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S S ISSUE #5 2016 I ITALY 2016 Overview

Spain Market Overview

Since Spain turned a corner in Barcelona casts its net far wider above but also provide Marbella with 2014, raising its head from the than ’s. While Catalan wealth a set of sustainable regulations for depths of recession to outpace props up this powerhouse behind the future expansion of the city and most Eurozone economies Spain’s economic recovery, the city renovation of its housing stock. But last year, select pockets of also attracts an extraordinary variety it does not affect – nor is it deterring its mainland and islands have of nationalities, most of whom want – most buyers and is throwing up taken on a momentum of their a reasonably-priced, central bolthole some opportunities among older own. in areas such as the Eixample, properties in well-located and well- Gothic Quarter or beachside established areas. Spain is far from out of the woods Barceloneta for their own occasional is a phenomenon all on its own, altogether, political deadlock use and rental income. persists following two general more closely resembling St Tropez, elections in quick succession and Barcelona is also embracing the Miami and Mykonos than the rest unemployment remains high. But luxury lifestyle with a new calibre of Spain in terms of the lifestyle the regions that Knight Frank of hotel, including the Mandarin it offers and the young, wealthy specialises in – Madrid and Oriental, the arrival of brands demographic it attracts. such as Soho House and the Barcelona, Marbella and the Balearic As a barometer of Ibiza’s transformation of its Port Vell islands of Mallorca and Ibiza – are prestige, look no further than the harbour into a super-yacht marina. seeing clear signs of recovery, each unprecedented number of private fuelled by different forces. In Marbella, Northern European jets and super-yachts that sweep in Madrid has seen property prices and Russian buyers dominate each summer – and beyond, as rise since 2011 – and although 70% demand. The market turned Ibiza’s high season becomes of buyers are Spanish, the bulk of in 2012 and prices are rising. ever longer. Northern Europeans are fuelling overseas demand comes from Latin The neighbouring and larger island sales of 10m+ properties in prime America, whose troubled economies € of Mallorca caters to all holiday areas such as the Golden Mile’s are driving investors to what they see budgets, but its properties are beachfront and La Zagaleta. as a safe Eurozone destination. particularly sought-after by wealthy Their preferred prime locations are There is also healthy demand buyers in search of a city, waterfront central neighbourhoods such as between the two extremes for or inland property. Palma offers Salamanca, Chamberí and Jerónimos modern, ideally newly-built villas all the charm and attractions of and they are increasingly viewing or apartments on small gated a cutting edge, cultural capital, Madrid as a place to relocate their communities. Off-plan investment is while other buyers find their haven families and educate their children. also proving popular again – a way among the upmarket marina or golf Madrid has eminent lifestyle appeal for buyers to get the high-quality, communities or in idyllic mountain – and it doesn’t even take that long high-tech new home they want towns such as Deià and Sóller. to get to the beach anymore, with and to finance it through stage a 90-minute high speed train link to payments. Their appeal may be distinct and Valencia and a connection to Malaga diverse, but these are all markets on The annulment of Marbella’s 2010 in just over 2.5 hours. the move. They each have a sense urban plan, which meant that the of energy, optimism and a hugely Low resale stock levels and the city now abides by the 1986 Urban attractive lifestyle offering – and scarcity of new-build (there are just Plan has brought about some overseas buyers are back and want 250 new units currently on sale in uncertainty as to the future of the to be part of it. the city) has kept Madrid’s property 16,500 properties (about 15% of values relatively stable in recent Marbella’s housing stock) which do Mark Harvey years. When a property comes on not comply with the 1986 Urban Head of the sale in a prime address, there is Plan. Local and regional authorities Spanish Department strong competition among buyers, have expressed their ongoing 99% of whom won’t need commitment to drawing up a new a mortgage. Urban Plan. This will deal with the For Sale - Sierra Blanca, Marbella

02 Knight Frank Inside View Knight Frank Inside View 03 Lifestyle

Fuelling creativity through food Dani García talks about his passion for traditional Andalucian food and the launch of his most personal project to date By Zoe Dare Hall Dani García Restaurant

