Andorra, a small independent country and European tax haven in the Pyrenees, saw real estate prices rise in value by 19.3 per cent last year, and one local travel guide thinks that another rise in prices is likely in the year ahead.

Best known for her ski resorts, Andorra attracts nearly ten million tourists a year, but it’s not just the holiday makers who are falling in love with the country and buying second homes that is fuelling the price rises, the guide says.

‘Quite a few tourists do like Andorra enough to buy a ski apartment, and there is an active local market too. But what really pushes the prices up is that there’s a third stream of buyers, people from around the world who want to take residency and benefit from Andorra’s tax haven status.’

Property currently for sale in Andorra include one bedroom apartments at 210,000 Euros, two bedroom apartments in Soldeu, the main skiing area of Andorra, at 272,000 Euros and 280,000 Euros in another ski village Arinsal, and three bedroom apartments in the capital Andorra la Vella at 333,000 Euros. Houses start from around 900,000 Euros.

Andorra property specialists have also noticed an increase in buyers recently, and comment that a large part of the increase in buyers is the increased attention from potential overseas property buyers in the UK.

‘The number of buyers from the UK has increased quite noticeably over the last couple of years’, they say, ‘With many quoting higher taxes in the UK as their reason for moving to Andorra. Most seemed convinced that the tax take from their earnings will rise more in the years ahead, and are planning for retirement and selling their businesses now’.

They also comment that historically tax havens have been popular no matter how the economy is. When someone buys a property in Monaco it often doesn’t matter to them if it’s a few hundred thousand Euros as they’re going to save more than that in tax during the time they are resident in Andorra.

Real Estate Price Increases

Demand for property in Andorra for the year ahead is every bit as high as in the past claim local estate agents, with many potential buyers already having planned visits.

Surprisingly perhaps for a tax haven, mortgages for a property are as available as many European countries, with rates around the same level. Up to eighty per cent of a property’s value is often agreed by the banks in Andorra.

Buying a property in Andorra is often seen as a route to residency, which entitles people to live in Andorra and benefit from her tax haven status.

To obtain residency in Andorra, applications need to be submitted in Catalan. A notarised copy of the applicants passport, birth certificate and a certificate of good conduct from the home country are submitted at the same time. Residency normally takes between three and six months to be approved.

Once residency is granted, residents are supposed to spend six months a year in Andorra, but this isn’t policed.

One of the drawbacks for those looking to become a resident in a tax haven when considering Andorra has been that the country has no airport of its own, and is unlikely to have ine future given that it is located in the Pyrenees. The nearest airports are Barcelona and Toulouse.

Recent improvements in the road from Barcelona to Andorra though have cut the travelling time by some thirty minutes to two hours fifteen minutes.

‘Given the tax advantages Andorra has’, note the Andorra travel guide, ‘A two and a quarter hour trip to the nearest international airport could be viewed as a small price to pay for those who will be saving substantial amounts of money in tax. Especially when you consider that their properties could be rising in value quite significantly in the years to come.’

Little known outside of the skiing and financial communities, the small European tax haven of Andorra has seen some startling rises in her property values in the last two years, with a repeat performance in 2007 possible.

In 2005 property inflation hit 19 per cent, and in 2006 the official property inflation reached sixteen per cent, and according to Andorra property specialists Tribune Properties 2007 is likely to see a further ten per cent rise.

‘There are three streams of buyers for Andorra’, say Tribune, ‘An active local market, second home buyers looking for ski apartments, and international buyers who want to gain residency in a tax haven. The international buyers add pressure on prices and often buy three or four bedroom apartments and chalets, making sure that the top end of the market is as active as the low and mid range properties.’

With a lack of snow for the first eight weeks of the Andorra ski holiday season, the second home buyers could be thinner on the ground than usual. The number of tourists is down by some fifteen per cent, and that could impact the property market as some visitors like it so much they buy a property in popular resorts such as Arinsal and Soldeu. So we feel a ten per cent rise in Andorra property values could be realistic for 2007.’

Andorra as a tax haven destination has been benefitting recently from the high cost of real estate in Monaco. Monaco recently became the most expensive country for property in Europe, and while a 32m2 studio in Monaco will cost close to a million Euros including the closing costs, Andorra offers over 100m2 three bedroom two bathroom apartments at less than half the price – with the same tax advantages as better known Monaco, bringing out a map of Andorra for many investors recently.

The different type of buyers tend to head for different areas Andorra, with the ski apartment buyers tending to purchase in the key ski resorts of Soldeu and Arinsal.

Those looking for residency go more for the year round villages and towns which have a resident community.

Outside of the capital (la Vella) these tend to be La Massana and the upcoming village of Anyos, Ordino and Arinsal, although Arinsal’s nightlife during the ski season early December to late April tends to steer many newcomers to La Massana and Ordino.

Thomson Ski

In addition to attracting international buyers in increasing numbers for residency, the Andorra authorities have invested heavily in their ski infrastructure, boosting the country’s tourism potential and subsequently Andorra’s real estate market.

And for this year’s ski season Andorra has opened a new family friendly ski park in Arinsal, moving away further still from her old image of a cheap and cheerful ski holiday for 18-30 year olds to one that caters well for all.

