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Attracting Expatriates with Lifestyle and Prices

1 December 2014

 “The biggest non-capital city in Europe” is what one devoted expatriate calls Barcelona, regional capital of Catalonia in Spain.

Every decade another European city seems to become a magnet that draws young and old who could live anywhere but prefer to live there. Prague was the attraction in the 1990s. In the 2000s it was Berlin. Since 2010 and apparently for the coming decade, it is Barcelona.

The website lists organised groups of Americans, Germans, British, French, Dutch, Italian, Argentineans, Brazilians, Russians, Poles, among other nationalities who live in Barcelona. As of 2013 according to bcnentrepreneur’s Barcelona data sheet, 17 percent of the people of Barcelona are foreigners.

For years North Africans have been emigrating to Spain and some remaining in Catalonia, the region where Barcelona is the capital. But a significant number of the people coming to Barcelona now are Europeans and Americans who are not refugees and have the money to choose where they would like to live.

Americans Carol Valmy Merchant and Richard Merchant spent the last nine years in Abu Dhabi in the United Arab Emirates. She’s an expert trainer in Pilates and other exercise systems; he manages major construction projects. This year they decided to leave the UAE and considered returning to the U.S. or finding someplace central in Europe to live.

Carol says she had “an important self-realisation” back in 1969. “I learned that I was a citizen of the world. I still feel that way; and I still love to travel. Since it is easier and more cost effective to travel from a base in Europe, I decided long ago to live here.”

Richard agrees. “Barcelona apartments are a third the cost of an apartment in Paris or London or even New York,” he explains, and adds, “real estate bottomed out in May 2013 according to charts I have read and is cheaper now than 15 years ago. Last year the area we bought in increased in value 9 percent.”

Barcelona is one of the few brighter spots in the slow recovery of the Spanish economy. International Monetary Fund President Christine Laguarde expects the economy to grow 0.9 percent this year and reach 1.0 percent in 2015.

While prices of houses and apartments in some sections of Barcelona are almost at pre-crisis levels, Spain’s Instituto Nacional de Estadistica found home prices still falling, down 1.3 percent in the fourth quarter of 2013.

While at the height of its housing boom, Spain was building 700,000 units per year – four times the number in the much larger UK – today residential construction is slow to non- existent. Spanish property valuation firm Tinsa estimates it will take until 2017 to clear the overhang of housing.

In Sitges on the coast outside Barcelona, a 3-bedroom/2-bath apartment of 90 sq. meters is selling for Euro 650,000, about what it would have cost in 2007-8. However, in some formerly popular resort areas on the coast and inland, apartments can be bought for Euro 50,000, sometimes less than half of the former price.

Many Spanish banks hold foreclosed properties. The Bankia combination of seven failing banks rescued and united by the government offers hundreds of such properties on its BankiaHabitat website. However, not everyone wants to live where the biggest bargains are. They want to be in Barcelona.

Carol says, “Barcelona is the most vibrant European city and the Catalans some of the most welcoming people I’ve ever met! Cities like London and Paris always felt a bit too impersonal, and too big to live in day-to-day.” Moreover, she finds Barcelona “walkable and accessible, and at times it feels like a village.”

So it is lifestyle that draws people like the Merchants to settle in Barcelona, a lifestyle that doesn’t cost as much as in many other cities. Richard appreciates “the relatively low cost of day to day living,” for example, “very inexpensive” transportation and says, “dining out in every level of restaurant is cheaper than even in the U.S., and the quality is excellent.”

Kevin Brass who covers property for the International New York Times has made Barcelona his temporary base although it isn’t his permanent residence because he is limited by the 90 days every six months allowed on his visa.

“I spend a lot of time working in coffee shops and cafes, and Barcelona is a great cafe city,” says Kevin. “Every day I can find a new bakery, café, or pastry shop where I can settle in with my laptop and a cortado,” a small strong coffee.

“As an urban planning geek,” Kevin loves L’Eixample, “one of the coolest and largest experiments in master planning.” It has “wide, tree-lined streets with large sidewalks and buildings limited to six stories” and “corners are notched at 45-degree angles to open up the streets, allow sunlight, and create more gathering places.”

Having lived in Austin, Chicago, Miami, and San Diego in the U.S. and Abu Dhabi when he covered property for The National and was a frequent chair and moderator of Cityscape events, Kevin is familiar with cities around the world. “Once you get away from the tourist areas,” he explains, “Barcelona is a much different city. The streets are safe and quiet, and there is none of the feeling that you are living in a Gothic theme park, which is how it often seems in the old quarter. “

The Merchants didn’t have a visa problem when they decided to buy an apartment in Barcelona. “We easily got our NIE tax papers that allow you to buy property here,” said Richard, “and because I have a British passport I can live here quite easily.”

Americans are liable for taxes on income and capital gains earned in Spain if they spend more than 183 days a year in the country. A tax agreement signed by the U.S. and Spain in 1991 prevents double taxation, so Spain cannot tax social security or capital gains in the U.S.

However, Richard said, “to gain permanent residency you have to show you have private health insurance and enough assets/income so that you will not be a burden to the state.”

A new law recently instituted in Spain gives foreigners automatic residency permits if they buy property worth more than 500,000 Euros.

In order to fit in better, the Merchants have enrolled in a 3-month, 4-hour per day intensive course in Spanish. “You can probably exist without knowing Spanish,” says Richard, “but I would not recommend it.”

Carol adds, “I want to become fluent in the language to be able to communicate more completely with the people here.” Although Catalan is the official language of the region, “most Catalans will speak to you in Castilian, and everyone is most helpful in trying to understand English speakers.”

To buy a property in Barcelona or anywhere in Spain, you first need a tax number or NIE acquired through a Spanish Embassy in two-three weeks, according to Richard. If you don’t speak Spanish, he advises using an English-speaking property finder to help locate the right home in the best place. He suggests investigating online first to have an idea of the city or area and prices.

Over a period of six months the Merchants communicated with the property finder by email, answered questions about what they wanted and their budget. The agent sent links to properties they could view from a distance. Once they were ready to visit, he set up appointments, found an English-speaking lawyer, and a bank that handles expatriates.

Final advice from Carol and Richard to potential buyers: Do your homework.