Date published: 01.09.08 - not release date

Buying to Rent Head to Head: Murcia, Spain v. Aquitaine, France

A www.Holiday-Rentals.co.uk Report

Despite competition from emerging markets in Eastern Europe and beyond, recent reports show that demand for property in Spain and France continues to be high, thanks to their proximity, stability, idyllic climates and lifestyles. Murcia and Aquitaine in particular stand out as desirable areas, offering cheaper and less built-up alternatives to the Costa del Sol and Cote d’Azur. The number of properties listed in Murcia and Aquitaine on leading holiday home rental website, Holiday-Rentals.co.uk, increased 85% and 59% respectively in the last 12 months alone. Here, the company reveals the results of a survey of owners on buying to rent in each area*.

Investors are being attracted to Murcia due to relatively low levels of urbanisation, the great climate and the fact that it is the golfing capital of Europe. According to the Barclays-IESE Barometer, there was a 46% rise in Murcia’s British population last year and over the next decade it is predicted that the region’s population will grow by 35%. The Spanish daily ‘ABC’ also recently reported that 200,000 new properties are planned for the Mar Menor area. In France, recent statistics released by the FNAIM (Fédération Nationale de l’Immobilier) revealed that property prices in almost every region increased by over 10% in the last 12 months, with Aquitaine among the top three performers, making it an attractive option as property prices are still considerably cheaper than those further south, along the Mediterranean coast.

Interestingly, a large number of owners in both regions have a total household income of less than £50,000 per year, reinforcing the fact that foreign property ownership is now accessible to more people than ever before. The most common purchase price in each country was also relatively low, at £100,000 to £150,000, although there's a wider price range in Aquitaine than in Murcia. In both areas, most owners had spent less than 11% of purchase price on fees, with around a third spending between 9 to 11%.

Nearly all properties in both areas are near an airport served by a low cost airline, but this had a stronger influence over the purchase decision in Murcia. The strongest influence for owners in both cases was love of the area, followed by ease of access from the UK and the presence of low-costs in Murcia and cost of the property in Aquitaine. Rental potential was the next most important factor in both areas, while re-sale potential and the economic performance of the region were considerably less influential in Murcia and mostly not at all in Aquitaine. Most people in Murcia own two bedroom apartments by the sea, or on a resort, while the most common property type in Aquitaine is a farmhouse and the number of bedrooms per property, four.

The Mar Menor area and golf resorts are considered the prime spots for investment in Murcia, while the highest concentration of properties in Aquitaine is in the Dordogne. However, the department of Gironde is gaining in popularity thanks to the abundance of unspoilt, picturesque villages around the river estuary that offer plenty for potential renters: the sandy beaches of the Atlantic coast, the up-and-coming city of Bordeaux, and beautiful vineyards and lakes. Pyrénées Atlantiques is also an attractive option, as rentals here extend to the ski season, plus this department is home to the vibrant and trendy towns of Biarritz and Pau, which according to the FNAIM (Fédération Nationale de l’Immobilier), experienced one of the highest property price increases in the country - 17.7% - between March 2005 and March 2006.

In terms of rentals, the season in Murcia is longer - 16 to 20 weeks per year on average - while in Aquitaine, the average is 11 to 15 weeks per year. However, at £400 per week or less, average rental rates in Murcia are lower than Aquitaine, where the average rate is £1,000 to £2,000 per week. Owners also revealed that the majority of their bookings now come from the Internet, in most cases via Holiday-Rentals.co.uk, which has the benefit of providing a large number of properties and comprehensive adverts in one place, with a powerful search tool built in for renters’ convenience.

Below, a full summary of the survey results is provided, along with some quotes and advice from owners in each area.

Links to the survey results, plus case studies can be provided on request

- Investor profile

A large of proportion of owners in both Murcia and Aquitaine have a total household income of less than £50,000 – around a third and a half respectively – reinforcing the fact that foreign property ownership is becoming more accessible. The vast majority of owners are over 36, married and in employment, with 30% in Murcia and 46% in Aquitaine being self-employed. In Murcia, 15% of owners are retired, compared to 21% in Aquitaine.

