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Friday, August 1st, 2014

To what extent have luxury property prices fallen?

Luxury villa: view of the gardenThe economic crisis has directly affected the residential property market in our country, leading to a decrease in asset prices. This decrease has, more or less, been attributed to a number of different factors, from which we can highlight location and quality of properties, as well as an excess in supply, amongst others.

However, these percentage price drops cannot easily be applied to the luxury real estate sector in the Spanish market due to various reasons, amongst which we can also underline location and quality of assets. This is a very different proportion in comparison to the real estate market for standard properties, in which the price drop has been between 10% and 45% (the latter figure only in exceptional cases), as the average price decrease for luxury properties is 20%.

 Fantastic property with poolAs previously stated, there are various factors which affect real estate assets in the luxury sector. One of these is quality, another location. These exceptional properties are situated almost exclusively in the best areas of major cities, as well as in coastal regions which have not been subject to mass construction. In the city of Valencia, these specific locations are situated in districts such as Eixample, as well as other areas of interest, including Avinguda de França, Avinguda de les Corts Valencianes and the administrative, commercial and historical centres of the city. Regarding coastal regions, the Costa Blanca can be considered an emblematic location, with locales such as Jávea, Altea, Dénia and Moraira representing perfect examples of sought-after areas.

The fall in exclusive property prices increases the attraction of the Spanish luxury residential sector for foreign investors. In this way, international clients have access to exceptional properties in excellent locations at an affordable price. If we add to this the quality of life that our country offers to foreigners, together with other positive factors such as a favourable tax system and the many international educational centres, it is perfectly clear as to why Spanish luxury real estate represents such an attraction for international clients.

Magnificent garden with poolThe surge in the luxury real estate market is reflected on an international level, as is explained by a report published in 2014 by Christie’s International Real Estate, a prestigious global network of real estate firms which specialises in luxury property (and to which Rimontgó is exclusively affiliated). The report is entitled ‘Luxury defined; an insight into the luxury residential property market’. Among the key points outlined by this report, worth mentioning are: the exponential surge in the luxury residential sector on a global scale; the increased importance of when foreign investors should buy; the resurgence of local clients, who had been sidelined during the economic crisis; and the appearance of the ‘millennial’ generation (formed by young executives in the technology sector, or industrial entrepreneurs). Finally, the report underlines how the best districts in major cities have established themselves as dominant areas for luxury properties in the real estate market.

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