An interesting article in the Wall Street Journal last week highlighted an increasing gap between the supply and demand for investment property in Europe.
Discussing the market for commercial property, Harm Meijer, European property analyst at JP Morgan Chase argues that "prime assets will stabilize or rise in value, depending on the country, but secondary assets will continue to slide."
It strikes me that despite the doom and gloom headlines, this will also hold true for internationally-focused residential property.
Let’s take Spain, as it’s the biggest European market. Prices are now 40% lower on the coast than at their peak according to the latest TINSA index. At first this seems strange as water-front property is most sought after category in our industry. Yet TINSA’s figures include all property in the coastal regions, the overwhelmingly majority of which is not even close to the beach.
Price drops in Spain seem to be accelerating, propelled by the savings banks new taste for reality. However, the sinking tide will not take down all boats. Foreign buyers are not buying in boom numbers but volumes are rising and they are ever-more discerning.
The demand for conveniently-located, well-priced, low-medium density completed resorts with beach views is at a post-boom high. The fact is there is genuine shortage of property that ticks all the boxes of the people who are now buying abroad.
This fact has either escaped the headline writers’ attention or just doesn’t sell newspapers. “Spain hit by huge property shortage” won’t be headline you’ll be reading any time soon in the Daily Mail. That is until international property advertising revenue begins to rise again and that could be some time.
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