- Factors influencing the purchase decision

Although nearly all properties in Murcia and Aquitaine – 100% and 97% respectively – are near an airport served by a low cost airline, this had a stronger influence over the purchase decision in Murcia. Owners in both areas were most strongly influenced by love of the area, followed by ease of access from the UK and the availability of low cost flights in Murcia and cost of the property in Aquitaine. Rental potential was the next most important factor in both areas, followed by cost of the property in Murcia and ease of access and the proximity of a low cost in Aquitaine. Re-sale potential and the economic performance of the region were less influential; in Murcia, most owners had considered these factors, but in Aquitaine the largest proportion said these factors did not influence them.

- The average investment

Most respondents own just one property and for both areas £100 to £150K was the most common purchase price. Just under half of owners in Murcia spent this much, compared to 28% in Aquitaine. In Murcia, 36% of owners spent under £100K on their property, taking the total having spent £150K or less to 84%, compared to 71% for Aquitaine. This, coupled with the fact that more owners were present in the under £40K and over £300K categories in Aquitaine, indicates there's a wider range of property in this area. In both areas, the majority of owners had spent less than 11% of the purchase price on fees, with around a third paying between 9 to 11%.

- Property types and location

A half of owners in Murcia have apartments and the other half is split almost equally between villas and townhouses. Properties tend to be either two or three bedrooms, with 56% of owners having two and 41%, three. The most popular area for investment is Cartagena and Mar Menor (94% of owners’ properties are here) and the majority own properties near the sea or on a resort. In Aquitaine, unsurprisingly the majority of properties are in Dordogne, but Gironde was also popular, with 24%. Properties are mostly in a rural location, or village and around a quarter are by the sea. The most common property is a farmhouse, followed by chateaux/country houses, villas, then gîtes, barns/conversions and cottages. Four bedroom properties were most common (42%) followed by three bedroom properties (28%).

- Rentals returns

The survey revealed that while the rental season in Murcia is longer, thanks to the hotter climate and the numerous golf resorts that attract off-peak renters, the average rental income per week is lower than in Aquitaine. In Murcia, on average, properties are rented out for between 16 to 20 weeks per year, at a rate of £400 or less per week. Whereas in Aquitaine, the rental season for the majority of owners is 11 to 15 weeks, at a rate of £1,000 to £2,000 per week. The most common length of stay in Murcia is a week, and in Aquitaine, two weeks and most owners received all, or most of their bookings online and through Holiday-Rentals.co.uk.

- Management of rentals

The majority of respondents find most aspects of managing a rental property easy, with advertising and marketing, reservations, payments and deposits being handled by the owner themselves, or their spouse or partner in their spare time. However, in Murcia, most owners employ a rental management company to deal with keys, lock-boxes, any problems while renters are there, plus cleaning and maintenance, whereas in Aquitaine, these duties are mostly either fulfilled by a paid employee, or the owners themselves.

- Quotes and advice from owners

*** AQUITAINE ***

The consensus regarding Aquitaine is that while it is undeniably becoming more ‘British’, it is still an extremely beautiful and popular region, with lots of different landscapes and properties to choose from. The department of Gironde, which borders the Atlantic, remains relatively undiscovered and has much to offer. As well as the up-and-coming city of Bordeaux, the Gironde Estuary is home to numerous pretty, quiet villages, within reach of the river, beaches and city, which is fantastic for those looking for rental returns.

Biarritz and Pau in Pyrénées Atlantiques are equally trendy, and of course in this department rentals can be extended to the ski season. The FNAIM recently reported that apartments in Pau showed one of the highest property price increases in the country; 17.7%, between March ‘05 and ’06, to €1,956 per square metre.

Owners repeatedly mentioned that there's now a lot of competition for rentals, so investors should do their research and think very carefully about the type of property and location. They should also ensure they understand the legal ins and outs of doing business, or owning property in France, and the tax implications. Using trustworthy agents, solicitors and builders was stressed as essential and several owners mentioned that investors should ask about termites, or a termite inspection.

