Andorra Real Estate
Andorra’s property market has undergone considerable turmoil in recent years. She has experienced a polarization of property values. Holiday apartments marketed to middle class skiers have slumped in value whereas luxury apartments and chalets have continued to see good interest and sustained its price levels. Market prices at this higher value end of Andorra’s market continues to attract high net worth individuals and families that are drawn to the country for tax and life style choices.
Having said this, even at the high end of the market, Andorra continues to offer surprising relative value given her small land mass and vs her tax efficient rivals such as Monaco, London, Jersey and Malta. Andorran property appears to offer exceptional relative value at this time given her beneficial geographic and zero tax environment.
Whilst rental returns can vary, their tax free nature typically offers a premium to other comparable investment destinations. Prices per sq meter vary considerably depending on quality of fittings, view and proximity to ski slopes. Prices at the low end can fall to 2500 euros per square meter whereas the luxury end of the market continues to see much interest and boasts prices as high as 15,000 euros a sq meter for Andorra’s real estate catering to the luxury end of the market.
For comparrison, a small bedroom apartment in Monaco would currently sell for approximately 1m to 2m euros. A two bedroom 100sqm apartment would sell for between 3m to 5m euros. Property prices in Monaco range between 30,000 to 60,000 euros a sqm.
Agency fees are paid by those selling properties and are around 5% on average of the sales price upon the successful sale. Purchase taxes must be paid which are approximately 4% of the purchase price of the property. Andorra has recently introduced a capital gains taxes paid at the rate of 8% of the profit should a profit be realized on the sale of your property. This is reduced if the proceeds are reinvested inside Andorra. Annual local taxes for local municiple services are very low in Andorra at approximately 0.001% per annum of the property value.
Many expat movers to Andorra manage their capital from their home. Changes in work practices and technology have meant a wider range of high technology savy clients are demanding accomodation with home office facilities. This has lead to many passive residents of Andorra demanding spacious large chalets as their main address. The construction industry and planning rules have responded as a consequence of this demand and larger plot sizes and houses have been built to accomodate this growing international demand.
Given the limited size of the country, modern, well positioned properties tend to consistently increase in value from year to year, a trend that has continued despite the housing market turmoils in Europe and the USA. It should be understood that Andorra is a small country and therefore its property market can become highly illiquid at times. This works both poistively and negatively for those requiring liquidity. Agents often advise clients not to be in a rush when buying or selling in Andorra. If circumstances dictate that you are in a rush be prepared to pay more and sell for less than you had intended due to these liquidity issues.
Due to Andorra being a ski holiday destination there are a large number of apartments for sale and rent. Passive residents can find a bargain therefore in the apartment end of the market. Prices have generally lagged the rises in the chalet market as supply and economic head winds have knocked this end of the market more violently.
In general, the Andorran property market has remained vibrant, even during the sub-prime mortgage and euro crisis of the last few years. The forecast for strong growth is expected to continue especially with the demise of other tax havens and the announcement of the construction of the new Pyrenees airport and a heli taxi service from Barcelona dedicated specifically to servicing Andorra and her high net worth residents.