Recent figures from the Ministry of Public Works show that there are more residential properties being completed now than any other time since the financial crisis of 2008. During the construction boom between January and July, 33.085 homes, mostly apartments, were finished, according to the report, representing a 39% increase from this time last year.
In 2007 there were 641,419 properties completed, in the following year that figure plummeted by 94%.
As a consequence, properties across of Spain became waiting rooms for investors seeking to capitalize on decreased property values to achieve double-digit rental yield.
However, this year private developments have gone up 37.4% and the total amount of money spent on finishing these projects increased as well to just under €4.4 billion. It’s quite a different story for Spain’s domestic market, particularly for those requiring social housing as local authority properties have actually decreased in number in the years since 2008.
The report from the Ministry goes on to reveal that applications for licences for new buildings in Spain soared by 24.4% in the first seven months of this year, with 49,238 applications submitted and approved for new residential construction. The “construction boom” seems back on!
The majority of new properties, (37,039 to be exact), were apartment blocks, up by 26% compared to 2016 and representing 75.2% of the total applications. Building applications for detached homes stood at 12,174, an increase of 19.5%.
On its current trajectory, 84,500 applications could be filed by the end of this year, which would be the highest number for seven years, since 2010 when 91,600 were made.
Meanwhile, applications for refurbishments and extensions were up 5.8% between January and July to a total of 17,855, with licences for extensions seeing the biggest increase – up by 18.8% to 1,373.
Towards the end of August this year, tourists heading for Spain were urged to travel elsewhere because of the difficulty in finding accommodation for short-term rental. Major travel company TUI went as far as to announce to its customers that ‘Spain is quite full’ due to the surge in visitor numbers to one of the world’s most popular tourist destination, advising them to consider alternatives.
Increasing numbers of tourists have flocked to the country over the last two years, as security concerns saw popular summer destinations like Tunisia, Egypt and Turkey fall out of favour with sun-seekers.
The first half of 2017 saw a 12% jump in international arrivals, as more than 36.4 million tourists were welcomed to the country.
Spain’s tourism sector has contributed significant amounts to the national economy in recent years as visitor numbers have consistently increased exponentially since 2010. While most Spanish citizens are pleased with the rising numbers of tourists, the high demand has caused prices in the country to rocket.
While higher prices in Spain could affect British travellers in particular, who are dealing with a Brexit-related weakening pound, it remains an attractive proposition for property investors and this can explain the recent construction boom. Although Spain’s property prices have shown signs of moderate growth in recent years, they still remain at a considerable discount to pre-crash prices. This presents the perfect dynamic for investors to maximize returns and with demand for property in the tourist areas of Spain at an all-time high, there is significant value to be found in the current climate.