When we see pictures of Spain, its striking architectural style, its picturesque nature of green meadows and golden beaches. We find ourselves dreaming of investing in the real estate of Spain, But when we listen to the voice of reality – which we will listen to together in this article – we discover that the decision to invest in Spain (or others) needs some hesitation and giving a 2nd though!
In this article we will review with you the real estate market in Spain and compare it with Turkey, to finally get you to the moment of final decision: buying a property in Turkey or Spain, which is the best option?
Overview of the real estate market in Spain
Spain’s main economic indicators for 2008 show that Spain suffered from the economic crisis, which was a part of the global crisis. this crisis has caused several problems in Spain, such as the real estate crisis and the banking crisis in 2010. Real estate prices went down by 40%, but to no avail, and even the government’s attempts to motivate investors to buy through the establishment of exhibitions of the foreign real estate but again it did not work!
The reason of refusal of a large segment of investors to the idea of real estate investment in Spain behind to some of the past problems that have occurred to other investors: such as the corruption of some municipalities and the issuance of false building permits followed by demolition decisions, in addition to the poor planning of some areas, resulting in unprecedented architectural intensity,which lead to a decrease in Spanish real estate values with more than 40%.
The problems have not only been linked to existing real estate projects but have also extended to property confiscated by Spanish banks after their owners failed to pay their mortgage payments.
(the number of properties confiscated has increased from 100,000 to 300,000 in one year).
To get rid of these properties Spanish banks started to offer them at nominal prices – as we said – but the low liquidity frustrates the total of those efforts.
Coming to your position as an investor who knows that entering the market at its worst is a golden opportunity to pick up properties in terms of location and cost. But Barbara Wood from Property Finance advises you to wait a bit, especially after the market has been very confused by price volatility.
It is getting worse when we learn that Spanish Economy Minister Luis de Guindos sent a letter to the president of the euro group, Jean Claude, in which he said, “I am writing to formally request financial assistance to recapitalize the Spanish financial entities.”
Has Spain’s property been completely blackened?
In fact, not!
Spanish real estate statistics indicate that foreigners increased their purchases in Spain by 8.2% and that was only 4.2% in 2009. Most of the foreign investments in Spain’s properties are directed to the coastal areas. The proportion of sales to foreigners out of total deals is about 33% in Alicante, 6% in Barcelona, 25% in Costa Brava, 11% in Murcia.
But the question here is, what nationality of these investors?
The nationality of these investors range from “British” to “23%” – Scandinavians “17%” – Russian “13%”) followed by French, Germans, and others.
We note here the lack of the presence of Arab investors in Spanish real estate, evidenced by the lack of proportion of their real estate investments.
The situation is different in the Turkish real estate market!
In the course of years, the Spanish property market itself has faltered, meanwhile, the Turkish counterpart
managed to achieve sales of $ 2.6 billion in 2012 – $ 3 billion in 2013 – $ 4.3 billion in 2014 – $ 4.2 billion in 2015 and finally 2.9 in 2016
Prices for homes offered for sale in Istanbul rose 0.14% last year, as The average price of the house (100 square meters) – according to the real estate index for 2018 – ranges between (300.494 Turkish liras, or the equivalent of 64.335 US dollars and 500.800 Turkish liras or the equivalent of 107,221 US dollars).
How Turkey made it?
When the flow of foreign capital to Turkey began to slow down following the global crisis, the Turkish government came up with the idea of granting foreigners citizenship in order to revive the Turkish real estate market. Indeed, that idea achieved a great result!
According to figures from the Ministry of Economy, Turkey attracted nearly $ 2.9 billion in the real estate market last year (accounting for 32.6% of Turkey’s total foreign direct investment).
Reasons for this rise in turkey real estate investments
Is due to the devaluation of the Turkish lira, which has made Turkish homes cheaper, instability in all MENA region, and the increasing unrest in the Middle East(Where the citizens of those countries are at the top of the list of foreign investors in Turkey)
Last but not least: Turkey’s appeal as a more stable Muslim country despite its problems, economic problems, and the recent failed coup attempt.
According to Moghadat Gulir, CEO of Nova Holding, the Saudis are now buying full housing units and are entering large housing projects.
The Saudis lead the list of foreign investors in Turkish real estate in 2017 by buying 528 houses, followed by Iraqis with 344 houses, Azerbaijanis with 278 houses, and Kuwaitis with 154 houses.
No doubt you notice the difference between the nationalities of investors in Turkey and those in Spain
Speaking about the economic factor of the purchase decision, Guler says: Muslim investors are able to live in Turkey as if they were in their countries where the adhaan is everywhere. Moreover, those who buy in Spain can’t get citizenship, but in Turkey the situation is different and this is certainly a big advantage.
Security of the Turkish real estate market
on the other hand, the Turkish governmental real estate company Emlak Konut Stated on its analysis published last September (Overview of the real estate and housing sectors) that there is no bubble in the Turkish real estate market (The economic bubble, or so-called asset bubble, means a price increase of over 100% in the last five years) Despite the recovery and increase of the Turkish real estate market as we have just seen.
The company pointed out in its analysis that house prices rose by (44.03%) between June 2012 and June 2017, which indicates that the Turkish real estate market far from the existence of a future economic bubble.
It is clear that investment in the Turkish real estate market is a smart and correct option, Because of its relative economic stability as well as the stability of the country as a whole, and especially after the end of presidential and parliamentary elections and the victory of the Justice and Development Party for a new state.