Twenty-twenty has been the strangest of years for the Spanish property market, and not particularly pleasant either! Here on Spain’s Costa del Sol, our buyer market is made up predominantly of international second home buyers. It’s a discretionary purchase most of the time, not really a “must-have.” Therefore, it’s common for any little bump in the road to affect the decision-making process for buyers.
The year began with the ongoing spectre of Brexit looming, with British buyers (usually the largest proportion of overseas purchasers) dissuaded from purchasing due to the poor sterling exchange rate with the euro.
So a fairly slow start was of course compounded dramatically with what happened midway through March, with the onset of the COVID-19 pandemic, and all of the lockdown and travel restrictions that ensued. In the absence of visiting buyers, the Costa del Sol property market came to a shuddering halt … a pause in the market that lasted until July, when the skies re-opened and buyers and holiday-makers started to visit again.
Virtual showings, real bargains
During this second-quarter abyss, we had to react quickly and change various things about our business. Cost control became a daily analysis, payment terms were re-negotiated with all of our suppliers and staff began to work from home. During this time, enquiry levels remained fairly consistent after an initial fall, and we were still able to broker sales (although not to anywhere near the usual volume) with the use of video/virtual viewings.
As price corrections became evident, it presented opportunities for well-researched buyers to pick up a “bargain,” and many were content to do so in the absence of competition and without physically visiting the property.
This applied especially to the high end of the Spanish property market; two of the properties that we sold using virtual tours were villas priced at 1.25 million euros and 2.75 million euros. Both were 20-percent under the asking price of neighbouring properties.
July and August saw a return of buyers, albeit it temporary. Sales conversion rates doubled, no doubt due to the research and groundwork that had already been done in the preceding months. Virtual viewings from the comfort of home had become the new “first viewings,” so when our clients did finally get to visit us, they found themselves at a more advanced stage of the sales process.
Of course, further travel restrictions and uncertainty about the end date to this pandemic crisis has lead to a renewed pause in the market. Again, we are seeing plenty of overseas enquiries, especially at the high end of the market, but those at the aspirational, mid-level of the market have gone quiet on us again. Perhaps it´s as simple as the people with more money tend to have fewer people to answer to, and can therefore travel and purchase with fewer concerns than others.
A return to normalcy in 2021?
The final quarter of 2020 doesn’t look great for real estate professionals here in Spain. Thoughts have again returned to cost-cutting, cash flow management and simple survival, all in the hope that we can be ready to pounce on perhaps a greater share of the market once we see a return to normal travel and buying behaviour. We are ever hopeful that advances in immediate testing and a vaccine solution will become evident during the next six months, with my own personal target being a return to some degree of normality in Q2 of 2021.
I can see revenue being earned in small bursts of activity over these coming months, as perhaps travel restrictions from certain countries are temporarily lifted, or agents find themselves “getting lucky” with someone on their database bagging a bargain.
Throughout all of this, the feedback from fellow agents is something that I am feeling to … a low-level depression and apathy that is making me feel less motivated, optimistic and less generally content than is normal. Knowing that we need to keep plugging away at the daily basics such as database communication, mailshotting and lead generation, as well as paying the bills and controlling costs, makes for strange and unsettling times.
Hopefully better times will return and our patience and hard work in these dark times will pay off.
About the author:
Sean Woolley is the founder and director of leading real estate agency Cloud Nine Spain. Sean has lived and worked in Spain for 20 years.
For more insights into the Spanish property market, and tips on buying property in Spain, pick up a copy of Sean’s new book. “From the Ground Up – The Insider’s Guide to Buying Spanish Property.”