When the Michelin-starred chef his two restaurants at the five-star becoming an apprentice of the Soon, diners in Madrid will have Each dish represents a chapter “García’s ambition is to Dani García launched CALIMA Puente Romano hotel: the two Basque chef Martin Berasategui – the opportunity to enjoy Garcia’s and a reflection of the book restaurant at Marbella’s Gran Melia Michelin-starred Dani García and who has eight Michelin stars, more taste of Andalucia as the chef where tastes, local produce show that traditional Don Pepe hotel just over a decade the Andalucian brasserie and tapas than any other Spanish chef. recently announced that he will and creativity are the basis of Andalucian food has ago, he found an unusual partner restaurant BiBo. “Haute cuisine open a branch of BiBo on the the story.” The experience inspired García to work with. He chose Raimundo with a casual touch” is how García city’s prestigious Paseo de la a place in world-class ready to forge ahead with his own Chefs have notoriously little Garcia del Moral, a professor in describes it. this year. He has also brand of cuisine as head chef chance - or ability - to relax, used cuisine, elevating pathological anatomy at Granada hinted that there may be another One of his favourite places in at Tragabuches in the dramatic to working long, anti-social hours the region’s natural University, and the meeting of minds new restaurant in the offing too – Marbella is the beach and it’s where Andalucian cliff top town of Ronda. in a high-pressure environment, resulted in García devising a culinary possibly in New York, a market produce – whether it’s he starts each day, with an early “It’s a place that’s very special to but when not in the kitchens way to use liquid nitrogen frozen he has been looking to crack for morning run along the promenade. me. It’s where I started my whole at Puente Romano, García tuna from Barbate or at -196C. some time. Heading east, his route takes him career and where I received my spends time on the beach with vegetables from his his daughters or playing padel CALIMA saw him become the to central Marbella on the yellow, first Michelin star at the age of 25,” The bigger his brand becomes, the own garden – to a first Andalucian chef to earn two sandy path that sees a constant he says. He also considers it a more he is able to “think local”, he (a tennis/squash hybrid). Asked Michelin stars. And for a while, stream of joggers, cyclists and personal triumph to have introduced says. “Our culture and biodiversity to recommend restaurants that new level. ” the average visitor to the Costa Garcia was one of just three chefs roller skaters enjoying the beauty the likes of cherry gazpacho and makes us one of the richest Spanish del might not discover, he in Europe – along with Heston of this stretch between the sea and ajoblanco (chilled almond and garlic regions, gastronomically-speaking. suggests the fish restaurant Los Blumenthal and Ferran Adrià – mountains and lined by some of soup) to the menu of an upmarket The same goes for Spain at a global Marinos José in Fuengirola, La to use nitrogen in cooking. It Marbella’s most opulent mansions. restaurant at a time when haute level. Ferran Adrià and thousands cuisine was synonymous with of people who passed through El Cosmopolita – a modern tapas inspired him to create such dishes His run also takes him past the French cooking and foie gras. Bulli are now all over the world and restaurant in Málaga, and the as frozen raff popcorn with raw beachfront Puente Romano, where spreading the understanding of Arab-inspired Noor Restaurant Motril baby shrimp and devise a he can be found most of the time. García’s ambition is to show that what Spanish cuisine is all about.” in Córdoba, run by his friend way to freeze olive oil at -15C. Not “I tend to be in the kitchens of my traditional Andalucian food has Paco Morales. for nothing is the 40-year-old chef restaurants. I alternate cooking with a place in world-class cuisine, Fantasy and magic play a big role He would add one more place considered to be leading the way in the creative process in a quiet area elevating the region’s natural in García’s culinary exploration. He to that list – his own restaurant, Andalucian cuisine. of my restaurant,” says Garcia. produce – whether it’s tuna from talks often about encapsulating the BiBo. “As a diner, it’s where I love Barbate or vegetables from his own spirit of fairy tales and children’s Today, García spends most of his Andalucia plays a vital role in his to go. It reflects my travels and garden – to a new level. “I have a stories, and his new menu at Dani time in Marbella. “It’s where I was inspiration. His earliest memories of everything I like,” says García. The great attachment to my land and García - “My most personal project,” born and it brings back memories food, he says, are “my mother in the Dani García brand may be about Andalucian culture, so it is naturally he says - is based on the book ‘The of my childhood. It’s where I live kitchen preparing a delicious lunch. to see significant expansion, but in my dishes. In my kitchen, I Little Prince’. “It’s a menu in which now, too, in a house in Puerto My mother and my grandmother the man behind it is never happier merge techniques and local and the flavour is the protagonist,” he Banus with spectacular views over were my biggest influences.” than when in Marbella. La Concha mountain”. international ingredients in a union explains. “The flavour is invisible to He trained at Malaga’s hospitality between tradition and avant-garde the eye. As we grow, we inevitably Marbella is also where he works, in school, La Cónsula, before Andalucian products,” he says. change our perception of things. Chef Dani García

