Nicola Venning, The Times

Granada, home to the Alhambra, is the place to pick up a bargain, reports Nicola Venning of The Times

IF YOU like to ski in the morning, snooze on a beach in the afternoon and squeeze in a spot of shopping before supper, there is a place you can do so, all from the doorstep of a smart apartment. Granada in eastern Andalusia has it all. And not only is property still relatively affordable, but the city’s spectacular location makes for a holiday home that is eminently lettable.
Situated in the foothills of the Sierra Nevada in southern Spain, the stunning fortress city of Granada is a 40-minute motorway drive to the Costa Tropical and its beach resorts and a mere half-hour from the mountain ski centre of Pradollano, where the season runs from November to April. But the principal reason why so many tourists are drawn to Granada is because of the Alhambra, its magnificent Moorish palace.

The medieval city, surrounded by ancient walls, bustles with shops, businesses and restaurants (it is one of the few places in Spain where tapas are still free) and has a popular university. Direct flights from Gatwick (Monarch) and Stansted (Ryanair) have made it easily accessible.

So it is surprising perhaps that property prices are — for the moment — still affordable. “Property in Madrid and Barcelona is as high as London,” says Alex Radford, a property lawyer with De Cotta, McKenna and Santafé, which has offices in London and Málaga. “It is less in cities like Seville — though it is still expensive — but in places like Córdoba and Granada, there are still bargains to be had.”

Barbara Wood, of The Property Finders, says: “Granada is 25 per cent cheaper than Seville and 50 per cent less than Barcelona.”

The most attractive areas of the city are in Albaicín — the old Arab quarter — and Sacromonte — the gypsy neighbourhood. Both are charming mazes of narrow streets, medieval whitewashed townhouses (in Sacromonte some are built into old caves) and have stunning views. The cheapest flat starts at about £100,000, but for just a little bit more you can buy something special.

“A flat in Albaicín in a low-rise building with a view of the Alhambra with one-and-a-half bedrooms and a great living room would be approximately £150,000,” says Wood. “There are also some really sensational refurbished apartments on Gran Vía de Colón (the main road into the old town) for £536,000.”

Michael D’Auray, 59, and his wife Mary, 53, both former hairdressers, moved to Granada 12 years ago. “We came out for a flamenco course,” says Michael. “My wife used to dance and I play flamenco guitar and we just fell in love with the place.”

The couple bought a four-bedroom medieval townhouse with patio and terrace for £165,000 four years ago and are now selling it through Andalucía-Alpujarra estate agents for £350,000 so as to move into the neighbouring Lecrín Valley. “We do not want to be too far away, because we have many friends here.”

The D’Aurays own two other houses in the Albaicín. “One is let to an estate agent and the other has been turned into three apartments, which we let to (foreign language) students,” says Michael. “From the point of view of letting, it is very good. The rents are not high, though they are increasing, but people are scrambling to let,” he says. The couple charge roughly €550 (£390) per student per month. “A refurbished two-bedroom apartment costing €200,000 (£143,000) on a long let is roughly €700 per month,” says Nicola Collier, director of Andalucía-Alpujarra. Returns hover around 4 per cent, but if you include capital growth they can often reach more. “In the past two years there has been a minimum 50 per cent increase in property prices and that is without substantial foreign investment,” says Collier.

If you want a higher return, consider holiday lets. “There is an increasing market for short-break rentals for people who visit for two or three days to take in the Alhambra,” says Wood. “A good two-bed, well-equipped apartment, brilliantly situated, could let for between €60 and €100 per night.”

Collier thinks that returns could increase by 200 per cent. “Many people do long lets in the winter (to students or Spaniards from Madrid who block-book for the winter skiing and use the flat at weekends), and holiday lets in the summer for a minimum of €500 per week — but it is much harder work,” says Collier. Management costs are roughly €50 per changeover with a 26-week rental season.

If you simply want a holiday home with space, there are some lovely villages a 20-minute drive away. Güejar-Sierra and Pinos Genil are both popular, though quite expensive. A three-bedroom two-bathroom penthouse with terrace and glorious view in Güejar Sierra is approximately €270,000. A rundown four-bedroom house would be €130,000. Prices in Pinos Genil are only slightly less.

There are also modern developments — such as the Santa Clara golf resort (one of only two golf courses in the area), which is a ten-minute drive from the city centre. “Santa Clara is very popular as a second-home destination for Spaniards (from Madrid) and English,” says James Stewart, a negotiator with Savills, which is marketing the resort in Britain. “In the first phase 80 per cent of the villas have been sold to Spaniards and 20 per cent to English.” A three-bedroom townhouse starts at £173,000 and includes access to the gym, spas and outdoor and indoor heated swimming pools. This is important because Granada is about 550 metres (1,800ft) above sea level and can become cold in the winter; the average temperature then is 12C (53F) compared with 30C (86F) in summer.

“If you want somewhere warm and a pool, Granada is not for you,” says Barbara Wood. “It is for people who are comfortable in another culture, want to speak Spanish, enjoy wonderful food and soak up the wonderful places. Granada is unique in Europe: where else can you ski half an hour from an 1,100-year-old fortress?”