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Spanish 'high-end' properties more resilient to property downturn

Source: Press Release : Savills International - Tue 27th Sep 2011

Research published today by Savills International and shows that France has replaced Spain as the favourite destination for second home owners to invest, with Spain in second place.

Traditional prime property hotspots which attract wealthy, lifestyle buyers have been more resilient to the downturn, include high-end locations such as Mallorca. Cash-rich, high-spend buyers have maintained the robust property values achieved in top holiday home destinations today.

When choosing where to invest, UK buyers are most influenced by factors such as proximity to restaurants and bars, beaches, and being in easy reach of airports to reduce travel time. Most buyers have bought in destinations with extensive tourism infrastructure including cultural and historical attractions, golf courses, beaches and children's entertainment.

In France, Italy and Switzerland, buyers have typically opted for older, traditional style properties, while in the US and Cyprus, and also albeit to a lesser extent in Spain and Portugal, investors have tended to buy more modern properties. This reflects the volume of new build development in these locations.

More than half of those surveyed said that income generated from letting their property partially covered costs, helping them to mitigate against current global economic conditions. More interestingly, almost a third of respondents said that rental income completely covered their costs and 13% indicated it made them a comfortable profit: Over one in 20 holiday homes generated in excess of 30,000 per annum.

A 2011 survey of more than one thousand tourists who were looking to rent holiday properties showed that similar to traditional overseas buying trends, Spain, France, the UK, Italy, Portugal and the United States topped the list of favourite destinations. They were followed by areas in south eastern Europe, Cyprus, Greece and Turkey, with Ireland in tenth place. These are typically summer destinations, with almost 80% of holiday rental requests being for the months April to September, with peaks in July and August.

The report noted investment opportunities where low house prices and high rental income can generate strong yield potential, and specifically mentioned the Balearics as falling into this category. This demonstrates that despite comparably low capital values in these locations, holiday home rental demand supported by strong tourism fundamentals, remains strong.

Rebecca Gill, research analyst at Savills International and the author of the report, said: "Clearly, holiday home owners and tourists share similar preferences for overseas properties. Strong underlying "lifestyle demand" for a property helps to support an investment case. It is these fundamentals that drive longer term capital appreciation and attract rental income."

Tim Boughton, General Manager, commented "The holiday rentals market is one of the fastest growing sectors in the travel industry with around one in five people now opting for this type of accommodation over a hotel due to the value and experience it offers. This is good news for today's lifestyle-motivated buyers as it generally means they can be assured of a strong rentals market which will help contribute towards costs."

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