Demand for offers
Immediately a whole lot of questions arise: is the game worth the candle? If buying, then where? How much does it cost? How to go about it? And is it necessary to buy at all - maybe it is simpler and cheaper to rent this very dacha?
Of course, one could limit oneself to renting, but it would be a sin to refuse the income that organically combines with the desired rest. After all, one must not forget that buying real estate is one of the oldest and most reliable ways to invest money. And if you buy real estate in the right place, you can earn quite well.
Real estate prices in Spain are constantly and quite significantly rising. Over the past five or six years, the average annual growth of real estate prices in Spain has been 15%. And this trend persists. Since the Russian default of 1998, the price of Spanish real estate has increased more than threefold. Moreover, no one will give you an exact forecast of the state of this market in 2006 or 2007. One can only state with certainty that so far nothing heralds a change in the current trend.
The growth in Spanish real estate prices is determined in exact accordance with the classical formula - by the demand for it. What then are the sources of this demand?
The first is the limited territory of Europe in general and the coast in particular. Almost the entire coast of Spain is already built up. Of course, in some places construction is still ongoing. There are also plots suitable for development. But, as a rule, they have already been sold to developers who are either reselling them or preparing to build on them themselves.
This territory is further limited by Spanish legislation: the coast itself - the beaches - is state property. In Spain, one cannot acquire one's own piece of sea, one's own beach. All Spanish beaches are free. A fee may be charged for sun loungers or umbrellas, but entry is free. So you can buy a plot of land very close to the sea, but the sea and the access to the water are shared.
The second source of demand relates to the standard of living in Spain. If we exclude Portugal and compare the standard of living with France, Britain, Italy, and Scandinavia, we can confidently say that life in Spain is cheaper while offering a decent level of comfort. When you drive along the coast, you immediately feel this in your own wallet. Now - after the transition to the single European currency - comparing prices requires no mental effort. You leave Spain, cross the Pyrenees, and at the very first French filling station you pay 20-30% more for the same petrol; the toll for the road also turns out to be more expensive - and they are all toll roads there - as is a sandwich in a roadside inn. The next jump in prices occurs when crossing the Franco-Italian border: in Italy everything is even more expensive than in France.
So it turns out that, all else being equal, the climate in Spain, separated from France by the Pyrenees, is milder, there are no exhausting winds here, and prices are lower.
The third source of demand is demographic. A rather curious process is currently underway in Europe: the baby-boomer generation - the generation born after the end of the Second World War - is retiring. Back then, in 1944-45, there was a significant increase in the birth rate. And now these post-war children are all approaching retirement age, which will lead to a sharp increase in the number of pensioners. It would seem, what does Spanish real estate have to do with it? According to our ideas, a pensioner's purchasing power is absolutely negligible, and therefore the larger the share of elderly people, the less prosperous society as a whole is. But that is our own peculiarity. Among Britons, Scandinavians, and even German citizens, there is a clearly expressed tendency to buy housing in Spain and spend their old age there: housing is cheaper than, say, in England, life is not too expensive either, and in some cases - which is quite surprising - mortgage terms are also more favorable. For example, if in Spain a mortgage loan can be obtained at 4%, then in Germany this percentage is significantly higher.
It is important to know: not only European residents can get a mortgage loan in Spain. It is practically impossible to get an ordinary loan there, but a mortgage - that is, one that is given against real estate collateral - almost anyone can get. Real estate cannot be exported, and besides, Spanish law strictly stipulates that real estate cannot be sold until the loan is repaid. In addition, banks take some precautions: if a Spaniard with a stable source of income and a good credit history can get up to 100% mortgage financing, then foreigners unknown to them will rarely be given more than 50-60%. But they will certainly give it.