Jocelyne Cleris, Property 56425, Pyrenees Atlantiques
“If the property is for holiday rentals, the precise location and availability of other properties in the locality must be taken into consideration.”

*** Karen Swinden, Property 61565, Pyrenees Atlantiques ***

“Your property must have a view of the mountains as this helps enormously with holiday rentals, but also with reselling. The property also needs to be either close to a ski resort (i.e. 20-30 minutes drive), or the coast (one hour max). This means you can extend the rental period for skiing, or attract people inland who would normally only rent property on the coast. There must also be room for a pool, or access to a pool.”

***Anonymous, Gironde ***

“Recognise that there are major differences between departments in Aquitaine; for example, Gironde is totally different from the Dordogne and not swamped with UK citizens, and it is quiet outside of the main summer months when the population multiplies. It has great beaches and lakes, but for rental properties, a pool is essential, so this extra cost should be taken in to account if purchasing a property without a pool.”

*** Anonymous, Gironde ***

“The coast of the Gironde is relatively undiscovered by the English, but is now becoming more widely known, particularly for the surfing. As an investment, this is the best in France.”

*** MURCIA ***

Murcia is quickly developing in to one of Spain’s most celebrated regions and over the next decade it is predicted that the population will grow by 35% (according to the Barclays-IESE Barometer). The Spanish daily ‘ABC’ also recently reported that 200,000 new properties are planned for the Mar Menor area, so while the area is currently unspoilt and not over-developed, building is on the increase.

Therefore, many owners pointed out that this is a factor to be aware of and that investors should research the plans for the area they are considering. For example, for how much longer will building works be continuing on adjacent properties and what else is on the agenda? A good agent should be able to assist with such research.

However, many owners commented that the area still feels very ‘Spanish’ and retains the charm of the old Spain, along with a large proportion of Spanish holidaymakers. Furthermore, within the Murcia province, no high-rise buildings are permitted, which should eliminate the risk of eye-sores similar to those that plague the other Costas.

La Manga was frequently referred to as a great choice for an investment, due to the fact that it is already an established 5* resort. Investing near any one of the golf courses was also considered a good way to attract off-peak rentals.

*** Charles and Breege Burke, Property 13130, Costa Calida ***

"Clear your head, know exactly your reasons for purchase and what you plan to do longer term. Choose your location very carefully. Buying abroad is fun, exciting and challenging if you plan to rent it out, but very rewarding too! A property overseas is a more of a bumpy ride than a UK property, however as you lie by the pool in the sunshine, all the bumps fade into insignificance!"

*** Anonymous, Las Palmaras, La Manga Club ***

"Rental properties need to be near a golf course ideally, as this increases the number of weeks it can be rented, since many golfers visit in winter. Buy the best you can get and if on a golf complex then choose the most established, with a great, already established reputation."

*** Anonymous, Las Casicas, Middle Segura Valley ***
"Get a good lawyer who knows the local area and get everything written into a tight contract. Spanish builders seem to have scant regard for the law! We never cease to be amazed how many British people do not use a lawyer or have one that is connected to their agent or builder and then are surprised when things go wrong. Carefully check the ownership of the land or property you are buying. We know of people who own a villa on land that does not even belong to their builder and when the rightful owners inherit the land, in law, they own the property on it!"

*** Anonymous, Monte Verde, La Manga Club, Mar Menor ***

"Go for a high-profile, secure, well run development, with plenty of things for rental clients to do, e.g., golf, tennis, beach, pool etc. Remember that you'll need to find someone to manage your property if you do not intend to live there full-time and get a personal recommendation. Do not buy a villa on its own stuck out in the wilds. Buy the best you can afford - if it seems cheap, it probably is."

- ends -

* Report based on responses from 66 property owners in Aquitaine and 68 property owners in Murcia

For further info please contact:
Sarah Chambers
sarah@holiday-rentals.co.uk
Tel: +44 (0)20 8740 2472