If you analyse the proportion of 3 bed units that were actually built within any given development of apartments in places such as the Costa del Sol or the Costa Blanca, you will son realise that in most cases, only a small proportion of the development was allocated to 3 bed stock – normally the corner units and maybe some of the penthouses. So if we estimate that 3 bed apartments make up approximately 20% of the total number of apartments and penthouses within most developments in Spain, it is safe to assume that this ratio still applies in today´s rather more depressed and distressed Spanish property market.

When we couple this with the fact that most buyers in today´s market are making the purchase with a longer-term vision and with the intention of using the properties themselves for family and friends, then a 3 bed property suddenly holds extra appeal.

This is something that we have noticed in the last 6 months here at Your Key to Spain. Most enquiries via our website are from prospective purchasers looking for a 3 bed property in Spain.

This presents the market with something of a problem.

The glut of available stock is made up of 2 bed properties, while the majority of demand is focused on the harder-to-find, less frequently available 3 bed properties. Therefore while there are savage price wars developing between vendors of 2 bed Spanish properties in some developments, the well-located 3 bed units within the well-regarded projects are holding their own, and are actually sometimes in high demand.

This doesn´t prevent eager buyers from expecting big discounts across all sectors of the Spanish property market, but prospective purchasers need to be realistic and take into account that smaller, micro-markets exist within the market as a whole, and these micro-markets are governed and manipulated in line with the same rules of supply and demand.

1.    research the areas so that you have a specific location in mind, eg Marbella
2.    browse the internet and speak to agents with properties advertised in your chosen area.
3.    ask the agents how they work – do they have their own stock of properties and do they have access to any more?
4.    ask them if they collaborate with other agents, and ask them if they work purely as ´property finders´ .

With the sheer volume of properties in Spain for sale, many prospective buyers are turning to Property Finders for guidance. Here is why:

Good property finders will have access to several thousand properties via their network of agents and the various multi-listing databases at their disposal. They will also have an intimate knowledge of your chosen location, and will be able to suggest plenty of options to help you.

Property finders work by talking to you at length to ascertain your buying criteria, and they will then approach other agents via their network to get hold of the most suitable stock – imagine Phil and Kirsty on Location Location Location!

This means that instead of only having a few hundred of the agent´s own properties to choose from, buyers can literally access the entire portfolio of available property in their chosen location.

The other huge benefit is that buyers only need one point of contact to co-ordinate viewings, so rather than having to liasie with several different agents, you can work ´with´ the property finder very closely to fine-tune the search and secure the best property.

Also, property finders have no allegiance to the vendors, so they are sure to try and secure the best possible deals for the buyer. Also, they are not tied by the handcuffs of representing both parties and so can give you their honest opinion of the Spanish properties that you are inspecting.

And if you think this property finding service attracts an up-front cost, you are wrong. Property finders simply take a cut of the commission that the listing agent earns from the vendor.

So who should you turn to for assistance?Firstly, let´s look at the way the economic crisis has impacted on the agent sector in Spain. Most of the estate agents who were here during the boom years have simply packed up and headed back home, or have been forced to shut for financial reasons.

The agents that are left are operating scaled down businesses, keeping an eye on costs, and many are operating from home. In this market, agents simply don´t have the financial or human resources at their disposal to offer the complete service. By this I mean that no agent in Spain is able to list all of the available stock for sale, advertise it prominently on websites and in shop windows and look after the prospective buyers.

There is therefore currently a tiered system of agents operating in Spain.

Firstly, there are those Spanish property agents who specialise in listing properties, particularly those within a specific location. So for instance, there might be an agent with an office within a very well-regarded development, and that agent can expect to be able to list all available properties within that particular project, safe in the knowledge that he/she has then become the local expert for that particular ´patch´.

Secondly, there are those agents who act as property finders. They don´t have the resources to list their own properties, and choose instead to market to a wide base of potential buyers, via the internet in most cases.

The third type of agent is the one who professes to do everything, and these can often be the most misleading. They may well have a stock of 200 of their own listed Spanish properties for sale, but because they have gone to such an extent to get these properties on their books, they will often be solely focused on marketing just those properties (remember that these agents are not only trying to look after the buyer, but also have to handle the expectations and demands of the vendors, many of whom are particularly anxious in the current market). The danger with these agents is that you simply don´t get to see the range of properties that most people need and want to see in such a competitive markletplace.