04 Knight Frank Inside View Knight Frank Inside View 05 Research € Prime price Price band Residential No. of purchases performance most in Sales by foreign buyers1 Nationalities (Annual % change demand 2015 v 2012 H2 2014 v H2 2015 Spain’s changing foreign buyer profile (%) to April 2016) (% change) (% change) Gaining ground 31% Spain has earned the title of Europe’s comeback kid but to NON-EU what extent is the country’s prime property market mirroring the economy’s return to growth? 24%

By Kate Everett-Allen 2013 Madrid Barcelona Spain’s economy has recovered Madrid 16% 4% € € strongly following the Eurozone Madrid has been back on the radar 2% 1m- 3m 27% 18% 8% < 2m3 86% 8% crisis. In 2016, Spain’s GDP growth of both residential and commercial 7% € € € 8% 10% (2.6%) is forecast to exceed that of investors for two to three years. both the UK (1.9%) and Germany Nationally, house prices fell 31% on (1.5%) and remain well ahead of the 40% average from peak to trough but NON-EU Eurozone average over the next three Madrid’s prime markets recorded years. declines closer to 20%. Typical prime 22% Mallorca Ultra-loose monetary policy by prices now range between €5,000 € the European Central Bank and low per sq m and €7,000 per sq m. 5% €1m-€3m 38% 21% oil prices have led to an increase The key districts of Salamanca, 2016 in consumer spending, higher Jerónimos and Chamberí account 13% employment and rising household for around 70% of prime property incomes. The market fundamentals searches in Madrid, with the areas of 10% are improving but there remains a 3% and La Habana also on the 5% 7% backdrop of global uncertainty. radar of wealthy buyers. EU UK* GERMANY SWEDEN FRANCE DENMARK Two key property market trends NETHERLANDS A third of Madrid’s prime buyers are stand out in 2016. Firstly, the rise of NON-EU 2 now from abroad. Since 2012 Latin US SWITZERLAND RUSSIA MIDDLE EAST Marbella Ibiza the non-EU buyer – Latin Americans LATIN AMERICA OTHER American buyers have increased their € now have a strong presence in Knight Frank Research. € presence, accounting for 30% of all 3 Madrid, Middle Eastern buyers *Data and classifications accurate at time of printing 3% <€2m 56% 15% 10% 1m- 3m 37% 21% sales agreed in 2015 by our Madrid € € are active in Marbella plus Swiss sales team. Venezuelan developers purchasers in Ibiza. The profile of are also behind a number of key Marbella Spain’s luxury buyers is shifting. The prime residential developments in the Rising sale volumes in Marbella Knight Frank, Ministry of Public Works, General Council of Notaries second key trend is the strength of 2 city. suggest confidence is returning to the ¹ By Region/Autonomous Community, Includes municipalities of Benahavis and the €1m-€3m price band; nearly all Estepona 3 Up to €1m for apartments, up to €2m for villas market. Price growth is slowly shifting of our prime markets now consider it Barcelona their most active market segment. into positive territory with newly-built Prices in Barcelona levelled out in modern villas in good locations, established areas which comply across the Balearics jumped 20% in The number of sales on the island 2015 and the prime areas of the city beachfront properties along the with the 1986 Urban Plan, as well the 12 months to January 2016. increased 37% in the three years such as Eixample and Zona Alta have Golden Mile and gated communities Economics as those which sit beyond the to 2015 and foreign buyers have GDP growth (annual % change) seen a small uptick in prices. such as Sierra Blanca, Camojan and The construction of new homes municipal boundary in areas such become more active. La Zagaleta outperforming the wider 3.5% SPAIN UK* GERMANY Confidence is returning. The number on the island virtually came to a market. as Benahavís and Estepona. Ibiza attracts more than 8,000 of residential sales in Barcelona standstill post-2008, but the first two 3.0% private flights a year and according increased 86% between 2012 and Mallorca months of 2016 saw a 55% increase Interest from Middle Eastern buyers to NetJets, London to Ibiza and 2015. Mallorca’s prime market, having in the number of applications for new 2.5% has increased significantly. The Palma de Mallorca are some of its number of online property searches reached its trough in the winter of residential projects compared with Local buyers, buoyed by positive most popular routes. 2.0% undertaken by Middle Eastern buyers 2014, has entered a new cycle of the same period in 2015, the largest economic indicators, are active growth. The island’s prime markets rise in the last 10 years according As the southern coast becomes once more but foreign buyers looking at properties in Marbella 1.5% of Andratx, Son Vida and Deià to the Balearics Statistics Office, more developed so attention is continue to dominate the luxury surged 164% on Knight Frank’s website between 2014 and 2015. remain firm favourites with British, IBESTAT. turning to inland markets and the 1.0% end of the market. German and Scandinavian buyers. Ibiza northern coastline. The new road The strength of sterling reignited The recent ruling regarding Marbella’s to San Juan in the north east will 0.5% interest from British buyers in 2015 2010 Town Plan, which affects around Not only has foreign demand The top-tier of Ibiza’s property reduce travel times significantly. as the GBP/EUR rate reached 1.4, 15% of Marbella’s housing stock, strengthened (sales to foreign buyers market has become uncoupled from 0.0% has led to some caution for those 2015 2016* 2017* interest amongst French, Belgian and increased 21% in 2015 year-on-year) the wider market and is witnessing Dutch buyers has also strengthened. properties affected, but it has also but sentiment among local buyers strong price gains as demand IMF World Economic Outlook refocused attention on properties in has also improved. Mortgage lending outpaces supply. *Forecast

