Second-Home Hunters Can Find Bargains Aplenty

During the boom economy it was hard enough to climb onto the real estate ladder to buy a first home, let alone a vacation property with an ocean view or ski-slope access. But the economic crisis has brought a bit of sunshine for investors who in the recent past have been priced out of top markets like Verbier, the Riviera, Tuscany and the Caribbean. "There are more properties coming onto the market than we have seen for a very long time," says Alexander Kraft, CEO of Sotheby's International Realty in France. "And there are great deals to be had."

That's fantastic news for people like me. Last spring, standing on a cliff overlooking some of the more extraordinary villas near Es Cubells beach in Ibiza, I promised myself that one day I was going to own a vacation home. Maybe it would be on one of the enchanting Balearic Islands, or possibly in south Florida—Miami or Naples—where hot weather is guaranteed most of the year (though the charming hills of the Scottish Highlands and the desolate islands off Croatia have also stirred my heart). At the time, I did not think I could begin to look at options until several years down the line. But now, with the market for second homes softening fast, even freelance journalists like me can start realistically toying with the idea. I've got my eye on the stunning Zen Vida property in Majorca, which boasts five bedrooms with en suite bathrooms, three al fresco dining areas and a designer kitchen, as well as spectacular views of the Bay of Palma. Then again, it's tough to pass up Théole-sur-Mer, the estate built in 1925 on a private peninsula near Cannes by the architect Barry Dierks, which offers an infinity pool and direct diving into the Mediterranean. (Both are offered through www.savills.co.uk/abroad; prices are available upon application.)

Marc Cohen, director of Ledbury Research, the London-based luxury consultancy, says that those who would normally not be able to afford a second home may gain the most from the global economic downturn. "The second-home market has suffered considerably," he says. "If there is an active buyer, the type will have changed from the typical 65-year-old retiree who has sold his business or retired from a high-salaried job to one who is much younger who has seen this become more of an opportunity."

The new year seems to be the perfect moment to start looking, says Lucy Russell, managing director of Quintessentially Estates (quintessentiallyestates .com). "Some of the very top-end properties have dropped significantly in most of the major European destinations," she says. "[And] we have seen houses in the Caribbean drop by half a million dollars, giving the buyer a good rate of return." In places like Spain, Malta and Portugal, there have been price drops of up to 30 percent for vacation homes. Three-bedroom, eco-friendly beachfront villas in the Joia das Dunas development northwest of Lisbon are selling for between €625,000 and €895,000. And in speculative markets—residences that are still under development, or areas like Dubai that are relatively new to second-home splurges—prices have dropped by up to 60 percent. Not that everything is a bargain; currently on the market in the Emirates Hills neighborhood of Dubai is an 8,170-square-meter, seven-bedroom, eight-bathroom villa complete with gym, cinema, sauna, steam room and two maids' bedrooms for €5.8 million by Quintessentially Estates.

Sotheby's Kraft says that for the last decade a villa with an ocean view in Cap Ferrat rarely stayed on the market for more than a week. Now such properties take much longer to sell. "Lots of sellers are getting flexible with prices, and owners, especially those from emerging economies, are willing to make a deal like maybe they would not have in the past," he says. Take, for example, a lovely Tuscan home, on the market through Savills. The property, which overlooks Lake Montedoglio near Arezzo, has four fully restored buildings, a large swimming pool and oodles of privacy. But the owners are so keen to sell, they have already dropped the price by €1 million, to €2.2 million. "Over the past three years we have seen very substantial price rises in key destinations—and a corresponding drop in sales volume—so I think the readjustment was needed," says Savills' Charles Weston-Baker. "Each of us has an innate sense of value perception, and a lot of properties have just gone beyond what people are comfortable paying." Weston-Baker speculates that those who can afford it will hold on to their second homes until the market rebounds. "But those who do need to sell will do so for substantially less than they would have six months ago," he says. Es Cubells residents, watch out—my moving van may be speeding down the road sooner than you think.