Traditionally, the Iberian mainland has been one of the top destinations for Brits seeking to buy property overseas, looking for Spanish property bargains. For the past 40 years, whether you were looking for an investment property, a holiday home, bargains, or a spot to sit back and enjoy a quiet retirement, Spanish property was the one for you. There has, however, been a lot of hype of late surrounding up-and-coming markets, with their off-the beaten-track appeal, rustic charm and, most importantly, cheap properties. But should we really be writing Spanish property off so easily and do bargains really still exist?  Steve Binge of the Property Showrooms thinks not. "Many people are now looking to purchase property bargains in emerging markets, such as Bulgaria and Croatia, but the appeal here is usually driven purely by the price with Spain being the preferred location by most".

So why does Spanish property have such enduring appeal to the British and are there bargains to be had? The answers are obvious. Spain is a tried and tested destination for expats. It offers a climate and lifestyle with universal appeal. The popularity of the destination with holidaymakers creates the potential for good property rental returns for those seeking investments. Budget airlines operate flights to Spanish destinations from all major UK airports making access quick, easy and cheap. Moreover, the long history of Brits buying Spanish property has prepared the way for others to follow. Steve Koeck of Almerisol points out that "The Spanish are geared up to deal with the British market. You can go anywhere and find an English speaking agent. Could you do that in Bulgaria or Turkey?" Certainly, the Spanish costas, 'lapped' by the clear blue waters of Mediterranean Sea, remain well-liked by Brits both as a holiday destination and a place to seek out property bargains. There is something to appeal to everyone, from the endlessly popular and commercial Costa Blanca, Brava and del Sol, to the rugged and unspoilt emerging new 'hot-spots' of the Costa Dorada, del Azahar, Cálida, de Almeria and de la Luz So while the Spanish costas can accommodate all tastes, can they accommodate all budgets?

Market overview
Although we can refute the charge that the Spanish property market is teetering on the precipice, it is also safe to say that the Spanish property market has changed substantially over the past few years and has slowed considerably of late. By the year 2000, the huge demand for Spanish property had made large companies rich and allowed the proliferation of a multitude of smaller property development companies and real estate agents. Now, in 2005, the market place is somewhat different and bargains are harder to find.
 
The Spanish domestic market, driven by a good economic performance, continues to deliver strong sales activity and steadily increasing prices. However, the international market, which had sent prices in popular costal resorts soaring, has dropped off in the last year. Inmueble magazine has reported that foreign demand for Spanish property is down by nine per cent from last year. Estate agents in the Costa del Sol and Blanca have reported that the market is very quiet, making it increasingly competitive in terms of service and quality of property. "Its natural selection", observes Binge. "The agents offering the best service and property inventories at the best prices are thriving while the others fall by the wayside." Overall, Spanish property prices are rising, but the rate of this increase appears to be slowing. According to the latest government figures, the average property price rose by 4.2 per cent in the first quarter of this year. At the first quarter of the year annualised, property inflation was 17 per cent, dropping to 15 per cent on the same basis at the end of the second quarter. However, Mark Stucklin of Spanish Property Insight, an online buyers' consultancy, views these figures with some trepidation. "While they might reflect the overall Spanish property market, they don't reflect the reality on the ground in areas popular with Brits. Prices are stagnant or even falling in coastal areas and there could be bargains to be had", he concludes.
 
In the mainstream coastal towns, property prices have climbed to dizzy heights, good for those who bought early but bad for those looking to buy now. The result is that many people have been priced out of the Spanish property market. Sharon Hillyard of Homes Overseas laments that "gone are the days when it is possible to buy property bargains on the Costa Blanca or Costa del Sol in order to spend one's holiday or for investment." Add to this the apparent overdevelopment of the more popular coastal resorts and a declining property market in the UK and you get a recipe for recession.
  
While Spanish property prices in popular coastal resorts are still increasing, they are doing so at a much slower rate and there seems to be some doubt concerning how much more prices in these areas can increase. Newly built coastal property sales have dropped by 3.3 per cent this year and, according to forecasts by the consultancy DBK, sales may continue to decline from 175,000 in 2005 to 170,000 in 2006. Wait a minute, I thought we were saying that the Spanish property market wasn't facing disaster; with all this doom and gloom one could certainly get the opposite impression. Well, let me refer you back to the enduring Spanish appeal. Even if the market does look shaky in the short term, in the longer term, say over a ten-year period, good quality Spanish property in desirable locations will be a sound investment in terms of capital accumulation. In the short term, provided there isn't a dramatic decline in tourism, a property in a popular coastal resort is also a safe bet when it comes to rental income.
 