Part 2 to follow

One of the jewels in the Costa del Sol property market is of course Marbella, home to the rich and famous, the glamorous yacht-harbour of Puerto Banus, the Saudi Royal Palace on the Golden Mile, and the atmospheric Old Town in Marbella itself.Although there are deals to be had on Marbella properties, there certainly isn´t what you could call a ´glut´ of discounted or cheap properties for sale in Marbella within the town hall boundaries.

Other than Marbella traditionally being at the top of the location wish-list for most buyers on the Costa del Sol, the other key reason why property prices in Marbella have held up relatively well is that for the last 4 or 5 years, the town has seen hardly any new development. This was due to the crackdown on illegal buildings, dodgy permits and building licences, and a general freeze on any new projects until the regional government and the Marbella town hall were able to sort their act out.

Thankfully, the new town hall plan was approved this month, but residents and property vendors in Marbella can probably give extra thanks to this legal impasse, as it was the forced halt in construction at the very height of the boom period that has actually helped the Marbella property market through the crisis that has hit so many other parts of the Costa del Sol. With no new-build properties built in the last 4 or 5 years, we haven´t seen an over-supply of cheap, investor-driven, empty properties to drive prices down.

With a restricted supply of quality properties in the best locations, Marbella is actually holding up rather well in the current property crisis. And of course, once the market starts to move again, Marbella should be first to recover anyway, simply because it´s the place where most buyers want to be.

Even though exceptions have had to be made in order to pass the new PGOU, the fact remains that there will never be a better time to buy land in and around Marbella or have the most choice of available plots of land that have now become legal under the new PGOU Urban Plan. With building regulations and order being brought back to Marbella, prospective buyers can now finally buy with confidence and knowledge.

Coupled together with the recession, the PGOU has provided a rare opportunity for potential buyers by having a much wider selection of land in Marbella available then before and at more competitive prices. In addition, local building contractors have seen a huge decline in their work, so it´s certainly cheaper to build now then in years gone by.

With Marbella being the jewel in the crown for the Costa del Sol, many other town councils all over the province have also been suffering from the town planning problems. With the passing of the new PGOU, other town councils, local governments and the people who call Marbella home are now looking at this jewel to lead the Costa del Sol out of recession.

Exceptions have had to be made in order to pass the new PGOU, by excluding the 500 or so illegal properties which have been built on land that was destined for other uses, and the decision on whether to demolish these certain properties being left to the Courts. Included in this figure are the 297 homes in Banana Beach in Marbella Town, 50 in Rio Real Golf, 30 in Torrevigía and another 50 in urbanisations outside the plan.

In fact, the last 2 weeks has seen a surge of UK enquiries for property in Spain after sterling rallied over 5% to hit the first of these magical triggers.

But let´s look at this situation from the other side. As we previously mentioned, most of the Spanish properties for sale in the key hotspots of the Costa del Sol and Costa Blanca are owned by British vendors, and during the demise of sterling in the last 12 months, they have been able to lower their asking prices considerably, and in some cases accept incredibly low offers, precisely because of sterling´s dire straits.If someone had bought a property for 300,000 euros in 2005 at a rate of 1.40, they would have paid the equivalent of £214,286

If they sell the same property at a whopping loss of 30% (90,000 euros), and then change their proceeds from euros into sterling, they will net the equivalent of £190,909. Despite making a 30% loss on the price of the property, the real loss to them is actually only 10.9% (£23,377), not ´that´ bad considering all the doom and gloom around the Spanish property market.

But this win-win situation is all set to change, and we are already seeing the effects of the recent recovery of sterling on the attitudes of buyers and sellers alike.

Buyers from the UK are now becoming more confident in their ability to buy into the Spanish property market – after all, their pounds are now worth more over here in Spain…..aren´t they??

British sellers of Spanish properties are now toughening their stance when it comes to accepting low offers, and some are even raising their asking prices, all due to the fact that, as sterling rises against the euro, so their position worsens.

For instance, if sterling pushes on to hit heights of 1.25, that same property that had previously cost 300,000 euros (£214,286) in 2005 would fetch just £168,000 if sold at a 30% loss at 210,000 euros. That represents a £22,909 loss on the figure that they could achieve by selling their property now (and a whopping net loss form the original price of £46,286, or 22%) even at the same price of 300,000 euros.

Don´t be at all surprised to see the following occur in the next 12 months:

-    an increase in the confidence of UK buyers of Spanish properties as economic conditions ease
-    a perceived increase in UK buyers´ spending power as the value of sterling increases
-    a hardening of attitudes by British sellers of properties in Spain
-    low offers being rejected by British owners, with only offers close to the asking price being accepted
-    potential for price increases in certain very popular areas

This may come as a bit of a shock to many British buyers considering investing in Spanish property, but agents in the popular areas are seeing this happening on a day-to-day basis at the moment.