The fourth factor, with which perhaps this list should have begun: interest in buying real estate is very high among the Spaniards themselves. It is the most widespread and simplest way for them to invest money. The middle class, having solved the problem of their own housing, as soon as some minimal free money appears, immediately takes out a mortgage and buys housing to rent out, resell later, or simply for investing money. Buying real estate is the most popular middle-class business along the entire Mediterranean coast. People buy one apartment, set up mortgage payments for it, and immediately look for the next apartment to buy. Moreover, they plan their lives so that by retirement they will have paid off these apartments and become rentier pensioners.
Russian-speaking Spain
And what about our compatriots? Is it known how many of them live in Spain today? Experts say definitively: such statistics do not exist. Neither the Spanish nor our authorities have this information.
After all, if the entry of tourists into Spain is recorded by the Spanish consulate and it states that annually from 200 to 300 thousand tourists from CIS countries visit Spain, then there is no data on the number of those who have gained permanent residence there. They enter the country by various means, including illegal ones. From time to time (once every five to six years) the Spanish authorities carried out an immigration amnesty, that is, they transferred illegal immigrants to legal status. And under certain circumstances, one could fall under it. In addition, someone marries a Spaniard, someone comes to Spain to study - and never leaves again...
The significant size of the Russian-speaking population in Spain can only be judged by certain indirect signs. Thus, newspapers in Russian are published in Spain - local versions of Komsomolskaya Pravda and Moskovsky Komsomolets. Unlike the Russian regional editions of these newspapers, which are the main Moscow edition plus a regional insert, the Spanish version is, on the contrary, Spanish materials plus an insert from Russia. These newspapers have their own subscriber, and occasionally they are sold at ordinary newsstands.
The presence of our compatriots in Spain can also be judged by the appearance here of so-called Russian stores, like those in traditionally immigrant countries - Israel, Germany, America. But immigrants from Russia and other CIS countries do not unite into Russian communities or clubs, they stay apart, maintaining contacts only with a limited circle of friends. Russian Orthodox parishes in Madrid and Barcelona have been expanding recently. That is, some kind of life is happening - but not taking organized, structured forms.
What kind of real estate is in demand?
The mass media tirelessly insist: there are very rich people in the world who buy villas in the Spanish area called the 'Golden Mile'. This area is located in Andalusia near the city of Marbella, next to Malaga airport. Arab, English and other millionaires built houses there. Gusinsky's villa there was often shown on television during the hunting season for the disgraced oligarch. It is clear that this circle of people is extremely narrow, and they are far from the people. Although, as it turns out, they are very interesting to the people.
However, a different category of buyers is of practical interest. There are known cases when people from the provinces sold their apartments back home for $10,000-12,000, collected all the money they could, bought housing in Spain, moved there, found work, and subsequently successfully obtained a residence permit.
And there are those who are not going anywhere at all, but buy housing in Spain for summer vacations. It could be an apartment in a multi-story building, a townhouse (a vertical section of a house with its own entrance), or a small villa from one hundred thousand to several million euros.
Catalonia is not Valencia
From general information and considerations, let's move closer to the Spanish coast and try to figure out whether there are any peculiarities of life in Catalonia compared with, say, Valencia.
It turns out there are. Spanish autonomous communities are not equal - the main law of the country, the constitution, endows them with different powers. The more rights an autonomy has, the more clearly expressed its national life is. In the most independent autonomies - Catalonia, the Basque Country, Galicia - the local language also has official status, in addition to Spanish, of course. It is easy to imagine that in such places, each with its own climate, terrain features, its own special history, life is also very different. Even just driving along the Mediterranean coast, you can easily see: Catalonia (the northernmost autonomy) and Andalusia (the southernmost) are two different countries.
Andalusia was the first land conquered by the Moors. This is immediately felt in the local architecture - even in the architecture of Christian churches built on the remains of Moorish ones. It is here that bullfighting and flamenco are popular. And Catalans despise bullfighting and consider this spectacle unworthy.
Catalonia, which once included Sicily, part of France, and part of mainland Italy, remains the most European part of Spain to this day. Catalonia is noticeably richer than other Mediterranean autonomies, its contribution to the national economy is higher than the average for Spain - correspondingly, the standard of living is higher. And on average, real estate is more expensive.
