HOW TO Investing in a holiday home

Thinking of investing in
a Holiday Home?
Spain
Number 2
destination
for tourism
in Europe
Most popular tourist markets...
with 57.7
million
Rank
Country
1
France
Spain
Italy
Turkey
Germany
United Kingdom
Russia
Austria
Ukraine
Greece
2
3
4
5
6
7
8
9
10
International Tourist
Arrivals Europe - 2012
83.0 million
tourist
arrivals
57.7 million
46.4 million
35.7 million
30.4 million
29.3 million
25.7 million
24.1 million
23.0 million
15.5 million
“Spain was ranked Number 2 destination in Europe in terms of tourist arrivals
and Number 2 destination in the World in terms of tourist receipts!”
Rank
Country
1
United States
Spain
France
China
Macau, China
Italy
Germany
United Kingdom
Hong Kong, China
Australia
2
3
4
5
6
7
8
9
10
International Tourist
Reciepts 2012
$126.2 billion
$55.9 billion
$53.7 billion
$50.0 billion
$43.7 billion
$41.2 billion
$38.1 billion
$36.4 billion
$32.1 billion
$31.5 billion
Source: UNWTO World Tourism Barometer
What trended in self-catering
for summer 2013?
According to statistics of actual self–catering holiday bookings made on www.holidaylettings.co.uk,
Spain, particularly the Costa del Sol was the 2nd most popular holiday destination in Europe:
Source: www.holidaylettings.co.uk
Most In Demand Cities & Towns
Source: www.holidaylettings.co.uk
Spanish coastal resorts accounted for five out of the “TOP 10” most high demand destinations in
Europe, four of which are based on the Costa del Sol.
Why Spain?
Spain is the number 2 destination for tourism
in Europe and saw continued increases in
visitors in 2013 with all key source markets
showing notable increments on the previous
year, including British +9%, German +13.2%,
Dutch +6.8%, Scandinavian +20.2% and
Russian +30%. Source: IET May 2013.
Rental occupancy levels are showing ongoing
increases year on year, which is particularly
prevalent in the key Spanish coastal
destinations such as the Costa del Sol. The
Spanish Minister for Tourism and Trade,
Rafael Rodriguez, recently announced that the
tourist occupancy rate in Andalusia and the
Costa del Sol during the month of July 2013
had been the best in the last five years since
the beginning of the economic crisis.
Top Spanish Tourist Destinations
Statistics provided by Eurostat show that the Spanish coastal destinations and Madrid account for
the highest levels of tourism in the country.
Source: Average length of stay in tourist accommodation by region, European Commission Eurostat
Why
Marbella?
holiday homes within 15 kilometres of the
Spanish coast enjoyed an occupancy rate of
87.4% in August 2013, an increase of 2.5% on
the previous year. Murcia, Ibiza and Malaga
have seen the highest levels of increases in
occupancy.
In July 2013, the hotel occupancy rate in the
Malaga province was 63.7%, ranking well
above the average for Andalusia. Additional
sources for private rental occupancy statistics
such as Rentalia.com, one of the largest
Spanish holiday booking portals reported that
Marbella & Puerto Banus are the most
established
and
demanded
holiday
destinations in the province of Malaga – with
Marbella showing a 34% increase in self
catering bookings in 2013.
ABOVE AVERAGE
YIELDS FOR HOLIDAY
LETTING APARTMENTS
86.3% OCCUPANCY OF
TOURISTIC APARTMENTS
IN MARBELLA
AUGUST 2013
The Institute of national statistics confirmed these findings, reporting occupancy levels of touristic
apartments in Marbella in excess of 86% in August 2013, annual percentage occupancy levels for
Marbella in 2013 are detailed below:
Marbella was the third most popular location for self catering bookings in Europe according to
holidaylettings.co.uk, showing a 34% increase on the previous year.