There is another ray of hope for those interested in short to medium term property investment opportunities. Property in less well-known Spanish areas has shown signs of increasing popularity and investors are beginning to scrutinise these areas for signs of rising prices.  As Mark Seaden of Spanish Property Partnership suggests, "there are reports of developers beginning to see some potential here, and I would expect developers to be moving into less well-known coastal areas in particular in the next few years".

Established Spanish property markets
The Costa del Sol is the name given to nearly 300 kilometres of coastline. Although this stretch of coast runs through the provinces of Cadiz, Malaga and Granada, it is the area between Gibraltar and Malaga that is most popular with foreign buyers. The areas popularity has pushed prices through the roof, with a three-bedroom apartment in a good location costing an average of 475,500 euros. According to a recent EU report, the Costa del Sol is the fastest growth area in Europe in terms of population size. There are currently 2.5 million people living in the region, and to the west of Malaga is the same as all the others. Although the area has indeed been shaped by the tourist industry, this generalisation is unfair. Each town has its own character determined by what it was like before the days of tourism and how it has been developed since.

Malaga, the fifth largest Spanish city, has been influenced by the different cultures which have populated it. Founded by the Phoenicians in the seventh century, the city has been ruled by Romans, Moors and Christians in succession and the marks of its varied history are still notable today. Torremolinos, the first resort heading west from Malaga, was the pioneer for resorts in the area. It has a reputation for discos and high rise apartments and, sadly, this sometimes overshadows some of the more unique aspects of its character. The old fishermen's Quarter has developed into an area famous for its atmospheric shops and restaurants. The main beaches of Bajondillo and La Carihuela certainly have their own charm, but also suffer from overcrowding.
 
Further west still lies Benalmadena Costa, a modern resort built as an extension of the older towns of Arroyo de al Miel and Benalmadena Pueblo. These distinct areas complement one another nicely, providing one of the finest pleasure ports on the Mediterranean, a modern seaside resort and, in Benalmadena Pueblo, a traditional 'white' village. Marbella is a well-known town that, unlike most other resorts on the Costa del Sol, did not start life as a traditional fishing village. Along with Puerto Banus and Estepona, Marbella has been successfully creating an upmarket reputation. Exclusive property developments reflect this with upmarket prices. Over the past two years, it is not just the Spanish costas but the whole of Spain that has experienced a huge building boom, and resorts along the Costa del Sol have among the highest level of new build activity anywhere in the country, with over 700,000 properties beginning development in 2004. The fear is that the Spanish property market will be flooded, driving prices down - good for those looking for bargains perhaps. It is commonly predicted that different market segments will perform in different ways: that good quality property in the best locations will continue to enjoy strong demand while the sub-par new developments in poor locations will have to be sold at bargain basement prices. An important feature that draws many to the Costa del sol is the number of outstanding golf courses, which has spawned the areas alternate name of 'Costa del Golf'.

Further east, places like Nerja and Motril are gradually beginning to attract more attention, although a number of obstacles stand in the way of these smaller places attracting a large influx of foreign investment. Property prices here are certainly lower but the eastern coast of the Costa del Sol lacks the facilities, such as high quality golf courses, which gives this particular costa such widespread appeal. Although people complain about overdevelopment and overcrowding, it seems that they foreign buyers are hesitant to make the move to the less developed areas to the east of Malaga.
  
The Spanish Costa Blanca, or the 'white coast', stretches along the Mediterranean coast from Denia in the north to Mojacar in the South. This costa first became popular with British tourists in the 1950s and 1960s. Affordable air travel opened the floodgates and British property buyers came in their droves. Today, airports at Alicante, Valencia and Murcia are serviced by budget airlines, making the region easily accessible from the UK. The Costa Blanca offers much of the same appeal as the Costa del Sol, but with lower prices – here a three-bedroom apartment in a prime location will set you back 370,000 euros. Like the Costa del Sol, the Costa Blanca has some good quality golf courses, but it also has many other activities associated with the sea, including water sports, sailing and climbing. The Costa Blanca is well known for its large cosmopolitan towns with vibrant nightlife, but sleepy little villages also dot the coastline. 

