Spain’s real estate market has been hit hard by the global recession, with an estimated 1 million to 1.2 million unsold new homes on the market, many of them unfinished, according to Frédéric Mangeant, managing director of the real estate company Knight Frank Spain, which is based in Madrid.
The market for new vacation homes on the Costa del Sol peaked in 2004, much earlier than in the rest of the country, said Christopher Clover, managing director of Panorama Properties, a real estate company in Marbella, Spain. There are about 25,000 new unsold homes in the Costa del Sol region, he added.
In recent months there has been a wave of foreclosures, and large developments have not been spared. More foreclosures are expected, Mr. Mangeant said, adding that many banks are bundling foreclosed homes with financing to attract buyers. He estimates that prices have fallen 30 percent since the global market peaked in 2007.
Unfavorable exchange rates and a lack of confidence in the Spanish market are keeping foreign buyers away, according to Mr. Mangeant. However, the market for luxury homes is stronger, because wealthy buyers are less likely to need financing, and sellers can afford to hold onto their homes until the market recovers.
For unique houses with historical appeal, or homes in areas unencumbered by a glut of new developments, prices have taken a slightly smaller hit, Mr. Clover said — more like 15 to 25 percent since the peak of the market.
Two-bedroom apartments on the Costa del Sol average 250,000 to 850,000 euros (about $340,000 to $1.1 million), Mr. Clover said. Houses at the lower end of the market, below 700,000 euros ($950,000), have fallen the farthest.
Mr. Clover said houses in the 2- to 3-million-euro range ($2.6 to $4 million) are selling 15 to 25 percent below their peak values.
