# Pros/Cons of investing in Spain rather than UK.



## Nicksmith (Jan 5, 2015)

Hi folks,I'm seriously thinking of investing in a one or two bed apartment in Nerja,so any advise welcome as this will be a first. So why do I want to buy an apartment in Nerja. Well firstly it's strictly as an investment I'm looking to earn a return on money lying in a UK bank earning next to nothing in interest. I'm talking about holiday rental not long term. Have had a good think about Frigiliana and Torrox but keep coming up with Nerja quite simply because it's so much busier and from an investment point more potential.Also the fact that we are living local rather than being in the UK and depending on agents for cleaning ect..So an even bigger question why invest in Spain rather than UK. Well here we go and please please this is simply my own opinion which of course we are all entitled to. Is Spain beginning to come out of recession Mmm very debatable,are other European countries coming out of the said recession. Everyone I have spoken to says this has been a boom year tourist wise for Spain. Well I got to thinking about all the troubles in the world today what with ISAS the problems they have created in Turkey.France with all there strikes and of course Greece not to mention Egypt. So are people looking to Spain as a trouble free country to holiday in...anyway I look forward to your advice and opinions on investing in a holiday apartment in Nerja. 
Thanks,
Nick.


----------



## Isobella (Oct 16, 2014)

Spain is fine for a lifestyle. No way would I consider it for investment. What with on costs and selling costs. An article this week said rental returns are dropping.


----------



## webmarcos (Dec 25, 2012)

Probably not what you want to hear (based on your location preference) but according to a recent report by the FT, the places where the property market is recovering best in Spain and where prices are rising fast, are the large cities like Madrid, Barcelona and Valencia. It's mentioned on this board (if you can't get around the paywall for FT) FT: Spain’s property market rallies in Barcelona, Madrid and Valencia -
People in Madrid report that it's become very difficult currently looking for rental accommodation. If you want a place that you can rent out 9-10 months of the year (to expats, teachers or classroom assistants) then Madrid would be somewhere to look. However a resort property on the coast - would you get even 4 months fully occupied?
Alternatively go for a airbnb type rental - you'd do well in central Madrid, but there again even better in London (yes the purchase price would be a lot more).
A cynic may suggest that Germany would be a better option - their population is due to rise a bit with the refugees they've agreed to take in...


----------



## Lynn R (Feb 21, 2014)

webmarcos said:


> However a resort property on the coast - would you get even 4 months fully occupied?


In Nerja, yes - but only with some properties, the ones in the best locations and furnished and equipped to a very high standard. And they are expensive, very, to buy. Some friends of ours come over to Nerja for holidays, to rent, 2 or 3 times a year. They know people who own an apartment on the Fuentes de Nerja complex (just behind the Mirasol restaurant) and have stayed there, but on other occasions they haven't been able to secure a rental there because it's fully booked. They have also rented a townhouse near the Riu Monica hotel several times, and again they have to juggle their dates to find availability, although they never visit during the summer as they don't like the hot weather. However, there will be thousands of more "ordiinary" places with much lower occupancy rates.

I think I agree with Isobella, the extra costs associated with buying and selling in Spain must surely make the overall yield from renting less attractive than in the UK, not to mention the fact that for the forseeable future at least there's not much prospect of any significant increase in value. I guess Nick would have to do his sums very, very carefully - can he afford a property in one of the prime locations, add on the buying costs, the IBI bills, the utilities (renters usually want UK tv and wifi), insurance, any new furnishings and accessories needed to bring the property up to a really high spec (and annual costs of replacing and maintaining stuff to keep it that way), advertising costs, versus the projected rental income he could get. If he intends to do the work of changeovers, meeting and greeting, etc himself, does he really want the work, especially if he does get good all year round occupancy? That would be very tying. I know someone who works in the office of a company which rents holiday apartments. Someone rang her late at night last week because a light bulb had blown in one of the apartments.


----------



## Gazeebo (Jan 23, 2015)

If I were buying as an investment only, I believe I would chose the UK. However, I can remember the property crash of the 80s and more recent years there has been a slowing down in some areas. I agree that rental in certain areas of Spain would only be from June to September in the main and it could leave your property unrented over the winter, whereas in the UK it would be year round, usually based on a 6 months renewable tenancy agreement.

If you were to buy an apartment in your chosen area, perhaps it would be worth considering whether the property is suitable for an all year round let, i.e. heating etc., etc., which would mean you not having to do the change-overs and everything else that comes with holiday lets.

Just my thoughts!


----------



## Leper (May 12, 2010)

Hi Nick, You didn't give an indication of how much you were willing to invest. I am glad you used the word "invest" because the word in Spain means "gamble" in the current climate. 

So you purchase, you hand the property over to a real estate agent to rent it out, then there is the maintenance cost, Spanish taxes, utility bills, refuse charges, public lighting costs, etc and that's before you learn what the real estate agent will take in commission, finders fee, advertising etc.

Later you decide you can handle the rentals and after some success for June, July and August you're left with trying to obtain tenants for the off seasons. It is from October to May you have some work to do. You spend money in advertising, employing cleaning people, handling maintenance needs yourself. 

