Property Investment in Spain

It is easily possible to have your place in the sun all year round for pure enjoyment but at the same time rent it out to cover mortgage and other ongoing costs and make an excellent capital gain. Of all your investments this is the one you will enjoy the most and compared with the Stock Market, Bonds, and even UK Property, given the current signs the chances are it will also prove your best financial investment over the next few years. This page is for those who may use their Spanish property on occasions but are largely using it for investment purposes.

Pure investors would do well to target property on or near a golf course (link to New Developments, Polaris) Golf Property, complex or beach developments as these get the best rental income to capital outlay ratio. Normally investors are likely to make best returns by taking out a mortgage for 60% - 80% of the capital cost.

With a 2 bedroom golf course property costing €200,000 you could expect to achieve 60% occupancy (about 30 weeks per year) with say an average rental of €500 per week – that’s an annual income of €15,600. An 80% interest only mortgage would cost less than half of that. You may wish to make use of a Management Service or Key Holding Agent so you need to subtract those costs, which can range to between 15 – 25% of the rental fee depending of the service package selected by you. Capital gains tax and the mortgage arrangement fees are also costs to consider but it’s evident from the above example that for a modest capital outlay of 20% of the purchase price with an interest only mortgage you can make a reasonable annual income as well as capital growth. In this example a simple 10% increase in value on a €200,000 property would give a 50% capital gain on the €40,000 cash paid.

The capital growth being achieved on property in the Costas has been consistent for many years and although nothing is guaranteed there is nothing to suggest that this is going to change in the foreseeable future, and of course the great thing is that you can also enjoy the benefits of having your very own place in the sun.

Demand both from the UK and elsewhere in Northern Europe as well as from Spanish cities like Madrid remains high and continues to increase as word gets around that it is such a great place for a second home. Many off-plan homes are bought by investors, some of whom simply resell when the property is completed and take an early profit.

Take a look at our New Property Developments page.