Mark: Welcome to the SnowOnly Property Podcast. We have Angel Belanche who is a Real Estate Asset Monetization expert. Well, that's your job, works in Andorra and his brand is Sotheby's Realty. And I'm really looking forward to speaking to him today. He’s going to cover lots and lots of topics. I've must admit, I've never been to Andorra before. So, I'm looking forward to hearing all about the area. I think the closest I've been is Barcelona. Angel, welcome to the SnowOnly Property Podcast.
Angel: Thank you. Thank you for having me.
Mark: Yeah. So, tell us a bit about your experience, your agency, the history of Andorra and give a brief overview to get the listeners interested.
Angel: Real quick about my personal background. So, I used to work for the competitors back in LA. Then I moved to Spain looking for my next phase in life. And then I was approached by Sotheby’s International Realty: well, the group of companies here in Andorra. I was convinced to come up here and I actually started working as an online lead acquisition [expert]. And then I started getting more responsibilities within my position. And now after almost four years, I do real estate asset monetization for our clients. Basically what we do is accompany along since the very first moment our clients think about investing in the Principality of Andorra on what's the best way to invest that money and get a return on their investment. So, that's what we do. In regards to the Principality of Andorra, I have a lot to share about this amazing country. This is the country for those who really love to enjoy the outdoors. Andorra means nature, 91% of the dates throughout the year, you can breathe an optimum air quality. Above 90% of the territory in Andorra is pure nature... Forest, rivers. So you can really enjoy the outdoors both summertime using the hikes, trails as well as in wintertime where, I don't know if you know Mark, but it has snowed like never before since the eighties this year. So, it's going to be a pretty interesting winter season. The last thing I would like to say is that 10% of the territory in Andorra is protected by UNESCO. And we're about to become the first country, fingers crossed, to become a World Biosphere Reserve Country.
Mark: Wow. That's exciting news, no?
Angel: Yes, very exciting. Andorra again, it means nature. Besides that it has a lot of factors that might influence someone to really think about investing in the country or becoming a resident. And the nature is definitely one of the most important things and I'm eager to share some of these with you.
Mark: And what's the ski area like? What's the altitude, the kilometers of piste that you have? How far is your typical chalet from the slopes, is there ski in / ski out or is it more, like buses? I'm interested to know it all.
Angel: I believe there's more than 300 ski runs throughout the country. This is more than 450 square kilometers. So, it's not really big but compared to other countries the size of the ski resort is definitely huge. So, you have two main resorts that might soon be connected into one but it's more like there's different, really nice villages of only wood and stone buildings. And it's the vibe [that’s important]: I would describe Andorra as a social club. We're only 80,000 people, right. Top season ski season... I don't know how many people have here, but the country turns really interesting and fun.
Mark: And typical ski season is much like anywhere else I assume: December to April?
Angel: Yeah. Correct.
Mark: In terms of the infrastructure of the resort, is it all high speed chair lifts? Is it still needing some upgrading? Again interested to know how they're developing the ski area. Is it at its peak or are they investing money for the future?
Angel: Yeah. Yeah. They keep investing. I think they're aiming to host the world cup of ski in the next years. And they hosted already, a couple years ago, one of the biggest competitions in the country. There is no country for sure has done that. As for the vibe and culture: At school, one of the subjects for kids is skiing. You can really get this vibe here.
Mark: So, what would you say to anyone that's considering investing in Andorra or maybe moving their family? I mean, personally, for me, I think the appeal is (I don’t know how many other places you get it), but for me, Andorra is so close to Barcelona, I think 125 kilometers, then you have the beach, the city and the ski area. So, that must make Andorra unique.
Angel: Yeah, yeah. Correct. That's definitely one of the determining factors, the fact that you can really enjoy the outdoors and be in this nature hub and in a couple hours be able to go to Cote D’Azur or go to the Costa Brava in Spain or to the north of Spain and enjoy different lifestyles. But Andorra itself - to become a resident, you really have to enjoy the nature and that lifestyle that Andorra provides. And also along with a combination with the taxation framework which is definitely one of the determining factors for someone to become resident or invest in the country as a foreign investment.
Mark: And let's get onto that, because I'm interested about that. So in terms of ownership, structure of buyers and obviously the tax benefits of being in Andorra, obviously that's a reason for investment. So can you elaborate on that a little bit?