You'll soon see that you are chasing your money. But, best of luck to you.


----------



## Williams2 (Sep 15, 2013)

webmarcos said:


> Probably not what you want to hear (based on your location preference) but according to a recent report by the FT, the places where the property market is recovering best in Spain and where prices are rising fast, are the large cities like Madrid, Barcelona and Valencia. It's mentioned on this board (if you can't get around the paywall for FT) FT: Spainâ€™s property market rallies in Barcelona, Madrid and Valencia -
> People in Madrid report that it's become very difficult currently looking for rental accommodation. If you want a place that you can rent out 9-10 months of the year (to expats, teachers or classroom assistants) then Madrid would be somewhere to look. However a resort property on the coast - would you get even 4 months fully occupied?
> Alternatively go for a airbnb type rental - you'd do well in central Madrid, but there again even better in London (yes the purchase price would be a lot more).
> A cynic may suggest that Germany would be a better option - their population is due to rise a bit with the refugees they've agreed to take in...



Yes - I would have said that - if your looking for good 'all year round rental income' Madrid's
the place to buy apartments or houses to rent out. The tenants being those in 'big
city jobs'
I also wonder whether Madrid might 'take off' as far as house prices going up, like
London did back in the 1980's, given the right political and economic climate of course.
Finally - you never know what might happen if Catalonia declares independence.
Could there be a big stampede of financial and big city firms moving from Barcelona to
Madrid ?
Who knows, you never know ?


----------



## Roy C (Sep 29, 2012)

We were recently looking in the Torrox area and one estate agent who deals a lot in the lettings business was saying the holiday lets were booming, especially strong market with Scandinavians. I also think your IS theory is relevant and could mean a definite increase in the Spanish tourist industry. Who in their right mind would want to holiday on a beach that needs armed guards there to protect the tourists and now Turkey is looking more vulnerable. 

So your idea might not be such a bad idea after all. However I'm only looking at this from a biased tourist point of view 

One idea is to look at sites like Owners Direct and check out availability.


----------



## Pesky Wesky (May 10, 2009)

Nicksmith said:


> Everyone I have spoken to says this has been a boom year tourist wise for Spain. Well I got to thinking about all the troubles in the world today what with ISAS the problems they have created in Turkey.France with all there strikes and of course Greece not to mention Egypt. So are people looking to Spain as a trouble free country to holiday in...anyway I look forward to your advice and opinions on investing in a holiday apartment in Nerja.
> Thanks,
> Nick.


It as been a boom year, and it will probably continue, but the tourist industry is volatile and can, and in the past, has, changed for good or bad at the drop of a hat.
And just wanted to say that Spain is not immune from terrorists attacks and will always be on the likes of Al Qaeda's hit lists due to its history, Al Andalus and all that


----------



## webmarcos (Dec 25, 2012)

We seem to be talking about a sub-set of Spain here (albeit a big one) - the tourist coastal areas. As already mentioned, if you want to rent out your property all year round in Spain (ok maybe not July/August*) then a major city like Madrid is perhaps a wiser choice.
If however you want to let out 3 to 4 months a year on the coast then you have to weigh up costs of having your property empty the rest of the time - although obviously you can take advantage and stay there yourself.
Is the growth in tourism going to stop anytime soon? I was reading an article on airline pilots yesterday in the Times. Even given the events of 2001 (nine eleven) and the crash of 2009, there has been a constant increase in air traffic. You also have to realise that long distance fast train journeys in Spain are increasing. So unless there were a major catastrophe, you can rely on tourist numbers to Spain remaining high. But given the numbers there are obviously a lot of other people chasing the tourist pound. You have to pay attention as to how you are going to attract customers to your door instead of 100s of other operators in the same field. 
Good luck if you go ahead with this.

* actually in recent years tourists have rediscovered Madrid so maybe an airbnb would do ok now in August.


----------



## Overandout (Nov 10, 2012)

I was going to mention three things:

1) The terrorist threat in Spain due to the claim on Al Andalus, but Pesy Wesky has already covered that (I think Spain's terrorist woes are yet to see their worst days)

2) The investment in property is usually seen (at least in my eyes) as the capital gain, not the rental income, but your plan seems to concemntrate on the rent giving a better return that bank interest.

I admit that bank interest is low, but with the tax on a second property, the costs associated with renting out etc, the risk of not covering your costs must be quite high if you do everything legally.

I have heard that Hacienda are cracking down in Madrid on Airbnb holiday lets that are not declared.

3) The risk of investing in Spain is a lot higher for someone who wants capital or income in the UK. If you have any expenses, or think you ever will have any expenses in the UK in the future, I would not risk investing in Spain. There are two main risks, the first being the exchange rate fluctuations (property is usually long term, so that is very difficult to foresee and mitigate), the second being a potential break up of the EU which may change bilateral agreements etc.

I have held a sum of money in the UK for a long time as a "security" but as I get older and can see that it is unlikely that I will ever return to the UK, I am thinking of investing in Spanish property too, but I know that it is a very definitive decision. It may well mean that returning to the UK in the future is impossible....


----------

