The popular surfing resort of Tarifa, which has stunning views across to Morocco, is at the eastern tip of Spain’s Costa de La Luz
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Cadiz is a compact, handsome place of 125,000 residents with a hugely atmospheric old town connected to the mainland by a narrow isthmus. The city lies at the heart of the Costa de la Luz, the name given to the section of the Spanish Atlantic coast between the Strait of Gibraltar and the Portuguese border.

“A trickle of foreigners have bought here, principally Germans and Britons,” says Concepción Zarzuela, of the Puertatierra estate agency, who has been instructed to sell a traditional, unrenovated Andalucian townhouse close to Calle Ancha, the most prestigious shopping street in Cadiz’s old town. The three-storey house, with an asking price of €800,000, has nine bedrooms distributed around a cool patio with delicate wrought-iron railings and traditional Moorish-style tiling.

Before Spain’s property crash, many such houses in the city were renovated and converted into stylish family homes or boutique hotels, giving Cadiz a generally cared-for feel. Today, this is rather at odds with the boarded-up shopfronts on Calle Ancha and surrounding streets. It is a scene repeated in town centres across the country and is the most striking paradox of the Spanish housing crash.

Earlier this year, Engel & Völkers, a Hamburg-based estate agent, announced plans to open three shops on the Costa de la Luz, including one in Cadiz, and one in nearby Seville over the next couple of years.

According to Ignacio Fiter, expansion manager at Engel & Völkers, Spain, longstanding investment on the Costa del Sol has made it a more mature and high-end market than the Costa de la Luz.

“Golf is obviously a big draw on the Costa del Sol, and access to Malaga airport is usually quick and easy,” says Fiter, “but the beaches are better on the Costa de la Luz.”

Fiter is hoping that the gradual return of bargain-seeking overseas buyers on the Costa del Sol, with German and Scandinavian buyers leading the way (purchases by Russian buyers were up 400 per cent in 2012 compared with 2011, albeit from a low base, says Fiter), will spill over into the Costa de la Luz. It is an argument that makes his company’s plans seem less counter-intuitive than at first glance.

Playa de la Victoria can lay claim to being one of the most impressive urban beaches in Spain – bettered perhaps only by San Sebastián’s glorious strand at La Concha. But the seafront apartment blocks are mostly faded and buyers need to look a block or two behind the front for better-appointed options.

One of these is a seventh-floor new-build penthouse with 113 sq metres of living space and 60 sq metres of outside terraces and a private parking space. The unit – which has views of the sea – is being offered for €540,000 through the Arhogar agency.

Martin Weber, a teacher from Cologne in Germany, bought a two-bedroom apartment a block from the promenade fronting Playa de la Victoria in 2004. “Had I invested the same money at the time in a flat in Cologne I could probably sell up now and buy the same apartment I have in Cadiz almost twice over,” says Weber. “On the other hand, if you like beaches, this is really the place for you. You can take dancing classes on the sand or learn a martial art. The atmosphere in Cadiz is almost Brazilian – nowhere in Spain reminds me so much of Latin America.”

For potential homebuyers, getting the timing right is likely to be a tricky call. The Spanish National Institute for Statistics reported in June that average property prices nationwide had fallen 14.3 per cent in the 12 months to the end of March this year. Standard & Poor’s, the rating agency, takes the view that given the excess supply of homes there will be a further 20 per cent drop in housing prices in Spain over the next four years. Servihabitat, the real estate arm of the bank La Caixa, has run advertisements in Cadiz’s local press asking buyers to “suggest a price” themselves on already discounted stock.

Meanwhile, Sotheby’s International is offering a five-bedroom, five-bathroom detached home overlooking the crescent-shaped beach at Zahara de los Atunes, for €2.1m. The property, which stands on a plot of almost 7,000 sq metres, has huge windows to make the most of the view, a large deck for dining and an infinity pool.

Five-bedroom house in Zahara de los Atunes, priced €2.1m

It is in relaxed seaside communities like Zahara de los Atunes, which is within easy reach of the windsurfing and kitesurfing mecca of Tarifa – which has a healthy lettings market – and 70km from the upmarket resort of Sotogrande on Spain’s Mediterranean coast, that probably offer the most solid investment options on the Costa de la Luz.

But bargain-seekers might consider the seaside towns between the city of Huelva and the Algarve in Portugal, a traditional holiday spot for people from Seville. Faro airport in Portugal is 125km away and offers the easiest entry point for the area. Much of the construction in this region was hasty, a reminder of times when home loans were easily available, but the redeeming feature – as ever on this coast – are the attractive beaches.

A two-bedroom unit with 70 sq metres of living space in the beach resort of El Portil, in a building with a shared swimming pool 100 metres from the beach is on sale for €100,000, reduced from €135,000, through the Marta Martin estate agency in Huelva.

Buying guide

● Buyers should budget 10 per cent of the purchase price to cover transaction costs, not including the estate agent’s fee

● In Cadiz province, buyers and sellers usually split the agent’s fee of 6 per cent of the purchase price

● Spain was ranked 30th in Transparency International’s most recent Corruption Perceptions Index (out of 174 countries and territories)

● The airport at Jerez de la Frontera, 50km from Cadiz, has a limited selection of international flights

● Net rental income is taxed at 25 per cent

● Buyers should think carefully before purchasing a unit in a building without a lift, which are unpopular and may be difficult to resell

What you can buy for . . .

€100,000: A two-bedroom apartment in any resort on the Costa de la Luz

€1m: A grand, renovated Andalucian townhouse in the heart of Cadiz

€5m: A six-bedroom villa on a seafront estate near Zahara de los Atunes or Conil de la Frontera

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