Angel: Sure. Real quick. In regards to the personal income the maximum tax rate is 10% being the first 24k exempt from taxation. Then as for the corporate tax rate it’s a maximum amount of 10 being able to deduct some variables. And direct tax is one of the most competitive in Europe being 4.5%. There's one metric that really defines how competitive the taxation framework in Andorra is. And it's the tax burden rate, which the average in Europe is a little bit above 40%. And Andorra is the second most competitive country tax wise just behind Ireland, which is one of the countries chosen by so many tech companies as we know already.
So, definitely lifestyle is one of the determining factors for someone to become a resident and the taxation framework is another determining factor. And let me share one more thing. One of the other variables that really our clients value is not only the physical security that you can get in Andorra but also the legal security. So, any political change does not become any social drama. And so that allows us to really plan a long term strategy with our clients. And that's something that they really value.
Mark: So, that's from the tax point of view, but I assume from an ownership point of view, can anyone in the world own in Andorra or are there limitations?
Angel: Anyone can really purchase a property or an estate or other types of assets in Andorra either as a foreign investor or becoming a resident, either passive or active. One of the questions that we ask our clients is, okay: you want to invest in Andorra does that investment come along with a change of residency, which is just a matter of paperwork, right. Butanyone can really own an estate property in the Principality of Andorra and can monetize it as well, and benefit from the taxation framework here.
Mark: Yeah. So as we’re on that trail, I will ask the question as I ask everyone, because it's important. In terms of options for finance, is that something that people consider looking into or it's not even available?
Angel: Yes, it is available. It’s definitely an option. And we here in our company, we advise our clients, what is the best way to finance their investment to get the best return.
Mark: That's interesting for me, Angel. So, you do have a lot of people that are taking you up on the finance?
Angel: Not really, although this is an option that we do even for clients. It's just another option to finance your projects and to boost your investment returns. So, it's definitely an option but we also manage the private equity of clients without having to relate to external finance.
Mark: So, let's just go back a step. In your role when you’re meeting the new buyers, you can take them through every single step in terms of finance and then just manage their assets in general. How far do you take that management? Is it long term or if they weren't a resident and they want to rent it out, is that something that you do or not really?
Angel: Yeah, correct. We offer a full service from the very first moment they have some interest in investing in the country throughout all the advisement process, all the paperwork if needed and all the way to how to monetize these assets the best way possible. So, we're talking about from a piece of land where a residential building can be developed. We plan all the project, we seek for investment, we seek for the buyer, we develop the project, we manage it and we sell these units. And not only that, we also, for these new buyers, for these new owners, we advise them on how to monetize these assets. That's one of the options.
Another option can be the traditional rental process. So, a buyer buys a property with us and they want to get a certain investment return. We advise them the best way possible considering other variables that might be interesting to them like security, a continuous amount of money coming in.
And there's another option, which is more interesting which we have recently developed, which is the luxury retreat program that we have for top properties. So, we're talking about properties starting at 1 million, 1.5 million where we can rent on a weekly basis offering a concierge service to the guests. So, basically it's a combination of a top property offering a five star grand lux hotel service. And that way we let the owners still use the property while it's not occupied and at the same time, they get this return on a weekly basis.
And now the market is hot as it’s wintertime. We have Christmas coming up. We have New Year's Eve. I don't know if it's called like this in Spain: the Three Kings: Spain is obviously a great feeder market for us. And these three weeks are really interesting because we're renting the properties from 2000 Euros per night to 4,500 per night. And that's a great return for our owners, for our clients who own these estate assets. And they're really happy because again, they can still use the property and at the same time, get a return. We've calculated more or less that depending on the property, we can get an average, if we rent 10 weeks throughout the year, they can get the same returns as if they would rent it throughout the year.
Mark: Wow. So, I guess my next question would be, what type of person would Andorra appeal to? Would it be families? As you said: obviously nature, lovers and stuff, but would you say it's more geared up to individuals? When I ask about questions about families, I guess I ask, would be easy to get access to schools, hospitals, are they close? What would be the typical buyer for Andorra?
Angel: Two main factors again. They don't have to be nature lovers. It's just that once you've lived here, then you realize how important it is to live in a natural pollution free environment. So, you don't have to really be a nature lover.
Mark: Yeah. Understood.
Angel: But definitely that's one of the factors. But yeah, two main factors, lifestyle and by lifestyle I mean security, physical security, legal security, no social dramas, enjoy the outdoors, enjoy the good life, the good stuff, the good food, the good wine. And taxation framework.
So, we've had clients that asked us, I want to move my factory to Andorra and benefit from the taxation framework. That is not for them. Andorra and its economic structure is not ready for those clients who want to produce their goods here in Andorra. Andorra is not prepared for this. Andorra is prepared for those who have an activity that does not require huge infrastructure.