Valencia and Murcia, squeezed between such different Catalonia and Andalusia, have absorbed the features of both. For example, the Valencian language is a dialect of Catalan. But the legislation here is more liberal than in Catalonia. Suffice it to say that in Catalonia it is impossible to enter public service without passing an exam in the Catalan language. Even a Spaniard will not be hired at a state institution - in a Catalan, not federal, authority - without this exam. In Valencia, it is enough to know Spanish.
And another telling fact. In all of Catalonia there is not a single Spanish school - that is, one where teaching is conducted in Spanish. There are English, French, German schools here, but not Spanish ones. The Spanish language is taught in local schools as a foreign language. In schools, Spain is covered quite briefly, with the main emphasis on in-depth study of the history and geography of Catalonia. Obviously, such increased national isolation cannot but affect the character and nuances of local life.
Valencia and Murcia are conventionally a buffer zone, passing through which you get into hot, bright Spain. Hot both in climate (in summer the air temperature reaches 45 degrees here) and in temperament.
If you had to choose a place to live, perhaps the most attractive could be Valencia and Murcia. The climate here is milder - without the insane Andalusian heat, but thanks to warm currents, the resort season is the longest on the entire Spanish coast. The legislation here is more lenient: those who plan to settle in Spain, find work here, educate their children, are unlikely to limit themselves to the Catalan language and will prefer the more widely spoken Spanish, and therefore will stay away from Catalonia.
But those who choose a place for summer vacation may well opt for Catalonia. It is amazingly conveniently located: France is a stone's throw away, and from there to Italy. In Catalonia, besides the sea, there are wonderful ski resorts in the Catalan Pyrenees. And the beaches here are special. Unlike the monotonous flat beaches of Murcia, Valencia, and Andalusia, part of the local coast - from Blanes to the French border - is called Costa Brava, which translates as 'rocky coast': it is picturesque coves, forests coming close to the sea, and sand.
This is the most comfortable, the most European, the most civilized, and the closest to us region of those already mentioned. And the language barrier is overcome for a diligent person with the help of the Catalan government, which supports many free Catalan language courses for foreigners. And do not think that learning Catalan is wasted time. Catalan, by the way, is the seventh most widely spoken language in Europe (it is spoken by significantly more people than, say, Finnish, Swedish, or Norwegian). It is one of the oldest languages in the world, it has a beautiful literature, and being a Romance language, it is easily mastered by those who know French or Spanish.
Who can help avoid mistakes?
Suppose the fundamental decision has been made - we are buying property in Valencia (or Catalonia). What next? What is the algorithm for finding suitable property, what mistakes should be feared, whom to turn to for help?
Experts say: if you know the country and the language, have been going there for many years, live there for long periods, have made friends - in short, if you feel at ease and comfortable in Spain, then you can search for housing on your own. But if you have only traveled around Spain as a tourist and have no one to rely on there - do not overestimate yourself, do not take on the purchase of real estate yourself, but turn to a specialist.
In an effort to save on an intermediary, an inexperienced person is guaranteed to make a typical set of mistakes. At best, not the full set. But in general, no one has ever managed to avoid mistakes. What are we talking about?
The most important thing is to choose the right place. Moreover, the criteria are not limited to formal and obvious ones, such as the presence of the sea within reach. Communication possibilities are important: how it is most convenient to get from your future home to one place or another. The development and construction plans for this place are important. If you know the language and live nearby, you will not fail to notice that an industrial zone is planned nearby, and your hypothetical house will end up not far from a huge plant. Clearly, this does not add comfort, but the main thing is that you will also suffer material losses - the price of the house will drop sharply. Or another thing. The most pleasant time to look for housing is early spring - it is not hot, and there are still few people. But at this time it is impossible to assess what exactly happens in a particular place during the resort season. You buy something, and then you cannot sleep day or night - that's the kind of noise and commotion there at the height of the season! It turns out that you will not be able to live in your new home for the four best months of the year. The slightest nuances are important - where the windows face (in the same building complex there are no absolutely equivalent apartments or houses - and they should also cost differently).
