Looking out from the balcony of Noriega’s Punta Paloma show apartment in Manilva at the glass like Mediterranean Sea, you would almost think that the scene had been retouched in Photoshop. The sky is clear blue, matching the sea with its colour saturation, and with the sun burning at a very nice 75 degrees Fahrenheit, you would be mistaken for believing it was the height of summer.
It is late October and summer has officially passed, though no one has the nerve to mention it in this part of Spain. The beaches are quieter now than the height of the season, this is mainly because the Spaniards have returned to their work and homes inland, and the British element is ensconced back in their normal routines in the grey, damp and dreary UK, where autumn has taken a hold. The first frost of the season has caught many drivers in the UK suburbs by surprise as they place a tentative foot outside the door for the commute to work. A couple of miles down the road from La Paloma, the 20th Volvo Masters is in full swing and Justin Rose is about to celebrate a victory at the Club de Golf, Valderrama course. In fact, the area around Manilva ‘suffers’ from the luxury of having some of the best golf courses in Europe and many would say the World.
Superb golfing facilities aside, the Manilva area has great appeal to many British buyers looking to invest in property in Spain. Situated about as far west as one could be on the Costa del Sol, Punta Paloma borders the exclusive and sought after area of Sotogrande and benefits from its location and proximity to Gibraltar, Malaga and the Costa de la Luz. Served by air from both Gibraltar and Malaga airports and with Jerez Airport only an hour away, the area is easily accessible from many major and minor airports in the UK. Road links have been greatly improved in the last few years and the extension of the motorway from Malaga to Manilva has greatly reduced the time from Malaga airport. Infrastructure in general has improved over the last decade in the Costa del Sol and with the arrival of the AVE high speed train to Malaga, soon it will be possible to have a day trip to Madrid and Barcelona and return in time for dinner.
It is no secret though that investing in Spanish property has received its fair share of scare stories and negative press recently, with a combination of articles reporting on everything from the land grab situation, illegal building, the readjustment of property prices and corruption scandals. The net effect on this has been to shake the confidence of prospective buyers and investors in the UK.
The Punta Paloma development I am standing in has been built by Spanish construction company, Noriega, and its UK director, Eugenio Sánchez-Ramade García-Conde is optimistic that the recent stories, although having an immediate negative effect on the market, will be overcome by research from investors and lifestyle buyers, that continue to be confident of Spain as a mature market with attractive mid and long-term returns.
“Many factors impact on the property market. Europe in general will feel the effects of the situation in the US with the credit crunch and the weakened dollar, and in many ways what is happening in Spain right now can be attributed to some of these factors. I think we are going through a unique moment in Spanish property history now, with pressures from both within Spain, Europe and the US impacting on the market. I believe it is a sign of the strength and maturity of the property market that has helped retain confidence with investment in Spain.”
A recent report from leading global investment bank, Deutsch Bank*, adds more grounds for optimism for investors in Spain and backs Eugenio’s statement. The report sees a continued level of growth backed by an increase in labour, an improvement in the quality of the workforce (human capital, increased openness and investment in innovation. It states that the current growth which has been driven by immigration is likely to continue to contribute strongly toward continued growth. The reason is easy to see, as many Europeans and Latin American’s see Spain as a strong economy with a very attractive lifestyle.
Unemployment rates in Spain have fallen to 8% from over 19.5% in the mid-nineties and inflationary pressures are set to remain modest. With a plentiful supply of labour, demands on wage increases have been kept to a minimum but slightly ahead of the European Central Bank inflation objective. Human capital has seen a rapid improvement, with the average years of education undertaken by the workforce increasing from 7.3 years to 10.6 years by 2004.
Deregulation and a generally more open approach to business within the EU, Latin America and Asia has also added to Spain’s success and projected improvement. Direct foreign investment in Spain surged from 12% of GDP in 1990 to 34% by 2005.
Spain realises that it needs to invest more in innovation. Historically this has been an extremely weak area of development due to the banning of books in the 16th century, the civil war (1936-39) and Franco’s regime which lasted until 1975. The Spanish government is increasing investment into research & development (R&D), rising from 0.8% GDP in 1995 to 1.1% in 2005. The government intends to increase investment into R&D spending to 2% by 2010.
Immigration has led to a housing boom with employment growth, especially on the Costas where 40% of Spain’s population lives and works, placing an increased demand on new and rental property. Housing prices have increased by almost 200% over the past decade. This level of growth is clearly unsustainable, but a continued forecast of increasing immigration will necessitate a demand for property including second/holiday homes. Construction investment has risen by 6.5% since 1998 with over 800,000 completions every year. Currently, Spain is experiencing inward immigration of 500,000 every year. The immigrants are not just retirees from the UK or Germany though. Eastern European, African and Latin America are contributing significantly to the rise in population. This is coupled by the fact that these immigrants come from countries with high fertility rates. Spain has also witnessed a slow down of emigration as the country has become more affluent. The combination of these factors will result in continued growth in the property sector for the foreseeable future.
Overall, the picture looks favourable and sees Spain emerging as one of Europe’s strong contenders, already addressing spectres from the past and looking to a bright future.
Noriega’s UK Director, Eugenio Sánchez-Ramade García-Conde has every reason to believe that Spain is turning the corner in the current property adjustment.
“What we will see in terms of second home construction is the realisation by the market that quality property will no longer be a cheap investment. But this is a positive thing for investors, quality in design, style, materials and build is an asset that helps position your investment above many of the elements currently affecting the market. The tightened regulations and investigations into the property scandals will of course have an effect, but these will be short-lived and in the long-term beneficial to new buyers and investor. Spain is now addressing many issues that have yet to be broached by many new European destinations, especially in Eastern Europe.”
Noriega’s Punta Paloma development occupies a prime position on the hillside overlooking the sea. The sharp modern design blends easily within the locality, yet it is a very contemporary design seen more often in urban cosmopolitan areas, but here overlooking the sea it is as far removed from a city as it could be and it works perfectly. The spacious rooms – Noriega traditionally gives more square footage for the Euro than most constructors – are finished with elegant marble floors and wooden doors that rise from the floor to meet the ceiling, giving a modern and airy entrance to each room. A bright contemporary kitchen is filled with the latest utilities from Spanish white goods company, Urenede. Urende like Noriega is part of a €1.4bn group of five companies that belong to the Sánchez-Ramade Group.
The Sánchez-Ramade Group has a long history in Spain dating back to the 1930’s, much of which can be traced with the progression of Spain in the 20th and 21st centuries. Buyers or investors looking for a construction company that is established and has a record of success can take confidence in Noriega’s 45 year history in both the commercial sector – Noriega began life building cinemas for it’s sister company, cinema chain CineSur - and by building homes for Spanish buyers before moving into the second and holiday home market.
It is this experience in building for the home market that I think differentiates Noriega’s properties. There is a level of thought that has gone into making ‘homes’ rather than empty shells. The Punta Paloma apartments are not designed as second homes, but as bright modern homes for living in. Talking with Eugenio on the balcony overlooking the sea, he explains Noriega’s approach to building. “Our homes are designed and built by artisans.” Looking at the finished product I can honestly say that is not a brash comment. You can see the care and level of detail that has gone into these apartments. Noriega has used the latest technology to add levels of comfort and functionality that is rarely seen in the second/holiday home market. Add the fantastic location, views of the Calaburras Peak, the Rock of Gibraltar and the Atlas Mountains in the North of Africa, the brilliant weather, clean sandy beaches, excellent local shopping and even an English college and it’s not hard to see the massive appeal for British buyers and investors.
