Dear all,
It's great to see interest in Spanish real estate picking up! I was born in Barcelona but lived in London during the worst years of the financial crisis. Ironically, during the worst months, I was flying to Madrid on a weekly basis to assist the Spanish Government and European authorities to sort out the mess the property market was back then. It was extremely interesting and a huge personal experience.
Where to buy in Spain? As @Erwin Groenendijk mentioned, there are opportunities everywhere, so I guess it is only a matter of personal goals and preferences. As I believe it's been already said, the largest hedge funds bought thousands of heavily discounted properties in 2011-2013, unloading their investments as early as 2014-2016.
That being said, I think international investors should stick to big capital cities unless accompanied by very knowleadgeable experts. Alternatively, when investing in vacation areas, they should be able to bear a higher risk or at least be happy spending some time in their property if the market turns sour, hopefully enjoying some sunshine.
Although properties in Barcelona have strongly appreciated when compared to the worst times, there's still room for higher appreciation. Making offers 50% below the asking price (as @Adrià Creixell suggests) today may work only with desperate sellers. I'm not saying there aren't anymore, but finding them in today's market environment is surely more challenging than in it was in 2011, when I remeber buying with up to 60% discounts.
With regards to rents in Barcelona, I do believe they are high compared to the average disposable income, but I am afraid we are running towards a city model such as London and Paris. Would rents in Barcelona increase? Definitely. For how long? Who knows...because while salaries in Paris and London may sustain high rents, the average salary in Barcelona is relatively low vs. the rents.
I think @Aydin Ozturk knows what he does. Nearby cities with universities and good transportation to/from Barcelona will offer higher ROIs in the short term.
@Andrew Stephens Spanish law is very tenant-oriented, however, the length of the rental agreement is usually 1-3 years. Tenants have the right to stay if they wish up to 3 years (provided the pay the rent!). After 3 years, a new contract should be negotiated and signed in case they want to stay. Cities such as Barcelona have a high turnover and tenants move quite often (every 2-3 years).
Beware though that back in the old days (pre 1985), tenants could have right to a rent for life with very limited increases. So if you buy any property with an existing tenant, make sure they don't have one of those agreements or you'll regret buying a "cheap" deal.
To international investors, I definitely recommend hiring a local property expert who will guide and accompany you through the legal process. I wouldn't hire just a broker, but an expert who could help you finding the right property for you as well as any legal and tax matters. Ideally, they should coordinate with your home tax advisor.
Hope my experience is of use to some of you guys. Will be great to share more insights with you. What are you up at the moment? Any live deals?