Lifestyle buyers are returning to the international market thanks to a combination of favourable exchange rates and greater confidence, says Zoë Dare Hall.
Little fires up thoughts of buying a holiday home abroad more than a sudden shift in fortunes—and that’s how many British people feel when they realise that we can now get more euros for a pound than we have since the property-boom days of late 2007. "The euro rate is driving the British to invest abroad again,’ confirms David King, Winkworth’s head of international sales. ‘There is a lot more confidence now and a feeling that our money is doing little in banks here, so why not enjoy it?"
Italy—specifically Tuscany—is looking ‘surprisingly quite active and you get really good value for money,’ says Mr King. But the three countries that are attracting the greatest number of buyers are Spain, Portugal and France.
People heading to France are drawn principally to Provence, but also to the Tarn and Lot and, increasingly, Paris, which is a new market for Winkworth. Many British buyers see the appeal of a lock-up-and-leave apartment that’s easy to get to and cheaper than London. ‘Prices in France have dropped by 20%–25% over the past few years and are probably touching bottom now,’ notes Mr King. ‘There are properties that have been on the market for a couple of years whose vendors are keen to do a deal as well as new properties coming on at realistic prices.’
Renting out a Parisian holiday home can be a minefield, because of tough regulations, so many people are simply keeping the property as a bolthole they can pop to regularly and which should see substantial capital growth in the long term. This is a step change compared with the past: in Paris, like elsewhere in France — as well as in Italy, Spain and Portugal — buyers are once again entertaining the idea of buying a second home for lifestyle rather than investment reasons.
On the Côte d’Azur, change is afoot now that the Russians have disappeared. ‘You really do notice it and no one has replaced them,’ says Mr King. ‘It means there are relative bargains for buyers at that level. Deals can be done on properties priced at €5 million or more.’ In Nice, easy access from the UK and Europe and a lively atmosphere are drawing buyers who seek the city buzz without Parisian prices.
The falling euro is also driving many people to Spain. Tourist numbers on the Costa del Sol were at a record high in 2014, Spain’s economy grew by 2% last year and the country was praised by the head of the international Monetary Fund, Christine Lagarde, for having restored confidence through its reforms.
The lull in interest in property is also starting to turn around in prime areas of the Costa del Sol. In particular, Marbella and Sotogrande—covered by Winkworth’s newest overseas office in Guadalmina—are the main focus for British buyers.
‘We have seen a 500% increase in the number of clients approaching us in the past three months, thanks to the currency shift,’ says Kevin Welch, Winkworth’s agent in Spain. ‘A two-bedroom apartment costing €250,000 in Nueva Andalucía, which is always immensely popular because of the golf, would have cost £208,000 this time last year. Now, it’s £188,000. Breaking that £200,000 barrier is hugely significant, because many people feel it’s affordable.’
There’s plenty of good-quality stock at that price level, but there also are many palatial properties available for buyers seeking coastal luxury.
Spain’s ‘Golden Visa’ programme, which offers residency to non-EU nationals in return for a minimum €500,000 property investment, has made less of an impact than many expected. This is partly linked to the drop in the number of Russian buyers, but also, says Mr Welch, because ‘investors, particularly the Chinese, are more attracted to Portugal’s visa programme, which is more beneficial tax-wise’.
However, foreign investors are encouraged by the favourable mortgage deals being offered by Spanish banks. ‘We see a lot of cash buyers, but the banks are so keen to lend again, because Euribor has fallen, that they are offering deals such as fixed-rate for 25 years for 3.9%,’ advises Mr Welch.
Over the border in Portugal, the Algarve is seeing a ‘badly needed’ turnaround in its fortunes after prices fell by about 30% during the downturn, according to Winkworth’s agent Mary Mangan. ‘the coast represents extremely good value now and we’re starting to see a lot of interest both for properties priced at less than €500,000, which appeal to people looking to move or retire here, and in the €1 million to €5 million bracket, which draws wealthy French and British buyers.’
Although Portugal’s Golden Visa scheme has seen a sizeable take-up, the main target for this investment is Lisbon. ‘Most Golden Visa buyers are Chinese and they tend to prefer an urban setting, with good shopping on the doorstep,’ says Mrs Mangan. Instead, the Algarve draws lifestyle buyers to its well-known, trusted resorts of Quinta do Lago, Vale Do Lobo, Vilamoura, Lagos and Praia da Luz. ‘It’s the old formula coming back to the fore,’ she adds. ‘Resort-based properties with restaurants, sports facilities and which are perceived to be a safe place.’
New-build units are scarce on the coast, according to Mrs Mangan, ‘apart from some new or renovated old properties coming on-stream on Quinta do Lago, but there is still a lot of stock for sale in places such as Lagos and Praia da Luz. What we lack are three-bedroom villas with a pool, costing about €350,000 to €500,000.CountryLifespecial15 That type of property was usually built by smaller developers, who have disappeared during the downturn.’ However, there is one to be snapped up in central Praia da Luz, with the requisite three bedrooms, pool with sea views and a price tag of €475,000.
Following the Greek elections, the spectre of a Greece leaving the Eurozone may make some fear for the future of Europe, but Mr King looks at it with optimism. ‘If Greece pulls out, the euro falls even lower, which makes it even cheaper for British buyers. And major markets such as Marbella, the Algarve and the Côte d’Azur will always survive. Foreigners have been buying there for 50 years in the first two and more than a century on the French Riviera.’