So, if you are by yourself and you only need a computer, Andorra is definitely a place to be and benefit from the taxation framework. Andorra is really, for me, an opportunity. It has been for me from a personal level. And I think it can be for so many people, business people who can come to Andorra and move their economic activity in the principality and benefit from the taxation framework. There's one thing that is really linked to the real estate market, which is passive residency. People who come to the country, they only have to stay 90 days throughout the year, so they can spend the other part of the year in in the coast of France or in the coast of Spain and then come back and they just become residents in the Principality of Andorra.
The only condition is that they have to invest for 400,000 Euros in one of the assets, which among them is a real estate. So, buy real estate in the territory of Andorra. That is why the passive residency is really linked to the real estate market.
Mark: Can you give us a little brief overview of the history of real estate? I'm always interested, with ski resorts, in the opportunity for investment for new buyers. Do you still see that? Is there opportunity in new build appreciation, land, is there still that investment option for people that want it? You’ve already covered the lifestyle and the resale and rental market, but is it the case that there is still an investment opportunity in capital appreciation?
Angel: Yes. Let me begin by saying that [there has been] a huge change in the real estate [market]. The real estate market has always been linked to the economy of the country like in so many other markets. Before 2012, Andorra was a tax haven country. In 2012, they opened out their economy and it ended up that it is no longer a tax haven country. And since then everything has been more documented and it has become an open economy.
I've collected some data that might be interesting. This data was released by the government and it reflects how an opportunity investing in the Principality of Andorra still exists. Besides benefiting from the taxation framework, the real estate market has been increasing. Well, there are some metrics that reflect that the Principality of Andorra is still a market of opportunity when it comes to real estate. So, the number of real estate transactions and the volume of these transactions has increased. If we take back the last 10 years and the estimation is that these will still grow. Another metric is the price per square meter. Last year in 2020, this metric was in between 2,254 houses and 2,504 apartments. That would be the residential. The estimation for this data, for this metric, tells us that these values will still increase.
So, for those are thinking about investing in the Principality of Andorra, and real estate is one of the assets that they're considering, I think these are metrics that might convince them to move because they not only will buy an asset that will increase its value in the short future, but also they can monetize it. And this monetization will be subject to a maximum of 10%, depending on the legal structure that they have. But 10% tops. I think that data reflects a little bit about the real estate market in Andorra.
Mark: So, anyone that's interested in buy in Andorra obviously they can speak to you, no problem. And you can help them out with all of that. So, I guess we’ve covered the future of Andorra as you mentioned there with your metrics that we can see capital growth, appreciation and rental. So, I guess in terms of infrastructure, they're still investing in it. I mean, it sounds like an amazing place to be I think if anyone's looking to invest in real estate, then Andorra, it seems like it's to a really great place to consider. And obviously you can speak to Angel about that.
I know that you've got some really good new developments. In terms of the new developments again, always interested in terms of appreciation. There must be still land that people are developing for new developments, can you let us know about the new that are on the markets?
Angel: Yeah, definitely. We're really strong in new developments, as I said, one of the advisement services that we offer is to build a project from scratch from the piece of land, to build up a residential, commercial hotel or retail development that can boost the return on the investment of our clients.
We currently are promoting Ordino Villas Resort, which is the second phase of a bigger resort. The first phase is 26 luxury units (apartments) in Ordino. Ordino is a part of Andorra that is already part of the World Biosphere Reserve, protected by the UNESCO. It's a really top area in the Principality of Andorra. It’s the second with the highest price per square meter. And I think we're a year away from finishing the first phase construction-wise and we've already sold all the 26 units. So, that's a good metric also that makes you realize that the demand is really absorbing this product.
So, we just released the second phase a couple months ago. And these are five buildings that can be fully customized from building five apartments per block per building to having an entire above 600 square meter villa in the entire building. So, we have a lot of information in regards to this if anyone is interested. And this is again, an asset that as you can see, as per the demand that absorbed the first phase, that might probably sell soon, definitely before construction ends.
Mark: Just while were on that, what facilities does the development have? Has it got swimming pools? What stuff is it? Ski and ski out? Can you give us a bit of an insight into that in case anyone is interested in investing into the second phase?
Angel: Yeah. Thank you for asking that I was going to move to the next development. So, in regards to this development, this is a closed residential area with security. The facilities are a shared gym, a shared indoor pool, although in the villas, if you want to buy a villa in this second phase, you can have an indoor pool or a gym in there as well. Also parking, even the parking has been designed so, the floor is a material that does not damage the cars at all. So, as you can see, it is really a high end product for high net worth individuals.