06 Knight Frank Inside View Knight Frank Inside View 07 Buying Guide

Golden Visa With the aim of enticing investment The purchase of into Spain, the government decided in 2013 to give the promise of a residency permit real estate in Spain valid for two years (extended to Buying property in Spain should be relatively straightforward, but five years in 2015 and including we would always recommend that you engage the services of a the right to work in the country) reputable agent, lawyer and notary. and a path to citizenship in the longer term, to anyone willing to invest at least €500,000 in Buying process charged at 10% of the value, plus Spanish property. Alternatives 1.5% Stamp Duty, these are both to real estate investment include The property is selected and the paid by the purchaser. Whereas on depositing one million euros in a terms agreed on. The property must commercial premises and garages, Spanish bank account, investing then be secured. This can be done not annexed to a home, and parcels in Spanish company shares to the through a private contract between of land purchased directly from a same amount or two million euros the two parties. It is customary that developer or builder VAT is 21% plus in Spanish public debt, or indeed 10% of the purchase price is paid at 1.5% Stamp Duty. this time. On completion, a deed of bringing a job-creating project to conveyance, the ‘escritura pública’, On resale properties there is a the country. must be signed by both parties at property transfer tax according N.I.E. (Foreigners’ the office of a Spanish public notary. to a sliding scale depending on The notary’s duty is to certify the location and sales price. Identification Number) deed of conveyance as a registered Any non-Spanish buyer must However, there are certain exceptions: public document. apply for an NIE number from • 3.5% when transferring properties the local police authorities. This Notary’s Fees whose real value (the updated number is required for any property cadastral value multiplied by the The notary’s fees are paid as stated transaction (buying, selling, utilities, rate of the municipality where by law, 80% by the vendor and 20% insurance, etc.). the property is located) does not by the purchaser unless otherwise exceed €130,000 as long as it is For more information please agreed, although in practice it is used as the purchaser’s permanent consult our Guide to buying customary that the purchaser pays short, second and subsequent home and if the purchaser is not Property in Spain, prepared for for the full amount. The fees are real estate transactions between over 35 years old, or €180,000 us by Diana Morales Properties. fixed by law on the basis of a sliding companies/self-employed when the property is to be used as Laws and regulations are subject scale. It is advisable to appoint a local the purchaser’s permanent home individuals are only subject to lawyer, who speaks the purchaser’s to change, and so are the personal and the purchaser is certified as 2% Stamp Duty. language; the lawyer will carry out a circumstances of each individual. having over 33% disability. title search, and advise the purchaser In all cases there is also a municipal This has been compiled as a guide on all aspects of the investment. • 2% when a property is purchased tax, ‘Plusvalia’ (which should not be for potential buyers of property in Lawyer’s fees are around 1% of the by an individual or company whose confused with Capital Gains Spain, it does not seek to provide purchase price