The spring sunlight glints off the snow-covered Sierra Nevada mountains. When I left Marbella on Spain’s Costa del Sol, 90 minutes from here on a modern highway, it was a balmy 75 degrees Fahrenheit. I haven’t seen a cloud since. At 2,200 feet above sea level, in Granada’s historic center, it’s 63 degrees, and sunglasses and short sleeves are the order of the day.
The streets are scented and colored with blooming ﬂowers. Everywhere historic buildings bring alive the romance of old Spain. Granada is the country’s most beautiful city, the jewel in the crown of Andalucía, and today, thanks to the country’s crisis, you can ﬁnd distressed real estate here for up to 50% less than what you would have paid for it four years ago.
Steeped in history, Granada attracts visitors from around the world. Its international airport has ﬂights from most major European cities, and it’s within a two-hour ﬂight of northern Europe’s major population centers. I ﬂew into Málaga on the coast, just a 90-minute drive away.
This could just be the perfect location. There’s culture. Three World Heritage sites, including the exquisite Moorish palace of the Alhambra, are just the headline draws. Take a walk around the medieval quarter and you’ll hear ﬂamenco guitarists practicing outside white-washed cave homes, as old as the city itself. Those nearby snow-covered mountains you can see from the city hide a wealth of ancient villages. There’s skiing, world-class golf, and the beaches of the coast aren’t far off.
The food is great, too. Cured meats hang from the ceiling of the taberna where I’ve stopped for lunch. The lady there slices serrano ham and manchego cheese while we devour the delicious complimentary tapas.
The beautiful and the glamorous are all around me. Some shoulder skis while others sip cava (Spanish-made champagne) in the corner café. They are mostly Spaniards—many come from Madrid for a weekend retreat—and some northern Europeans.
Would you like to know more about Spain’s Real Estate Market and International Real Estate?
Simply sign up for International Living’s free daily postcard e-letters now and receive a special report “International Living’s Insider Guide to Buying Real Estate Overseas.” (We value your privacy. You can unsubscribe at any time.)
Get Your Free Report Here
Property in Spain for less than $100,000 and up to 95% ﬁnancing
It’s very different from the Costa del Sol, where Brits and Germans come to drink the same beer and eat the same food as they do at home. A week before my visit, a banking contact called me with an opportunity that grabbed my attention: newly-completed condos in a historic area minutes from Granada’s Old Town. A bank has foreclosed on the developer. Prices start at under $100,000 and up to 95% ﬁnancing is available. Five minutes later my ﬂight was booked.
Times are tough in Spain. Half her youth are unemployed. Her economy, banks, and real estate industry are in tatters. They built too many homes—properties that nobody would ever want. Speculators bet on rising prices and snapped them up. Then, in 2007, the music stopped. And in 2008 things really ground to a halt. That’s why we have this opportunity.
Estimates put the total of Spain’s excess supply and distressed inventory as high as two million units. Much of it—50% is a reasonable guess—is along the touristy costas. Until now, there has been no genuine effort to sell this inventory. But ﬁnally the banks are doing deals. And that’s why I’m here. I’ve been following this market for the past three years. I haven’t seen a deal I liked since late 2009, when I introduced members of my Real Estate Trend Alert service to a distressed opportunity.
The deals just haven’t been good enough to get my attention. Because Granada didn’t see the same development as other parts of Spain, this also means that distressed, completed condos in the right part of town are almost non-existent.
Appealing property deals in Spain’s Real Estate Market
But now we can get some appealing deals on bank-foreclosed real estate. Like these newly-built, 800-square-foot condos minutes from central Granada for under $100,000. The ﬁnancing, of up to 95% of the purchase price, is available direct from the bank that has foreclosed on them.
This part of Spain has intrinsic value that will always hold appeal. And what development there has been in Granada is tasteful. The area where these condos are is peaceful, quiet, and classy. It’s surrounded by high-end villas with pools. Except for this building, it’s all high-end, single-family homes. The area is known as “Little Vatican” because of the many churches and convents dotted around the neighborhood. You can walk to the historic center of the city in less than 10 minutes. Construction of the condos is complete.
And to a very high standard. When scouting for distressed opportunities I’m only interested in construction that is complete. And with a HOA functioning. Also, I’m looking for somewhere that doesn’t have a supply overhang. This is a stunningly beautiful place that ticks these boxes.
And with prices for an 800-square-foot condo starting below $100,000, this is a killer deal. Of course, real estate here is priced in euros, so you have a currency risk.
Who knows what the future holds for the euro? But your mortgage of up to 95% is also in euros. So by mortgaging your property you hedge most of your currency risk. Your monthly payments could be as low as $600.
The bank that has foreclosed on the developer is offering this finance deal to Americans and Canadians, too. Put simply: It is trying to turn a non-performing loan to the developer into many smaller performing loans to people like you.
Getting a mortgage in Spain for anyone right now is difficult unless the bank is moving around a distressed debt like this. The banks aren’t lending. Just moving debt from people who aren’t paying it off to people that they hope will.
These condos were built with the local market in mind. Young professionals or retirees from the area looking to downsize would live here. Or so the plan went until the crisis hit. The developer did a good job finishing the building but couldn’t pay the bank back. So the bank took back the condos and wants to pass them on to buyers who will be able to make monthly mortgage payments starting at $600. Construction costs alone would have been in excess of $200 per square foot. And that’s not ﬁguring any site cost.
Today you can buy from $125 per foot. In Spain, as in much of Europe, transfer costs are high. It can vary, but figure on 10%. But your holding costs are low. Your monthly holding costs for one of these condos is just $79.
Down on the coast there are also deals to be done. And buyers from Norway and Germany are back in force. Not the frenzy there was eight years ago, but a nice home at the right price will sell fast. Bank foreclosed condos sell at discounts of up to 64% from prices four years ago.
Like $135,000 for a two-bedroom, two-bathroom condo that was put on the market four years ago for $380,000. This condo is in La Duquesa, 22 minutes from the high-end Puerto Banús. Up to 70% ﬁnance is available.
Down the coast, $140,000 buys you a four-year-old, two-bedroom, two-bathroom condo direct from the bank. That’s 900 square feet of inside space and a terrace of up to 600 square feet on the ground ﬂoor. A marina is eight minutes away and Málaga Airport is 50 minutes away. This condo stays rented in July and August for $725 per week.
Today in Spain you will ﬁnd a lot of junk. There are too many condos that should never have been built. But you’ll also ﬁnd some killer deals in places of outstanding natural beauty with year-round sunshine.
About the Author: Ronan McMahon is a director of Pathfinder, IL’s preferred real estate advertiser.
FREE Real Estate Report
Sign up for International Living’s free daily postcard e-letters now and receive a special report “International Living’s Insider Guide to Buying Real Estate Overseas.” (We value your privacy. You can unsubscribe at any time.)