Currency and the Marbella property market

Share Pia Arrieta | Apr 30 2015

The introduction of the euro as a joint European currency in 2002 greatly simplified the economic and commercial playing field within the continent. Where there had previously been a long list of individual currencies related to each and every nation within Europe, this confusing matrix of conversion rates from one coin to the other was replaced at one stroke by the euro zone.

Currency and the Marbella property market

Somewhat maligned since the onset of the financial crisis, which we hasten to add has greatly affected especially the other developed parts of the world, the euro created a single currency zone free of the need for foreign exchange conversions. This not only facilitated the flow of funds, people, business and investment among member states such as Spain, Germany and the Netherlands, but it also saved all involved a lot money.

From several dozen currencies we were suddenly down to a handful, most notably the British pound, the Swiss franc and the Norwegian, Swedish and Danish krones. Most FX traffic now focused on exchanges between these currencies and the euro, US dollar, Yen and Russian rouble, and life was suddenly a lot easier. It means that German, Dutch or French buyers of property in Spain need not worry about valuta-based fluctuations in values, and can compare prices on a one-for-one basis.

Currency fluctuations

The good old-fashioned fluctuations that do still exist now affect primarily British, Scandinavian, Swiss, Russian and Arab buyers, and while even this market was for a long time marked by the stability that followed the so-called euro crisis of 2011-2012, recent events have shown that currency can still have a potent effect on the real estate market.

In essence we are talking about the devaluation of the euro against other major currencies such as the pound, dollar and Swiss franc at the beginning of this year. It saw the pan-European coin drop from 1.15 against the pound to 1.35 at the time of writing, and while the development favours the price competitiveness of euro zone exporters, its impact on real estate and tourism centres – such as Marbella and the Costa del Sol – can only be positive.

At a stroke, buyers and investors from the UK, Scandinavia and Switzerland find their buying power has increased by 17%. In other words, someone looking for a property of up to 1 million euros can suddenly afford 170,000 euros more! Coupled with economies that are performing quite well, this means that we can expect a further resurgence from the traditionally strong British and Scandinavian markets, with 2015 expected to be the year of the British buyer.

Add to this the fact that those buyers and investors who use dollars – such as many of the Arab, Russian, Asian and of course American buyers – are experiencing a similar increase in the amount of Marbella property they get for their money, and it becomes clear that the latest fluctuations make real estate in this area all the more attractive – without affecting things for buyers from within the euro zone itself. For Marbella, the latest currency shifts appear to have produced a fine example of a win-win situation that will help to drive further growth.

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