First it was Britons searching for El Dorado in the form of a villa under the Spanish sun.
Now Spanish estate agents have turned to the east as Russians and Chinese have emerged as the fastest-growing groups of foreign buyers.
With the Spanish property market on its knees, Madrid passed a new law yesterday offering residency permits to foreigners who buy properties valued at more than €500,000 (£425,000).
Investors who buy €2 million of public debt will also be entitled to claim residency. This would give non-EU citizens the opportunity to move freely throughout the Schengen area, which abolished passport and immigration controls in 26 European states, including 22 EU and 4 European Free Trade Association countries.
Soraya Sáenz de Santamaría, the Spanish Deputy Prime Minister, yesterday denied that Madrid was “selling” the country. “We are not doing anything more or less than other countries like Britain, Portugal or Ireland, which have introduced similar measures,” she said.
The offer of residency is part of a package of measures that Mariano Rajoy, the Prime Minister, hopes will stimulate the economy after five years of recession. With unemployment spiralling to 27 per cent, Spain’s centre-right Government admitted that the economy may decline by up to 1.4 per cent this year.
A government source said: “The details of the new law have to be finalised but the point is to attract Russian and Chinese buyers.” The move comes as government figures published last week showed a 21.5 per cent fall in house sales in the first quarter of this year, compared with the same period last year.
Britons remain the biggest group of foreign homebuyers by nationality, making up 16 per cent of purchases by non-Spaniards last year. However, our interest in buying a Spanish villa has fallen dramatically since the financial crisis: Britons represented 61 per cent of foreign buyers in 2006. In contrast, the number of Russian and Chinese buyers rose by 48 and 35 per cent respectively between 2011 and 12, according to the College of Property Registrars.
Last year, for the first time, more than half of the 7,000 properties sold to foreigners on the Costa Blanca, a traditional stronghold of British expatriates, were bought by Russians. Chinese companies are already advertising Spanish property in Shanghai and Beijing, with residency permits as part of the deal.
“I think there is massive potential for both the Russian and Chinese markets,” said Alex Vaughan, a partner in Lucas Fox, an estate agent that specialises in luxury Spanish properties.
“Chinese investors and potential emigrants want to buy property because it is cheaper in Spain and legally more secure,” said Sylvan Ma from Square Foot Nexus, an agency selling Spanish property to the Chinese.
19,318 Spanish home sales in March, the lowest level since 2008
72% Fall in sales from March 2007 to March this year
26,871 properties bought by non-nationals last year, up 12.7 per cent on 2011
8.12% of properties were bought by foreigners last year
Sources: Spanish Institute National Statistics, College of Property Registrars
Special Thanks to The Times Europe