Mark: And would you be managing that, as you said, you were going to take care of the concierge? Is that something that the development manages or you can do that independently as well?
Angel: Yeah, so on one side we offer a concierge service since we built the retreats, the luxury retreat rental of villas. We had to build in a structure of concierge service. So, we offer concierge service, although it's not our business core, we can offer that to the clients that ask us. And definitely this is a product that fits perfectly the luxury treat rental of units or villas. And for this, although it's not finished for the entire villa, you would probably get more than 4500 per night, definitely.
Mark: So, you said you had another development, let's hear about that.
Angel: Yes, Escala Penthouses is the name of that one. That one is located in Engolasters. So, it’s at the mountain and has tremendous breathtaking views over the valley of Andorra, the center of the principality. Now you have a five minute drive to the city center and at the same time you have a 10 minute drive to the closest ski lift. For that one it's again a luxury new residential development. It has about 12 units and it has been designed along with the mountain. So, all the units have an outdoor area, the terrace which is a hundred square meters per unit, the terrace only. And so you really can enjoy the outdoors and you don't have anything above, regardless of what level you are. So, you have that feeling that regardless of level one or level six, you have the feeling of living in a penthouse.
Mark: Just to point out that for any of these developments that Angel is talking about, we'll provide links at the bottom, so you can click straight on the links and then go through and speak to Angel.
Actually it's funny, Angel, we've just got to the last question… the question is which we ask everybody is: if you had 500,000 Euros, what would you spend it on; what would be your choice of property? I guess it would be in one of those new developments, if it's affordable. So, if you had 500,000 Euros, where would you be putting your money?
Angel: First of all, with half a million if you want to become a passive resident, with half a million, you can definitely do. What you have to do is invest 400k on a different asset to become a resident, one of these assets being real estate located in the Principality of Andorra. The other ones are bonds from the government other financial instruments for private or public entities. But real estate is actually involved in one out of four transactions related to passive residency. So, it's really an interesting asset. And in these uncertain times, real estate has always been this safe value, as we have seen historically. So, what I would say is if you have a need to invest and you're considering real estate as one of them, if you become a resident you'll definitely have to live in this address or either rent another one and just monetize this one.
Mark. I'll allow myself to double this budget and go to 1 million!
Mark: Go for it!
Angel: So, if I were to have one million, or one of our clients would have a million, what I would advise them is to really get a luxury property that they can use to monetize through the luxury retreat rental program. That would allow them to really boost their returns. We are having a return of a minimum of 6%, all the way to almost 20% for these properties. So, this is something really good and interesting for our clients because owning a real estate asset is not as dangerous or volatile as other assets. And you have that security of owning it. You can always sell it back. And in the meantime you can get an 18%, 20% return on your invest, that's a great alternative value by our clients.
Mark: Wow, Angel, honestly, we are going to run out time, but I've so many more questions to ask. Just quickly, I'm going to try and fit it in. There's a lot of history in Andorra, so is there disparity between the old style properties in Andorra that maybe hold the better locations and the new build properties? Where's the demand going? Is it more to the new build are people converting the old ones or are they happy with the old ones?
Angel: There's everything to be honest. So, the prime location, which is Les Escaldes, Engordany is a little bit further up the mountain of the city center really close to the Les Escaldes houses they’re developing. That's like the prime area and there's very limited land plot where you can build. So, one alternative is definitely purchase a building and then refurbish it that definitely one of the options, but there're still land plots where our clients can build brand new properties they can use, or properties in prime locations where you can build an asset either hotel, retail, commercial, or residential.
Let me share with you that recently a couple years ago, the government changed the urban regulation for probably the most prime area in the Principality of Andorra allowing the developers to build buildings of 20 levels, approximately 17 meters high. That definitely changed the real estate market. The prices in those buildings are high rocketed and it's really a product that is really in demand because you're right there, close to the financial district, close to the commercial area. And you're 10 to 15 minutes away to the closest ski lift. So, Andorra is changing but definitely for the good and Andorra is still a country of opportunity for those who are still thinking about it.
Mark: Angel, I think that is the perfect ending. “Andorra is still a country of opportunity”. Thank you very much for your time today. To all our listeners if you are in Andorra or going to Andorra go and meet Angel, I will put all his details in the description and links of the properties that you mentioned, go and check out Sotheby's Realty in Andorra. Angel, thank you so much for your time and your knowledge. I'm sure everyone will appreciate it. And I'm sure you'll be inundated with inquiries.
Angel: Thank you very much for having me.
Mark: Take care.
Apr 12, 2024
