The real estate agency Servissim’s Managing Director, Simon Binsted, told all-andorra.com about various features of the Andorran real estate market.
Please tell us about your real estate agency Servissim SL. How was it created?
Our two directors, Maite Castro and myself, met in 1986 and early the following year formed a joint venture with an estate agency to offer services in English to all our clients. In those days, not only could very few Andorrans speak English at a sufficient level to give advice to international residents on how to go about running their lives in Andorra but also there was no local radio in any language and no daily newspapers either, so the community, numbering about 1200 at the time, relied almost exclusively on unreliable and inaccurate word-of-mouth information.
The service grew rapidly and in 1990 Maite and I had by then married and decided to incorporate the service as an independent business. Thus was Servissim S.L. born. More than 30 years later, there are a number of individuals (nearly all of them being former employees or clients of Servissim) offering to help and advise new residents, so the company has seen greater expansion than its estate agency.
However, Servissim is still the leading information and assistance company in the country and not only can the company offer a whole library of exclusive, constantly-updated help sheets on every important aspect of living in Andorra, but has unrivalled experience in helping its many clients adjust to their new life in this magnificent little country. By the mid-90’s, it was decided to expand into property sales, in addition to services and rentals.
In 1995, with the arrival of the internet, Servissim registered www.andorra-property.com and started the first multilingual property sales site in the country. Not only does the site still have the biggest selection of direct sales listings in the country, but it has also stayed ever since Day 1 in the first three top search-rankings for property sales in Andorra without the assistance of AdWords. The company’s absolute determination to offer Andorra’s most professional and ethical property sales service has allowed it to continue to prosper against huge competition in the marketplace. Both the company’s principals are licensed by examination as estate agents: indeed, I am still the only Englishman ever to have passed the exam, since this requirement came into force in 2002.
You are the only real estate agency with British capital in Andorra. Are your customers mostly British or not?
Absolutely not! In fact, more than 70% of clients who have bought their property through us in the last 5 years have not been British, although it is true to say that many have been English-speaking and feel comfortable knowing that we all speak it. Again the same applies to those who trust us to sell their property: the huge majority are local people who have known us for a long time and know that we are one of the most successful agencies in the country.
Today in Andorra there are more than 110 real estate agencies. Why is this? How many agencies are actually functioning?
Not as many as you would think. Many agencies are there just to handle rentals and property deals on behalf of their extended family and many of the small agencies do not really have many listings of their own and “lift” their products from other agencies’ websites, hoping to share a commission or two. Many are “one-man-bands” as we say in English, without the depth of skills needed in today’s dynamic market.
The changes in prices in the real estate market of Andorra for the last 10 years. How expensive is 1 m2 of housing in the capital of Andorra?
How long is a piece of string? You can still find properties for sale that were built in the 1960’s, essentially for low-paid workers, that you could pick up for 2.000€ per M² or even less in downtown Andorra la Vella or Escaldes, but I doubt that is what you had in mind. Newer property with good central positioning or with sunny views from the surrounding mountainsides that would appeal to those looking to come and live here as passive residents or business investors start these days at around 4.500€-5.000€ and can go much higher in prestige locations. However, that is small change compared with other low-tax countries like Monaco. Property in other parishes, where actually many new residents prefer to look, is considerably cheaper.
What are the maximum and minimum prices in the residential real estate market of Andorra?
The lowest price for a more or less habitable dwelling in Andorra might be around 1.000 per M² and the highest might be around 10.000€
Can you give us any examples of the largest investment projects in the Andorran real estate market? Who are the investors?
In the main, Andorrans, many of whom are not short of capital for the bigger real-estate projects and of course know the local conditions and planning processes. In addition, there is a specific prohibition in the Foreign Investment law of 2012 against foreign companies (as opposed to individuals) being permitted to invest in any construction project designed for sale or leasing out.
What are the largest plots of land for sale? What are the prices? Do you have any examples of recent transactions that have been made?
