Saturday, December 13, 2014
As I've told you this week, the Costa del Sol is on a tear. Spain's macro picture may be poor…but the best distressed real estate opportunities are there to snap up.
The situation here is playing out just like I've seen in other distressed European markets. Fear and negativity hits rock bottom. Banks want out. You can jump in once pricing hits those "no brainer" levels.
For the past 18 months, you would have had the best opportunities in the south of Spain to yourself.
Now giant U.S. funds are coming to town…retail buyers from northern Europe are arriving…and SAREB, Spain's bad bank, is getting its house in order and releasing quality assets that have been foreclosed on to the market.
If Spain has been on your radar you need to plan your visit now.
The luxurious Puerto Banus sits on the eastern fringes of Marbella. This is where you find the jet set. A mooring for your super yacht will set you back seven figures. Homes sell for well into eight figures. Gucci, Chanel, and Rolex have all set up shop here.
There are also plenty of excellent and reasonably priced port-fronting cafes and restaurants. This is one of those international places that does well no matter what's happening in Spain or elsewhere in the world.
Yet even here, you can find incredible deals.
When you go, look for "best in class" deals, where a bank or investor has to sell a large volume of quality homes or condos fast. That creates the opportunity to buy for one third of former list prices and significantly less than replacement cost.
Real estate bubbles send all prices too high. When they pop, they bring everything down with them. Sometimes too far. The same irrational views that drove the prices up help push them down, and for a short time quality properties become very cheap.
That's when you should buy: before the fear subsides and prices go up once again.
Once a market hits true psychological bottom it's amazing how quickly it bounces back. Now all the industry talk on the ground in this part of Spain is of new pre-construction projects. A flood of money has arrived from U.S. funds—these funds will start their own construction on land they bought cheap.
Stick to the best fire sale opportunities and you'll do well. Sea-view condos that you could have bought eight years ago for 297,000 euro…you can now buy for 92,500 euro ($115,000).
This situation will not last.
P.S. If you'd like to join a group of likeminded folks on a trip to Spain, I've created a scouting trip for Real Estate Trend Alert members. The next one takes place February 19, and will focus on Puerto Banus and fire-sale opportunities west of Marbella.