of the property. business activity is classified within Tax which the seller is liable for or replace legal advice which you the real estate sector for further when the property is sold). This should obtain, nor is it intended to Notary and registry fees are set resale, and it is specified in the Registration Residence Permits have any contractual effect. by law and according to a sliding ‘Plusvalia’ is paid by the seller, purchase title deed. The new owner scale. Together, both fees amount to unless otherwise agreed. It is a It is necessary to register the It is not necessary to have will have a period of five years to sell approximately 1.5% of the purchase municipal tax on the increase in new ownership by inscribing the a residence permit to buy a the property. If not sold within this value on the land, from the date deed of conveyance, ‘escritura property in Spain unless you are price. time frame, the owner will have to when it was purchased until it is pública’, at the Land Register planning to live in Spain for over Purchasing Costs/Taxes pay the difference to compensate sold. From January 2013, proof of up to the normal rate applicable. Office. This inscription is the final 183 days per calendar year. In Overall, taxes, legal fees and payment of the ‘Plusvalia’ must be step in assuring your legal title to that case, you need to apply for expenses directly related to the • If both vendor and purchaser provided in order to register the the property. fiscal residence in Spain. purchase of a completed residential are companies or self-employed new ownership. property amount to between 10%- individuals subject to IVA (VAT), Ownership Non-European Union citizens If the purchaser applies for a who want to reside permanently 11% approximately. and they waive their right to Apart from individual ownership, mortgage on the property, in Spain must obtain a special IVA exemption, there will be a a property can be owned by a On new residential properties there will be approximately 3% residence visa from the Spanish ‘Taxpayer investment on VAT’, company. Owning companies purchased direct from the developer additional expenses. Consulate in their home country. and in this case there will be can be Spanish companies or or builder, there is VAT (IVA in Spanish) With this visa, they can apply for 0% IVA and 2% Stamp Duty. In foreign companies. a residence permit.

08 Knight Frank Inside View Knight Frank Inside View 09 Our Team

The Spanish Network The London team works closely with our network of local experts in Spain Madrid and the Balearics. Our local agents have been carefully selected for their integrity, experience and professionalism, and Mallorca

speak English as well as Spanish. Ibiza

Marbella

London Spain MARK HARVEY Knight Frank Madrid Head of the Spanish Department +44 20 7861 5034 ERNESTO TARAZONA [email protected] Head of Residential and Land +34 915 959 045 Important Notice EDWARD DE MALLET MORGAN [email protected] Prime sales +44 20 7861 1553 JOSE GREGORIO FARÍA © Knight Frank LLP 2016 – This report is published for general Recent Global Publications [email protected] Head of Prime Residential information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, THE +34 915 959 091 SPANISH VIEW WEALTH Propiedades únicas a la venta en España REPORT KATE EVERETT-ALLEN [email protected] analysis, views and projections presented in this report, no responsibility The global perspective on prime property and investment 2016

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