It may sound far-fetched, but I fear it is true – the Brits are in danger of missing the boat and buying into the market too late to take advantage of what are clearly excellent conditions for anyone looking to snap up a Spanish property bargain.

-    the majority of Spanish property enquiries received by most of the popular portals and websites originate from prospective buyers based in the UK (and therefore likely to be buying in sterling).
-    The majority of vendors seeking to sell their properties in Spain are British, and most will therefore be seeking to repatriate the proceeds of their sales back into sterling.The fact that the majority of interest in property in Spain still originates from the UK clearly indicates that the Brits still have a desire to own a holiday home or property investment in Spain, particularly now that prices have dropped to such low figures.

Although Spanish property prices are at their lowest for several years in most of the popular areas, most Brits are reluctant to buy until their currency recovers some of its lost ground against the euro. Most Brits remember the heady days of 1 pound being worth almost 1.5 euros, and the thought of exchanging their hard-earned cash for a figure such as 1.10 euros, especially in such hard times, fills most of them with dread.

Of course, everything is relative. British buyers were queueing up in their droves 3 or 4 years ago to buy properties at a rate of 1.40 - a rate that is around 20% better that recent sterling/euro exchange rates. But it mustn´t be forgotten that property prices have also plummeted since those heady days, and in most cases prices have fallen by well in excess of 20%.

So in 2005, buyers would happily pay €300,000 for a property at a rate of 1.40 – equivalent to £214,286

But now, buyers are reluctant to pay €210,000 for the same property at a rate of 1.10 – equivalent to £190,909 – a net ´gain´ on the purchase price of over £23,000. Doesn´t this seem odd?

Certainly, European buyers have been quick to take advantage. Most agents on Spain´s Costa del Sol have reported brisk business in the last 3 months, with the majority of buyers coming from countries unaffected by the demise of sterling – places such as Belgium, the Netherlands, Russia, Poland (where the economy has actually benefited from growth in the last 12 months) and of course the Spanish themselves who, although in the grip of a hard recession, have been snapping up property bargains along their cherished costas.

Read more in Part 2

Although these are still hard times for most people in Europe, it seems that the dream of owning a property in Spain is still as strong as ever. This desire has also been fuelled by a raft of discounted and distressed Spanish properties becoming available, offering prospective buyers some of the cheapest prices and best value Spanish properties since the bygone days before the last Spanish property boom.

As we have reported here several times, there is an increasing interest and demand for Spanish properties. This is probably due to a combination of several factors:

-    the beginning of a new year tends to give people fresh impetus to achieve their goals
-    many prospective buyers seem to have been keen to rid themselves of the spectre of 2009 and all its recessionary doom and gloom. The new year has given many people a little boost in the confidence stakes.
-    The recession seems to now be behind us. Although we are still living in tough financial times, the future looks a little brighter, and so those plans and dreams that were on hold for the last 18 months are now back on the agenda for a lot of people.
-    Sterling is rising against the euro, giving British buyers greater confidence to invest in the Spanish property market.
-    The mortgage market seems to be easing slightly.
-    Historically low property prices in Spain have convinced many that now is the time to invest, rather than waiting for the inevitable return to normality and subsequent price rises in the better areas.

With the sterling euro exchange rate hovering at around 1.15 in recent days, many Brits who regarded this figure as a psychological trigger to exchange currencies have taken advantage of the 12% increase in sterling´s value within the last 12 months.
One expert at Moneycorp, one of the leading foreign exchange specialists, whilst also reporting brisk activity, reckons that a large proportion of Brits are holding out for sterling to hit a level of 1.20 before committing to the single currency. It is thought that a change of government in the UK, added to an end to the current recession , could see that figure reached before the end of 2010, prompting thousands of potential British buyers to enter the Spanish property market.

The region´s reservoirs have doubled in capacity in the last few weeks, with December´s rainfall alone guaranteeing water for the next 2 years here in Andalucia – yes, it rained THAT much!
The volume of rainfall wasn´t uniform across the region however. For instance 362 litres of rain per square metre fell in Cadiz, guaranteeing the water supply there for the next 4 years, whilst Almeria only received 148 litres per square metre.

The level of the well-known La Concepcion reservoir in Marbella rose from 40% capacity to 97.5% in just a 2 week period, to the extent that the reservoir´s sluice gates had to be opened in order to release the excess water into the sea, amounting to the Costa del Sol´s normal supply for a 6 week period.

No shortage of water here for a while then!