Potential income & yields of touristic apartments in the correct location can far exceed those
provided by traditional long term lets. Examples of average annual incomes of the most commonly
reserved properties on holidaylettings.co.uk in Spain are detailed below:
In coastal resorts, to benefit from the high occupancy and premium income levels achieved by
holiday lettings, the property will need to be positioned in one of the more popular resort
destinations.
According to Kyero one of Spain’s largest property portals, the average price of a one bedroom
property in the province of Marbella was 164,000€ in Quarter 4, 2013, however this is an average
figure and includes properties in non desirable locations. Apply a minimum of 20% premium for a
coastal property which satisfies the requirements of holiday lettings, we would estimate that the
current purchase price would be in the region of 196,800 Euros.
Based on factual income levels from 20131, this would provide an estimated gross yield of 12.75% considerably higher than average yields provided by long term let’s, even those achieved in major
cities such as Barcelona, which on average run at 4.3%2 gross yield for a comparably sized property!
Source: Kyero Property Index
1
2
As reported from bookings data on www.holidaylettings.co.uk
Source: Global Property Guide – June 2013
Where do you invest for the
best returns?
Featured Investment:
With prices in Spain at a historic low - now is
the time to invest to maximise your returns
and yields. Consider established high demand
areas to maximise your occupancy levels and
potential for medium term appreciation.
Cosmo Beach Marbella
This community of beach front apartments is
idyllically located on the “New Golden Mile”
an emerging destination just west of
Marbella.
The area is just minutes from the lively marina
of Puerto Banus and the more traditional
town and beaches of Estepona. This boutique
style residential retreat comprises of spacious
one, two and three bedroom apartments and
penthouses waking up to uninterrupted views
of the Mediterranean coastline & a
spectacular backdrop of Marbella´s mountain
ranges.
Close to all amenities, exclusive features include:
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Boutique style beach front living
Guaranteed and flexible rental packages
Priced at 40% below the cost of construction!
Recently completed to a high specification
Prices from as little as €149,000
Rooftop infinity pool with stunning views
Easy access to ALL amenities
This exclusive proposition not only offers investors the opportunity to secure these highly
desirable properties at up to 40% discount of the original debt for construction, but additionally
provides fantastic rental yields and even guaranteed rental options.
Key investment points
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Rental projections for Cosmo Beach have been provided
by a reputed third party rental management company;
these are detailed on the following page. We feel that
these estimates are particularly realistic when comparing
with average occupancy levels and rental rates achieved
last year for one bedroom apartments in the region
generating €25,096 gross income.
Realistic average
return on investment1
of
19% per annum
Forecast returns based on conservative short term rental
contracts provide estimated annual gross yields3 of 9% of
the purchase price, if leveraging finance of up to 70%4,
annual gross yields on investment are forecast to return
in the region of 13% after annual mortgage
repayments!
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3
For the more cautious investors, Cosmo Beach offers an
assured rental package of 5% minimum gross yield.
Projected capital appreciation estimates by 2019 of
40% provide for a realistic average return on
investment5 of 19% per annum, even on a pessimistic
estimate of 20% growth over the same period this
would provide 10% ROI per annum6. We feel that these
figures are particularly accurate considering that
market pricing would need to return to levels in excess
of this before breaking even on the construction cost of
these apartments.
Short term rentals provide
annual gross yields 1 at 9%
of the purchase price, if
leveraging finance of up to
70% 2, at 13% after annual
mortgage repayments.
Gross annual yield based on projected gross annual income versus total investment with 70% finance,
associated buying costs and furniture package as required by rental Management Company.
4
Finance estimates and repayments based on a 70% capital and interest repayment mortgage over a 25 year
term with interest set at 4.5%
5
Capital appreciation calculated on projected growth versus total investment with 70% finance, associated
buying costs and furniture package as required by rental Management Company.
6
Exiting the last recession in 1996–1997, the first five consecutive year period saw an average annual growth
of 10.69% appreciation on price per meter for new build properties in Spain.