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28/04/2022

The impact of the war in Ukraine on the situation on the property market in Spain - our observations

The impact of the war in Ukraine on the situation on the property market in Spain
We have long wondered whether to write this article now, when thousands of innocent people are dying and the scale of the cruelty of the Russian troops is beyond imagination. However, we decided to deal with this topic and show how the war in Ukraine influenced the real estate market in Spain, and thus our work. For years, we have been trying to educate our clients by providing them with as much information as possible related to the real estate market on the Iberian Peninsula. Take this entry the same way.

At the beginning, it is worth emphasizing that it is not only the war in Ukraine that influences the decisions of Polish investors. Those who come to us talk about the need to invest money outside of Poland, about escaping from galloping inflation, high housing prices on the Polish market, and finally about the need to have your own corner far from the eastern border of Poland.

The world held its breath, and our phones started ringing

Russia's invasion of Ukraine surprised us all. It is true that experts dealing with this part of the world and Russian-Ukrainian relations warned against such a scenario since the annexation of Crimea, but I think that no one believed in it until the end. And yet it happened.

On Friday, February 25, our phones rang and the traffic on the website doubled. It turned out that the outbreak of the war activated two groups of potential property buyers in Spain:

  1. The first group are people who have been thinking about buying property abroad for some time, and now feel a strong need to settle the matter immediately.
  2. The second group are people who never thought about investing in foreign real estate, but after the war broke out, they decided that their money would be safer in Spain and began to be actively interested in this topic.

The first group are usually clients who "did their homework"

Representatives of this group are more or less familiar with the prices, offers, geography of Spain and the mechanisms governing this market. When calling us, they often already have an eye on a specific property or at least a location, which allows us to find out about their preferences and possibly add more offers to the list of properties to see.

The clients from the first group are usually investors with experience in the real estate market in Poland, and often also abroad. They are aware that with such a hot market, because let's remind you that Spanish real estate has been selling well for over a year, decisions must be made quickly. Investors with experience also know that their best investment will be people who know the market behind the scenes, trusted professionals who will not let them make mistakes. Quick does not mean mindless.

These clients usually book the property on their first visit to Spain. We prepare it in advance, we determine what properties we will see, we arrange clients with a lawyer, notary, or possibly a bank representative. These are the so-called fast transactions.

The second group are customers driven by fear

With clients from the second group – if they trust us – sometimes we can get things done quickly. Usually, however, we have a more difficult task here. First of all, fear is not a good advisor, and in this group it is the reason why clients want to buy property in Spain.

Many of them only know about this country that it has a good climate and… is far from the eastern border of Poland. It is difficult for us to work knowing that the demand that we have been recording since the outbreak of war is driven by it. We know that many people who have now entered the market as potential buyers are absolutely not prepared for such a step. We do everything we can to give them as much information as possible about the market, the buying process, property maintenance costs, rental options etc. All this so that, despite their motives when making a decision to buy a property, they make it consciously and do not regret this move.

Potential investors are more likely to look for information about the property purchase process in Spain

We clearly see that there is a need for this type of education. In the period from February 24 to April 19, our blog post about what you need to know about the real estate purchase process, was viewed ten times greater than in the corresponding period of last year.

This naturally translates into a much larger number of phone calls. One day I picked up 38 of them... All from the so-called new contacts, i.e. people who have not dealt with us before. As it turned out, some of them watched us, for example, on FB, but more out of curiosity and for nice photos than out of real need. Until that day when they felt the need arose.

We also receive a lot more emails and messages via social media. Unfortunately, we have to refuse some people willing to buy a property in Spain, because despite the best intentions, we are not able to find a 3-bedroom house in good condition, maximum 200 m from the beach, for 60,000 EUR.

Good deals are harder and harder to find and real estate prices are rising

The price range between EUR 100,000 and EUR 200,000 is the one which the most people ask for and, at the same time, the one where it is most difficult to find something really interesting. The secondary market is heavily drained, and in the primary market prices are rising very quickly, mainly due to huge increases in the prices of building materials and fuels.

There is no indication that the rise in property prices in Spain will slow down any time soon. Conversely, it will intensify, especially in the primary market. That is why we encourage our clients not to wait too long with a purchase decision, hoping that the price will drop. Our observations show that the price will not fall and the property will find another buyer very quickly.

The premium real estate segment is doing relatively well. Demand for them is high, but it is obviously a more hermetic market.

Many new real estate agencies are established

The growing demand for Spanish real estate among foreign investors has resulted in the emergence of new real estate offices. There is nothing wrong with that, but it is worth being careful and checking who is on the other side. Experience is not gained overnight in any profession. We have been in this market for 12 years and we know from the history of our clients that a waste of time is the smallest loss that can be incurred if you trust the wrong people.