One of the few drawbacks when taking residency in Andorra compared to Monaco has been access to a major international airport. While Monaco enjoys close proximity to Nice Airport, with a ten minute helicopter ride available, Andorra’s nearest airports have been Barcelona and Toulouse, three hours away, with no direct flights to Andorra.

Recent road improvements between Barcelona and Andorra has cut this by thirty minutes, and there is a possibility of a scheduled helicopter service, Andorra weather permitting, or more likely ten minutes from the Spanish Andorra border, allowing quicker access to international flights for business people considering Andorra residency.

Other improvements within Andorra include new tunnels, allowing quicker access to the ski fields, and driving around Andorra easier.

With more demand from international buyers who want to take advantage of Andorra residency, the Andorra government announced in February that it was increasing the number of residency applications from the previous 200 year a year to 500.

‘Andorra is becoming more popular among the international buyers’, comment local travel guide YourAndorra, ‘And with Monaco real estate prices sky high it comes as no surprise that the government has moved favourably by allowing more residents. But it’s not just the tax free living they come for – it’s the Andorra weather as well for many who see the ideal opportunity to live in a tax free environment and enjoying winter sports too.’

Andorra, the tiny independent country in the Pyrenees, saw her property prices rise in value by 19.3 per cent last year, and a local travel guide suggests that another rise in prices is likely in the year ahead.

Best known for her ski resorts, Andorra attracts nearly ten million tourists a year, but it’s not just the holiday makers who are falling in love with the country and buying second homes that is fuelling the price rises, the guide says.

‘Quite a few tourists do like Andorra enough to buy a ski apartment, and there is an active local market too. But what really pushes the prices up is that there’s a third stream of buyers, people from around the world who want to take residency and benefit from Andorra’s tax haven status.’

Property currently for sale in Andorra include one bedroom apartments at 210,000 Euros, two bedroom apartments in Soldeu, the main skiing area of Andorra, at 272,000 Euros and 280,000 Euros in another ski village Arinsal, and three bedroom apartments in the capital Andorra la Vella at 333,000 Euros. Houses start from around 900,000 Euros.

Andorra property specialists have also noticed an increase in buyers recently, and comment that a large part of the increase in buyers is the increased attention from potential overseas property buyers in the UK.

‘The number of buyers from the UK has increased quite noticeably over the last couple of years’, they say, ‘With many quoting higher taxes in the UK as their reason for moving to Andorra. Most seemed convinced that the tax take from their earnings will rise more in the years ahead, and are planning for retirement and selling their businesses now’.

The companies also comment that historically tax havens have been popular no matter how the economy is. When someone buys a property in Monaco it often doesn’t matter to them if it’s a few hundred thousand Euros as they’re going to save more than that in tax during the time they are resident in Andorra.

More Property Price Increases

Demand for property in Andorra for the year ahead is every bit as high as in the past, with many potential buyers already having planned visits.

Surprisingly perhaps for a tax haven, mortgages for a property are as available as many European countries, with rates around the same level. Up to eighty per cent of a property’s value is often agreed by the banks in Andorra.

Buying a property in Andorra is often seen as a route to residency, which entitles people to live in Andorra and benefit from her tax haven status.

To obtain residency in Andorra, applications need to be submitted in Catalan. A notarised copy of the applicants passport, birth certificate and a certificate of good conduct from the home country are submitted at the same time. Residency normally takes between three and six months to be approved.

Once residency is granted, residents are supposed to spend six months a year in Andorra, but this isn’t policed.

One of the drawbacks for those looking to become a resident in a tax haven when considering Andorra has been that the country has no airport of its own, and is unlikely to have ine future given that it is located in the Pyrenees. The nearest airports are Barcelona and Toulouse.

Recent improvements in the road from Barcelona to Andorra though have cut the travelling time by some thirty minutes to two hours fifteen minutes.

‘Given the tax advantages Andorra has’, note a travel guide, ‘A two and a quarter hour trip to the nearest international airport could be viewed as a small price to pay for those who will be saving substantial amounts of money in tax. Especially when you consider that their properties could be rising in value quite significantly in the years to come.’

With the reelection of Venezuela’s Hugo Chavez and Brazil’s Lula da Silva and the victories of Rafael Correa in Ecuador and Evo Morales in Bolivia, Latin America has moved firmly to the left.

Other leftist presidents include Michelle Bachelet (Chile), Alan Garcia (Peru), Daniel Ortega (Nicaragua), Nestor Kirchner (Argentina), Tabaré Vázquez (Uruguay).

Some of these leaders openly admire the extremist rhetoric and gestures of Hugo Chavez, who has promised to transform Venezuela from a capitalist to a socialist state. Chavez’ government openly tolerated violation of property rights to address a housing crisis he has partially created.

In a new report out this week, the Global Property Guide notes that property markets in many Latin American countries are nevertheless doing well, despite the sweeping gains by the left. Except in Venezuela the newly elected socialist governments seem relatively benign, and unlikely to pose much of a threat to property investors.

Some of the markets are even seeing real estate booms and recoveries. Nicaragua, Argentina and Uruguay are offering high yields and good location at significantly lower prices.

The real issues which deter foreign investment and property market growth are civil wars, high crime rates, and social unrest. As Latin America increasingly obtains access to US markets, and as the circle of countries in which US retirees are willing to settle widens, the outlook for residential property in Latin America remains positive.