The Costa can be divided into two distinct scenic landscapes. In the north, mountains run parallel to the shore, descending at times to form rugged cliff faces. To the south, palm trees and salt deposits form the backdrop to sand beaches. Benidorm is one of the most popular towns of the area. It is infamous for its abundance of bars, restaurants, shops, nightclubs and, of course, tourists. The popularity of the town means that it too suffers from overdevelopment while the infrastructure necessary to meet the needs of a growing population can at times be lacking.
 
The more popular resorts along the Costa Blanca and Costa del Sol, Hillyard observes, are increasingly suffering from overcrowding. "These resorts have become very overcrowded, particularly in July and August, which sees an influx of tourists to add to the high numbers of Spanish residents and foreigners who have bought here. This is possibly why we are finding that fewer British people are buying Spanish property in the more well-known costas." According to Stucklin, "the scope for capital appreciation in the best-known areas is now very limited in the short to medium term. Established markets need a recession to clean up the business and teach everyone the old lesson that there is no such thing as a risk-free investment. The established destinations face a lot of challenges, but assuming that they don't completely wreck the natural environment, that infrastructure upgrades are carried out and that the sun continues to shine, then in the long run I think the costas will do fine."
 
An established market with overseas buyers, yet one that has managed to escape the crowded overdevelopment which has become the thorn in the side of the Costa del Sol and Blanca, the Costa Brava is the coastal zone that begins about 40 kilometres north of Barcelona and includes the entire shoreline of Girona. It is an area of natural beauty, taking its name from the succession of steep cliffs and small coves that form the rugged beaches. Some of its towns, such as Tossa de Mar Palamos and Lloret de Mar, have been massively exploited for tourism, but others, such as Tossa de Mar, maintain their original size and quaint fishing-village charm. The area is served by two Spanish airports, Barcelona and Girona, and can also be accessed from airports in the South of France. While the level of British investment has been falling in established Spanish property markets, the Costa Brava has held up comparatively well.
 
Overdevelopment has been avoided along this costa because stringent building legislation has been in place since the 1950s. This means that there is decent scope for capital accumulation, and the market here has not experienced quite the same slow-down as some of the other costas because it is more driven by domestic demand. Having said this, the investment opportunities in the Costa Brava are somewhat limited by the more northern location and more temperate climes, and so rental income is less reliable. Seaden sees a bright future for Spanish property in established costas, but does predict that some of the interest that they generate is being drawn away by the newly emergent markets. "There is still room for capital accumulation in del Sol and Blanca, but I think that some more 'adventurous' investors will be looking at the surrounding coastlines to get in on early gains. I think the future will be healthy for established costas, but we may not see such buoyant behaviour in the future, with some of the present confidence being transferred to surrounding coastlines."

Up and coming Spanish areas
The Costa Dorada, named for its golden beaches, stretches south from the Costa Brava down to Tarragona. It is formed by beautiful, open, well maintained beaches and, like the Costa Brava, is easily reached from Barcelona. Good transportation links and low cost airlines flying into Barcelona, Valencia and Reus make the area easily accessible. This area boasts a good range of smaller fishing villages and lively seaside towns. An important tourist centre, which draws Barcelonans who want to escape the city for a day trip or weekend visit, is Sitges. The Costa Dorada is also home to Port Aventura, one of Europe's largest amusement parks.
  
Until recently, prices here had been relatively low, but an influx of foreign investment has driven them up fairly sharply. Prices here start from 220,000 euros, although expect to pay around 300,000 euros for prime locations. Capital growth has been strong, with increases of 17 per cent on property bought last year, but whether this will continue remains to be seen. The 'orange blossom coast', the Costa del Azahar, runs north of Valencia alongside the province of Castellon. As with the other unknown costas, property prices here have experienced a considerable up-turn. But, says Hillard, "there are places on the Costa del Azahar where Spanish property can be obtained for a fair and realistic price. For example, we have a luxury bungalow situated front line to the prestigious Panoramica Golf Course, with its own private swimming pool and jacuzzi for 260,000 euros. We also have two-bedroom two-bathroom apartments for 120,000 euros." Unspoilt countryside, 112 kilometres of sandy beaches, medieval castles and renaissance mansions are attracting those looking for Spain's traditional face.
 
