New Construction madness seizes the Alicante region
Construction madness seizes the Alicante region!
The Alicante region, especially the Orihuela Costa is Spain’s leading light as the property market kicks off again.
Presently, Orihuela Costa is a neighbour of its big sister, the city of Orihuela.
The Orichuela Costa includes famous regions like Villamartin, La Zenia, Cabo Roig, Los Dolses, Dehesa de Campoamor, San miguel de Salinas, Pilar de Campo Verde, La fuente, Punta Prima, Playa Flamenca and Los Montesinos.
The town of Orihuela itself is nearly 20 kilometers from the actual Mediterranean coast.
In 2017, Orihuela city was the coastal town in which more homes were built in Spain.( towns of small size, 10,000 inhabitants) Its way ahead of very hot spanish markets such as Marbella, Estepona or Ibiza.
The Spanish Ministry of Development provides the information and the numbers speak for themselves. Since 2011, long after the worst of the Spanish property crash yet before the market rebounded, real estate activity reawakened in Orihuela Costa. Its true that the figures are far away from those of the bubble. Just like in the rest of Europe we are awaiting a full recovery. However this region is the most dynamic point of the entire Spanish coast, and ranks even above the hottest spots on the Costa del Sol.
This new boom in construction in Spain is based on a strong demand for new construction housing around the Alicante/Villamartin/Torrevieja areas.
According to the data from Fomento, the coastal town in which more houses were sold were sold was Torrevieja, and the hottest region was the Orihuela costa.
Joaquín Cabrera Seva, Tinsa technician explains it like this:
“Well, in 2007 with the outbreak of the crisis, the construction of new buildings was halted. It wasn’t until 2013, when large local promoters who survived the crisis, got plots of land from banks and promoters who could survive.
The first local builders who started their activity with new build promotions located in coastal areas close to the sea and already existing services went to the market at low prices. Due to value, location and reputation, these new builds were easily sold.”
This increase in new development sales awoke the rest of promoters in Spain who saw that demand existed, if property in Spain was priced right. New builds went on the market in 2013 around 100,000 euro and that prices of the new developments went up as the months passed, “recalls Cabrera Seva who says that “at present (May 2019) there is nothing below 160,000 euro for sale in new build property in Spain”.
Cabrera goes on to point out that since 2014 all the agents have been back selling houses.
“Since they understood that the market (especially British) preferred to have new quality work, rather than cheap houses”.
According to this expert in the field of Spanish property sales, “the foreign market demands almost exclusively new build, quality construction. This demand is for the most part, made by cash buyers”.
“The British, the Scandinavians, the Norwegians and Belgians demand Spanish homes without needing financing. They want them to be newly built. Sometimes when they buy second-hand, the property must be completely reformed, and/or great value”
Is there any symptom of buyer exhaustion?
(or are the prices at the perfect sweet spot?)
According to the experts consulted this week, there is no sign of market depletion. (unlike perhaps what is beginning to be perceived in other hot spots on the Spanish map).
Prices have risen 15% in the last year. The average cost of property in Spain is up 22% since they touched rock bottom while they are still 1/3 below the levels reached during the ‘Spanish property boom’.
It may be the perfect price point for those thinking of getting involved on the market in Spain. They can see demand is pushing prices but it still is way off the crazy highs of 2008.
“In the past 6 years, the new construction market has seen continued growth. New construction promotions continue to be sold and the number of real estate agents continues to grow. The Spanish local promoters are still looking for plots of land to continue the activity. What we do see is a greater distance between the sale prices of the new builds and resale property on the Orihuela costa. Although there is also great activity and demand both for new and resale property. ” says Cabrera.
“Alicante is, in 2019, the Spanish province responsible for leading the recovery in coastal areas. This has become evident in the last two years”, So says Alfredo Millá, the CEO and founder of Sonneil.
“While the media centers focused on Madrid and Barcelona, the green shoots of recovery spread over a good part of the Alicante region.
The province of Alicante together with Barcelona, is the second region in Spain with the largest number of new build projects underway.”
Strong weight of foreign demand.
Alicante with 5,915 units sold is only behind Madrid (16,972) and Barcelona (7,896), the province with the highest number of new home sales registered in 2018. This figure is impressive exceeding even the 5,812 of Malaga. This is according to data from the College of Registrars in Spain. In addition to this, Alicante is also the province with the highest real estate activity, 21.35 sales per thousand inhabitants. This is thanks, mainly “to the high volume of tourist activity and Foreign buying and selling ” according to Millá.
To give us an idea, In the alicante region, 40% of all property transactions are carried out by foreigners. This is the highest percentage in all of Spain, above 37% in Tenerife; 30% in the Balearic Islands and 28% in Malaga.
“Brits, Belgians and French are the nationalities most interested in buying in Orihuela. The Swedes and Danes are both in the top 5 in Torrevieja, Villamartin, Cabo Roig and these similar locations ” says Alfredo Millá. “What shows is that the market is booming now in Spain and demand continues to grow.”
Joaquín Cabrera explains, “the Orihuela Costa area has greater potential and greater volume. This leads to greater demand for property and draws the neighboring municipalities, such as Torrevieja, Pilar de la Horadada and Guardamar. ( demand increases in all the neighbourhoods). Foreign buyers enjoy the benefits of the climate of Orihuela Costa and Torrevieja. Sometimes they have a hard time going down to the province of Murcia, due to oversupply since Polaris World days but there is demand in nearby municipalities such as San Pedro del Pinatar or San Javier. “
According to this seasoned professional “the coastal area of Orihuela Costa has nothing to do with its urban center, (City) and is separated by more than 30 km. We must give the city credit though as its where the first promotion of new construction has begun.”
Its a popular tourist area where there is no seasonality for the Spanish property market.
The national market in Spain in summer seasons sees increases in Real estate activities, but during the rest of the year the foreign market is continuous. Especially British buyers, who are often here to stay, not only retirees but complete families, with children that can be integrated into the schools and eventually the labor market. ”
He emphasises how “the big majority of the Real Estate businesses are run by foreigners. They make better salespeople, leaving for the Spaniards the construction of new work and professional services like finance and design”.
The real estate companies in the area have become a real engine for the increased activity since they have been responsible for generating this flow of British and foreign buyers of new homes. “They (estate agents) have connections with the countries of recruitment that Spanish do not. They have numerous investments in foreign countries, which means that when the buyers arrive, they only have to choose what they buy and not whether or not they should buy.
” concludes the technician of Tinsa.
The good performance of the real estate market on the Costa Blanca (La Zenia, Cabo Roig, Villamartin) has allowed the stock of resale property that was built during the years of the ‘boom’ to be absorbed.
According to Tinsa, this ‘stock’ of holiday homes is residual in Guardamar del Segura and Pilar de la Horadada, but it is becoming more and more scarce in Torrevieja and its surrounding areas and Orihuela.
It is good news for those looking to buy property in Spain right now!