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Friday, 13 June 2008

Euro Exchange – the real cost to British Buyers in Canary Islands

Following the strong media exposure damping British buyers hopes of buying holiday homes in Spain due to the strong Euro, it is well worth further examination of the real cost the current exchange rates poses to those looking to take advantage of competitively priced properties on offer this year.

With the current exchange in the region of GBP 1 to Euro 1.26 compared to Euro 1.40 a year ago a property of 200,000 Euros now would cost 15,873 GBP more. This is based on paying the full amount using GBP of course, something which rarely ever happens as the majority of buyers in Canary Islands use locally sourced mortgages taken in Euros and take advantage of the Islands extended season for rental. Where the rental is payable in Euros the monthly mortgage repayments are not subject to any exchange costs.

John Goldacre from the Canary Islands property specialist Goldacre Estates points out, ‘in a typical scenario investors take advantage of the lower rates offered by Euro mortgages compared to Sterling equivalents. Where a 70% mortgage is offered locally, our clients only have to exchange 30% from Sterling to Euros, representing a minimal cost of exchange compared to paying 100% from Sterling.’

A 200,000Euro example then would actually only cost 4,762 GBP more than a year ago, not 15,873GBP. This realistic cost when compared to the localised markets of Fuerteventura and Gran Canaria www.goldacreestatesgrancanaria.com should be considered carefully. Currently Fuerteventura offers some of the lowest priced properties as it is still in the early growth stages compared to mature markets like mainland Spain or even Tenerife. Combine this with a long rental season due to year round letting capabilities and the media presented picture becomes less obvious.

John has this to say, ‘Shrewd investors have turned their attentions away from the more familiar markets of continental Europe towards smaller niche sectors offering less volume but higher quality and favoured positions. One such example is the Vista Mar project in Fuerteventura offering frontline sea view apartments of very high quality build and design that include many extras such as air-conditioning, fully fitted kitchens, 42m2 terraces, private garaging, gym facilities as well as a 25m pool for exclusive owner use. Products like this are exceptional in todays market and provide the best cover against recessions especially when there is only a 20% investment required today and then you look at local additions that make up the total investment picture such as additional investment in the airport, new golf facilities close by, a new marina, promenade, blue flag beach and ferry services to other islands close by.’

GoldAcre Estates can be contacted on www.goldacre-estates.com or e-mail info@goldacre-estates.com

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