There are very, very few opportunities for residential investors to find plots for immediate construction of a residential property of more than, say, 2.000m², partly because this is a very small country where only about 8% of the total land area is permitted to be built on – and in any event it is only six years ago that a non-resident purchaser was even permitted to come in and buy any building plot larger than 1.000m²! Most plots with services already on site are even smaller than that at around 600m² and these would start these days at around 400€ per m² outside the capital centre. As for any plots available in the central valley you could add one or two zeros to that price. However, on a 600m² plot one can in most parishes build 400m² of living space above ground level (and more below) and that, for most people, is more than they would want anyway.
What is the likelihood of property prices increasing in Andorra?
If I could reliably see into the future, I would be very wealthy! But, all things being equal one could make a few guesses: the price of property in Andorra depends heavily on demand from outside the country mainly from people who want to come to live here. Prices of property in the lower category i.e. older unmodernised properties and pure holiday properties will probably rise the slowest since there is still an oversupply. Good, well-presented mid-size (120-140m2) residential apartments in the mid-range i.e. 350.000€ – 600.000€ should see the largest capital gains, since it is this sector of the market that is seeing the biggest demand currently. Detached properties (500.00€ – 750.000€) needing substantial improvement and updating could also prove very rewarding over the next few years and larger houses and prestige properties always manage to see steady growth in value.
In 2016, the government of Andorra called as priority projects, the construction of Class A office buildings, as well as residential houses in Andorra la Vella and Escaldes with 3-4 bedrooms. Do you think these priorities are still the top ones?
The priorities are still there but there appears to be a slight over-supply now in prestige office space, which to my mind will only be solved when Andorra’s future relationship with the EU is finally settled.
What kind of taxes do owners of real estate in Andorra in 2018 need to pay?
Once they have paid the initial tax of 4% of the purchase price when they buy their property, new residents are always stunned by how little we pay in the way of local property taxes. These are split into contributions for water, hygiene (waste collection and other services) and street lighting, ownership charges and residence charges per person. Each commune has slightly different rates, but a resident family of, say, three in a mid-size residential apartment would pay on average about 300€ a year in total! Even in a large house they would be unlikely to pay more than 500€ a year.
Permission for construction: is it easy to obtain? Construction next to the ski resort – is it possible? Are there land plots for that? In which resorts is it possible?
As long as you are asking for planning permission to build in a properly designated area and you observe any covenants in your title deeds (which will have been fully explained by the notary at the time of purchase) there is little difficulty in obtaining permissions as long as you observe the local building regulations. As for large plots next to ski stations, there are held tightly by Andorrans and given the restrictions on foreign corporate investment that I mentioned above, this is best left to the locals. We are, though, aware of one large plot available near a ski station in La Massana parish.
There are many advantages of buying residential property in Andorra: skiing, nature, climate, security – could you mention any others?
You have mentioned more or less everything already – except that Andorra is not only a winter sports centre. I could list at least 20 summer sports that a resident can enjoy within 15 minutes of his home and every year we host the World Championship Mountainbiking circuit – and that is not the only international event, by far. The other thing we shouldn’t forget is that Andorra is one of the most cosmopolitan places on earth. We have maybe 8 million visitors a year – about 100 for every single resident of Andorra – and every day you meet people from literally all over the world. It is truly fascinating and the local cultural calendar is amazing.
Loan for real estate: what are the conditions for non-residents and residents? What are the conditions for mortgages? How many mortgage deals have gone through your agency (as a percentage of all deals)?
Not as many as you would think: about 35% of all transactions in our case – as many buyers are new residents who must invest a minimum of 400.000€ in Andorra anyway. Local buyers can normally get loans for about 80% of the purchase price at around 2% currently and non-residents can usually get loans of about 50% at a slightly higher percentage rate.
Communal payments – how much does electricity and heating in Andorra cost?
If you buy a condominium property (i.e. an apartment) there are the service charges to pay which are set annually by the administrator of the building and voted on by the owners themselves. An average basic charge for a mid-size apartment in a recently-built block might be 1.200€ a year plus a charge for the amount of hot water and heating you use. As to electricity, this is as complicated as anywhere because it not only the amount per KwH that you pay but the minimum standing charges, so comparisons are extremely difficult, but 50-60€ a month would probably be an average, where heating and hot water heating are not involved.