In other words, when choosing real estate, many factors should be taken into account. After all, the rate of property price growth is an average indicator: some property steadily rises in price day by day, while some simply becomes cheaper.
Second, the choice of construction quality. Now they build well in Spain, but twenty years ago it was different. Therefore, the secondary market may contain very poor-quality goods - you buy an apartment, and it turns out that without a complete renovation, without replacing all communications, it is impossible to live there. An inexperienced foreigner will never guess who and how built this or that house - and what the consequences are.
Third. A non-specialist will not be able to competently bargain with the seller - he will never immediately see significant flaws or think to point out the lack of certain amenities that would allow the price to be reduced: for example, the absence of a common pool, garden, etc. He himself may not need them, but they provide grounds for bargaining.
Fourth. A mortgage can be obtained from many banks - but different ones, on different terms and for different periods. A stranger does not know these subtleties. To competently build relationships with the bank and the seller, to pay the minimum of possible taxes - never can someone who has taken on this matter for the first time.
It is reassuring that the realtor market in Spain is quite civilized. You are not threatened by outright deception there. For example, if you signed a contract with a developer and made a down payment, it cannot be that this company one fine day simply disappeared. But at the same time, any seller always strives to sell as expensively as possible and always tries to add a small bone to a good piece of meat. Avoiding this, ensuring a competent transaction is the task of a professional. Of course, there are professionals and professionals - you also have to choose one based on your own experience and intuition.
There is another feature in the process of buying Spanish real estate: all sorts of proverbs suggesting one not to hurry do not apply to it. After all, Spanish real estate is rising in price because of high demand. This means that any quality property sells fairly quickly. And it is important to understand: if something has been on the market for a long time, one should figure out why; there is a high probability that either the price is inflated or there are hidden flaws.
Of course, coincidences happen. Say, the owner was sick and could not handle the sale. But still, this rarely happens. Suspicion should be raised by photographs of real estate for sale in glossy magazines that come out, say, once a quarter. In the case of serial (or multi-unit) properties, this is justified: by the time the advertisement comes out, some of the houses will have been bought up, but something will still remain. However, a single apartment or house, given the current high demand, sells even before that advertisement appears.
The buyer must understand this when he is about to travel to Spain to see his possible purchase: while he is applying for a Spanish visa and buying an airline ticket, the apartment he has chosen may be bought. Therefore, when setting off, one should have not just one but several equivalent options in mind.
Since the real estate market in Spain is so active, quite a few intermediaries work in it. These are large national companies, large regional firms—two or three per autonomous community—and many small intermediary firms. Large agencies have a fairly high commission level—but a huge number of listings; well-structured legal and other services; due to the large cash turnover, they have special relationships with banks, which ensures fairly favorable conditions for obtaining mortgage loans. Small firms have a lower commission and an individual approach to the client—although their selection of goods is poorer: fewer owners entrust them with selling their property. In addition, many Spaniards try to sell property without intermediaries. But let us repeat: buying real estate on your own—without a consultant—is not recommended.
At your own doorstep
Suppose a suitable option has been found, a reliable realtor has confirmed that the chosen house-apartment has no hidden flaws, and the buyer has managed to see his future home before other contenders. What next? The seller will take the buyer's intentions seriously only after receiving a deposit. The deposit may be small—for an apartment worth €200.000 one can put down ?2.000—but, by definition, of course, it is non-refundable.
The purchase process itself takes a considerable amount of time, and it can be conducted by the agent you have chosen under a power of attorney drawn up at the Spanish embassy. And this process ends after the full payment of the transaction amount and the tax, with registration: the new owner is entered into the state register and receives the so-called escritura, or a set of property documents.
