Amid falling real estate prices, one of the largest stories to come out of the Spanish property market in 2012 was the proposal to introduce foreign residency permits for those purchasing property over 160,000 euros (£129,797 approximately). However, the impact this will have on the market as a whole could be contested and there is uncertainty over the ability of the measure to give Spanish real estate the boost it needs in 2013.

This is largely due to the scope of the plans and the fact many currently do not understand what they entail. As European nationals already have the right to take up residency in Spain without a permit, the measure will not encourage a raft of new investors from the continent. With a large bulk of interest in Spanish property coming from those countries near its border and the UK, the failure to provide such buyers with an incentive to invest in the country could have ramifications.

However, the residency permits will open Spain up to new markets and will primarily target Russia and China. Russia is already fast becoming one of the most active nations in Spain and, according to Sotheby's International Realty, after Catalonia, Spain and the Balearic Islands are the preferred destination of Russian tourists.

For the first nine months of 2012, there were 102,121 visitors to the Balearic Islands alone from this part of Eastern Europe. Anna Batizi, head of international sales for Moscow Sotheby's International Realty, explained: "Lifestyle is the single biggest draw for Russians when it comes to the Balearics. These are the perfect holiday Islands blessed with well over 300 days of sunshine a year, something that Moscow lacks to the most extreme extent."

Nevertheless, the jury is still out on how far offering residency to those prepared to buy property in Spain will revitalise the market. This is set against the backdrop of falling property prices, which make it more affordable for investors to buy in the country but deter those looking for a quick return on investment.

What's more, Spain is struggling to move its surplus of distressed property, according to the Global Property Guide. As of November 2012, there were approximately 750,000 pieces of property left unsold or repossessed by banks.



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