performance varies considerably across countries, due to different economic and property paths and circumstances. Within such an environment, conventional portfolio theory suggests that international investing can help reduce the risk of property portfolios.
Reasons for Purchasing Overseas Property
There are several broad reasons for purchasing foreign property. Here are some of the main ones:
• Relocation for better climate and lifestyle – People may decide to relocate to a geographical location that better suits their lifestyle, income and circumstances. For example, in the UK a surprisingly high number of people emigrate to Spain because of it’s climate, relative low cost of living and the cheaper property prices.
• Financial and investment reasons – Increasingly, property investment is being touted as the “ultimate” fool-proof way of achieving long-term financial gains. Many people are now even using property investment as their main financial means for supporting their retirement years. The amazing in run up in housing prices over the period 2001-2007 had further reinforced this mentality in the minds of many people. However, the severe financial and economic crisis that hit most property markets around the globe and the subsequent collapse of housing and commercial property prices had drastically reduced the appetite of individual and institutional property investors for foreign property. It is very likely though that when this crisis is over and foreign economies return on the path of rapid growth the appetite for purchasing foreign property will also return.
• Purchase of a holiday home – This is mainly for those who have the resources to purchase a property in their favourite part of the world – somewhere they enjoy visiting, perhaps where they can laze away on the beach and enjoy the fruits of a completely different environment.
• For retirement reasons – Many retirees, especially, those living in the cold countries of north Europe, have been increasingly purchasing property in sunny countries with warm climates and nice beaches for retirement. Often, couples in their twilight years may find that their current life has changed dramatically. They may live in a large house (too large now the children are not longer living with them) and now wish for a slower pace of life, a better lifestyle or simply want to move in a different environment for health purposes. More elderly citizens relocate than is commonly thought. Note that according to projections, Europe will have nearly 100 million people in retirement age by 2015
Purchasing Property in Spain
Property in Spain continues to attract Europeans and especially the British, because of the country’s warm climate, natural beauty and pleasant quality of life.
The rush of purchase of second homes by foreigners has made the housing market boom over the past decade, but the market now is a buyer’s market due to excess overbuilding and competition from many new and emerging markets. The current oversupplied environment is good for long-term investors and retirees because they can get properties at discount. Even if prices decline somewhat further, it should prove a good purchase in the long term as property markets are inherently cyclical.
The availability of low cost flights within Europe and Britain means that it has never been easier to investigate potential property purchases.
Hotspots To Buy In Spain
There are a huge number of potential locations to suit everyone when considering purchase of property in Spain. Here are some of the more popular destinations:
• Costa Blanca
• Costa del Azahar
• Costa Calida
• Costa Brava
• Costa Dorada
• Canary Islands
• Costa del Sol
• Costa de la Luz
• Costa del Almeria
Important Things To Look Out For When Buying Property In Spain
Unfortunately, there are some unreliable people in the Spanish property market so you do need to act carefully. Some people have been burned very badly when trying to make their purchase of property in Spain.
Having said that there is a large availability of properties for purchase in Spain including purpose-built apartments, villa complexes and practically every other type of property you could want. It can be a confusing choice however, with a huge number of parties all claiming to have access to the best properties.
Here are some of the important factors you should consider when opting for a Spanish property:
• Look for “GIPE” and “API” accreditation while on the lookout for a good estate agent. This does not guarantee that you will not get ripped off but it will reduce your chances significantly.
• As always you should look to have any contract you sign thoroughly checked by a lawyer who understands both English and Spanish very well.
• You’ll need to be familiar with the contrato privado which is a contract that sets the price and lockss both parties into the transaction.
• If you do become a Spanish property owner then you will need to obtain a tax ID number, known as a numero de identificacion de extranjeros – this is important because it is required in order to pay taxes as well as for registering the property.
• Beware that if you intend to restore a property then a licence known as licencia de obra will be needed