Before the state
And now attention: having an escritura is grounds for obtaining an annual multiple-entry Spanish (and at the same time Schengen) visa. This is a very serious incentive for buying Spanish real estate: a person saves himself and all members of his family included in the escritura from the bureaucratic delights that inevitably accompany obtaining visas. It is recommended to use this visa for the first time to enter Europe via Spain, and then for the whole year you can use it to enter any country in the Schengen area.
This is not a general rule—by no means all states grant an entry visa solely on the grounds that the visa applicant owns real estate in their country. So Spanish liberalism should be appreciated, but our people gravitate toward stability and therefore want more: though they like getting annual visas easily, they prefer permanent resident status (residency), and even better, citizenship.
Having Spanish real estate is also useful for obtaining residency, although not necessary. Something else is necessary: a residency applicant must be understandable to the Spanish authorities. They want to know exactly his sources of income—how and what he lives on: whether he has a business or an employment contract in Spain, or he regularly receives money from abroad, the origin of which he can document. One of the components of this comprehensibility is having his own Spanish housing. And a minimum monthly income of €600 per family member. True, residency (permanent resident status) is de jure a temporary thing. This status requires periodic confirmation—first after a year, then after two more years, and then perhaps even less often. However, de facto it is permanent. Once obtained, it can be lost only in an unusual situation: by committing a serious offense or owing money to all Spanish banks. After living in Spain for ten years that are righteous from the point of view of Spanish law, one can apply for citizenship.
Events of recent years—high-profile scandals surrounding Russian businessmen—have led to the development of suspiciousness among the Spanish authorities. This has affected, in particular, the purchase of housing. If previously daring real estate buyers came to Spain with suitcases of cash, now such tricks are unlikely to pass. Banks are obliged to inform the Interior Ministry if they have doubts about the origin of a foreigner's money.
Prices
And we will conclude these theoretical calculations, advice, and recommendations with the most interesting and specific thing—prices.
Suppose we have the most modest means and the most modest requirements. We agree that our property should not be on the first sea line, but beyond the highway and the railway, which in many parts of the Mediterranean coast come almost right up to the shore. True, we are not ready to leave the resort area for the wasteland of central Spain either. We are prepared for the fact that there will be no shops or supermarkets near our new home - it costs us nothing to drive a few kilometers for a loaf of bread. Better cramped, but at a Spanish resort, we say, and we settle for a studio (as we call it, a one-room apartment with a tiny kitchen), located on a non-prestigious first floor (the higher, the more expensive). The windows look not onto beautiful Spanish views, but onto a small courtyard. Moreover, the studio is in a building twenty years old.
Such a little apartment can be bought for €40,000. Quality new housing in a good location in the resort area costs on average €2,500 per square meter. So a four-room apartment with an area of 100 sq. m, with a common swimming pool for the building's residents and a parking lot or underground garage, cannot be bought for less than €250,000.
Suppose we want to have a small house with a plot of five to six hundred square meters. In four to five kilometers from the sea, the minimum price per square meter of land is €100. That means six hundred square meters will cost €60,000. And the price per square meter of the house - with new staged construction - will be at least €1,000. Thus, a small two-story house with an area of 150 square meters will cost €150,000-220,000.
The closer to the water's edge, the more rapidly prices rise. The price per square meter of land exceeds €500. True, the house should not be more expensive: after all, the price of ceramic tiles does not depend on proximity to the sea. But the seller will definitely ask for more. Such are the prices in expensive Catalonia.
In Valencia it is a little cheaper. There, construction is now very popular of large buildings with a huge number of apartments - of all kinds: with one, two, and three bedrooms. This does not mean that they do not build villas or townhouses there at all, but the most widespread Valencian construction is apartments, prices for which do not fall below €1,500-2,000 per square meter.
Of course, a city apartment in an apartment building is not a country house. However, one cannot dismiss the obvious advantage of such a purchase: you do not need to look after it during the eight winter months when you do not show your face there. Lock the apartment and leave, but you cannot leave a house unattended.
So now you think: to buy or not to buy...