The Costa del Azahar is known for its rich history and extraordinarily beautiful towns like Gandia, which are still largely untouched by developers. For a livelier, more cosmopolitan environment, the best place to invest in property is Castellon de la Plana, the capital of the province and an important commercial and cultural town. This is made possible by good transportation links, with the A7 motorway linking the coast to major cities and a dependable rail service with stations in all coastal towns. Being a good two-hour drive from the nearest international airports (Barcelona and Valencia) has protected the region from the excesses of mass tourism.
 
The Costa Calida lies in the south east of the Iberian peninsular, sandwiched between the Costa Blanca to the north and the Costa Almeria to the south. La Manga is the biggest tourist destination in the region, stretching between Mar Menor and the Mediterranean. It is an area of substantial importance to property developers, with small 'village' clusters of apartments and villas populating the hillsides surrounding the three golf courses, tennis centre and other recreational facilities located on this narrow scratch of land. Prices in the larger resorts are affordable, with off-plan, two-bedroom apartments starting at 145,000 euros. Spanish property prices in the Costa Calida were kept in check largely by inaccessibility, but this is changing. The costa is just 25 kilometres from Murcia (San Javier) airport and 120 kilometres from Alicante and there are plans for the opening of an international airport in Corvera and a highspeed rail link to Madrid.
 
The Costa Almeria is another up and coming costa that is reaping the benefits of better transportation links, and as road and air links are improving Spanish property investors and tourists are beginning to 'discover' the area. The west of Almeria is home to the highly developed tourist resorts of Roquetas de Mar and Aqua Dulce, which have the facilities of any modern resort, including bars, restaurants, shops and nightlife. Property prices in these resorts are among the highest in the region, but remain considerably lower than comparable resorts in the more established costas. To the north of the costa are the naturist beaches of Vera, where a number of new complexes are being constructed. To the west is the developing resort of Almerimar, with marinas, golf courses, shops, restaurants and other facilities. Prices can be as low as 115,000 euros for a two-bedroom property in this costa, but they do increase as the location improves and it is wise to be cautious as the less established resorts do lack facilities.
 
"Almeria", says Steve Koeck, "is cheaper than traditional areas, plus it has the best weather of all the costas. The Costa Almeria offers everything from apartments close to the beach to villas in inland rural Spain, from new-build off plan to older resale properties. On average in Almeria prices have increased by 20 per cent in the last year. It will slow down for sure, but we can still achieve steady growth for the foreseeable future." The last of the less well-known Spanish costas on our tour is the Costa de la Luz. The 'coast of light' is the most southerly point of mainland Spain. It boasts fabulous dune-backed beaches, pine woods, fishing villages and several nature reserves. Spanish property prices are much lower than the neighbouring Costa del Sol, and as yet it has not succumbed to mass tourism, although its popularity is rapidly increasing.

Tarifa, the point that separates Africa from Europe and Mediterranean from the Atlantic, in particular is growing in fame. Strong winds keep temperatures down all year round, discouraging mass development but attracting droves of windsurfers. This combined with the new trend for nature-related holidays, has increased the popularity of Tarifa with its virgin beaches and unspoilt landscape. As demand grows, so too does the cost of Spanish property. All the lesser known Spanish costas have enjoyed robust price increases throughout the past year, closing the gap between property values here and prices in the consolidated costas. The Internet and low cost airlines have been opening up new areas, while high prices and overcrowding in traditionally popular areas have forced buyers to look further afield. As this price difference closes up, it is likely that demand for property in the lesser-known costas will decline. "Prices in lesser-known areas tend to rise fast at the beginning of their emergence, then slow down when prices start approximating developed areas. Lets face it, few people will buy in these areas if they can afford not to," says Stucklin.
  
The advantage of buying Spanish property in one of the less well-known costas goes beyond lower prices. They are invariably less developed and offer a more authentic Spanish environment. However, on the down side, they are harder to reach, the potential rental income is (at least for the time being) lower and they lack the facilities located in the more established tourist areas. Furthermore, all of the Spanish coastal regions have experienced a surge in development and it has not all been environmentally friendly. As interest in the lesser-known Spanish costas increases some aspects of the lifestyle that makes them appealing may be threatened.

Read the latest Spanish Property Bulletin ezine FREE

Search for Spanish property bargains

For further information about Spanish property:
Almerisol 
Spanish Property Partnership  
Spanish Property Insight 
Spanish Property Showrooms 
C&S Homes Overseas

Related articles about Spanish property:
Check out Almeria in undiscovered Spain
Spain's inland areas and the Islands

Article first published in April 2006