Rental Market in Javea and its Impact on Sales
I am a real estate agent in Javea, I started my business 7 years ago (2010) in the middle of the major downturn in property sales. I focused my business on long term rentals, during the recession this was a reasonably buoyant market.
The sales market was slow approaching non-existent, holiday makers were looking at cheaper holidays in locations such as North Africa and Turkey or just staying at home as the recession hit, taking its toll on holiday bookings. Owners in Javea turned to the long term rental market for a return on their empty properties that they could not sell.
Back in 2010 there were lots of long term rental properties on the market and less agents than there are now. I could show a client 5 different properties in an afternoon and still have more that fit their requirements. They were spoilt for choice. Offers could be made on the prices and deals were done. Now I´d be lucky to come up with one decent property and there is no negotiation in price.
Sadly, for long term renters times have changed in this market, the demand has completely outstripped the supply. Like all market places this has pushed prices up and the rental prices unlike purchase prices have risen steadily. Properties that I rented for 650 euros per month 3 years ago, are now achieving 800 euros per month. That´s around a 25% increase in 3 years.
When I first started renting property 7 years ago, a modern 3 bedroom apartment with pool would fetch around 650-750 euros per month, now owners can expect in the region of 900-1000 euros per month.
Luxury villas have increased even more. I have a villa on my books that now rents for 2500 euros per month, when only 4 years ago the owner was getting 1600 euros per month. That´s over 50% increase from their original income within 4 years.
I have thought long and hard and looked at the changes that have happened to bring about this shortage of long term rental properties in Javea, and subsequent increase in prices. There has been a slight up turn in the sales market, but nothing like a boom, prices are not increasing in this market. Staying steady or maybe up the odd one or two percent increase. There are still investors that want a return on their investment if they can´t sell for the right price. Even if properties are sold the purchasers may be investors and wish to rent.
I believe there are 2 main reasons.
- Increase in Demand
There is an increase of people who want to live and rent here in Javea. Some would suggest that these people are renting because they can´t get a mortgage. This may be the case for some, but I don’t really think we are seeing a difference in the demographics over the years. The renters are people that live and work here who have never had the criteria for a mortgage past or present, offshore worker’s families where living here is often a temporary option and retirees who don’t want to commit to buying.
To support the argument that there is an increase in demand, I have several landlords who own multiply properties, which are all rented out and have been for a while. A few years ago these owners would have a list of empty properties – An example is a company that owns a whole block with 20 apartments, they would send a weekly email of the ones that were available. We have not had an email for a long time as they are all occupied. This shows to me an increase in demand, the property pool has not reduced, there is just more people wanting to rent long term. In turn pushing the prices up. This is good for landlords and investors but not for renters.
- Holiday Market Buoyancy
The holiday market has increased over the last few years with Spain being a safe destination for Northern Europeans, there has been an increase in this area of French, Dutch and Belgians, brought on by the insecurity in North Africa destinations. The Brits have always been a strong presence and places like Turkey which are not so attractive at the moment, so more Brits are turning to Spain for their holidays.
Owners that perhaps would have considered long term rental are now being enticed by premium weekly rates. I understand this increase in demand has also pushed up the price of holiday rental properties. I am not a holiday rental agent so I can’t give exact figures, but a similar increase to the long term rental prices. Between 25-50% over the last 3-4 years.
Seeing this rise in rental returns either on the long term or the holiday rental market must be great for property owners that have bought during the downturn. Making the return on investment so much higher. I am surprised that the increase in rental potential has not started an upturn in the sales market. These markets are interlinked, investors look at rental potential alongside capital gain when choosing an investment property.
There is such a strong rental market here in Javea it must be an incentive for property investors. What I have noticed of late are the sales of new builds increasing, there are several new apartment blocks being constructed and if the builders are to be believed selling like hot cakes. Are these sales to investors looking to cash in on the great rental returns?
The writer of this article, Jo Ivory, has a Javea real estate blog
I truly believe if it wasn’t for Brexit and the fall in the pound we would have seen a bumper year for sales in 2017. As it is it’s been a rocky few months on the sales market. Although I still think shrewd euro currency investors are buying now. According to Tinsa the national house price index the prices in 2017 are the same as they were back in 2003.
Over the last 14 years we have seen a massive rise and fall in the property prices. The average price on the Mediterranean Costas now and in 2003 is 1380 euros per square meter. The prices increased dramatically from 2003 and hit a peak in 2007 of 2590 euros per square meter. Surely there must be an upturn in property prices soon, prices levelled out in 2013 and have stayed the same now for the past 3 years.
The increase in the rental income could be the stimulus for the sales market to start picking up. It must be a major factor in all property marketplaces across the globe. We can only hope that investors start to see the potential returns from property here in Javea. These returns being better or as good as other property investments.