Its Not All Bad News - There Are Some Gems Out There

As mentioned above, we did actually view one property that my friend is going to put an offer on

. In my opinion, he has found pretty much the only type of property I would ever encourage an investor in coastal Spain to purchase.

It was in a small development, less than 120 units and the surrounding area isnt overdeveloped. There were only 11 available and asking prices have been reduced by 40% from peak. There are no mortgage gimmicks on offer. There was plenty of activity in the resort and lights on many of the units, an encouraging sign in late November. Most owners are keeping them exclusively for personal use - i.e. they dont want to rent them out.

The quality of the properties is extremely high - the floors, walls, fixtures, lighting, electronics, heating and security were all at a standard comparable to a 5 star hotel. It was located 400m from the sea, close to lots of shops, bars, restaurants and with easy access to the motorway, the airport and the train station.

My American friend will probably put a low ball offer on a 2 bed 2 bath unit with spacious interiors and a large garden and terrace. The asking price is 40% below the peak rates, and theyll probably accept 50% below peak prices for a cash deal and an end of year sale.

Taking this great price and the lack of rental competition in the resort the net rental yields are still going to be very low - about 3.5%. Thats probably as good as you can get right now.

In my view however, this is the only type of property in Spain where you have a varied exit market strategy and a real chance of selling at a profit in 5-7 years time. The problem of course, is that there arent very many of these deals around, and youll need at least a 30% deposit.

by: Colin Murphy

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