Our Percentage of the Month: -3.6%
News in February 2020
The February 2020 percentage of real estate in Spain: -3.6%, this is the drop in the number of sales in Spain in 2019
News for February 2020. Each month, we present you the most recent real estate news. You thus benefit from the main indicators and the most recent information to buy better in Spain.
Editorial: 2020… the return to the sharp rise in prices in Barcelona!
As of the summer of 2017, we had (above all) predicted price stability and then a fall in prices in Barcelona. Today, we expect prices to return to higher prices in the Catalan capital, and it is likely to be rapid and significant!
Why this trend reversal? For three reasons: the local political crisis between Catalan nationalist parties, the still very attractive “Barcelona” image, and the high inflation of property prices in major European cities.
The crisis between Catalan nationalists. The allies of yesterday have become the enemies of today. ERC (independentist left), the oldest nationalist party had already opened the breach. At the national level, ERC has agreed to support (or at least abstain) the new PSOE / Podemos government in Madrid. And in return, the PSOE accepted a dialogue on the future of Catalonia. And at the end of January, things got worse when the President of the Catalan Parliament (ERC) confirmed the suspension of the seat of deputy of the President of the “Generalitat” (the Region) of Catalonia (JxCat, center-right independence), by order of the Spanish Election Commission. New elections will be held shortly. The break between ERC and JxCat is completed. Which means a political solution to the Catalan problem (inside Spain). And above all a normalization of social and economic life in the region, and in Barcelona in particular.
The attractive image of Barcelona. Despite the sometimes-violent demonstrations, Barcelona retains an image of a modern, innovative, welcoming and festive metropolis. Especially among young entrepreneurs and start-ups. Office supply and demand has never been stronger. According to PricewaterhouseCoopers, Barcelona returns to the Top 10 of the 10 most attractive European cities to invest in real estate in 2020 (… after a 27th place in 2019).
Inflation in property prices in Europe. In recent years, property prices have risen very rapidly in major European cities. They reached heights all over Europe: 10,000 euros per m2 on average in Paris (with districts at 30,000 euros), 15,000 euros in London, 12,000 euros in Geneva, and even 6,000 euros in Lisbon! Everywhere… except in Barcelona where prices have remained stable for two and a half years (around 4000 euros / m2), or even decreased in certain districts.
Our forecast for the Catalan capital: prices up at least 8% this year. Probably more in high-end property. It’s time to invest in Barcelona!
First annual drop in residential sales since 2013!
The residential real estate market has still not recovered since the implementation of the Mortgage Law. In November 2019, 38,680 sales transactions were signed, a figure down by more than 9% both compared to October 2019 (-9.7%) and compared to November 2018 (-9.3%). Over the year as a whole, the drop in sales was 3.6%. Everything indicates that 2019 should record the first decline in the real estate market since 2013. Between January and November of last year, 466,300 homes were sold, with a monthly average of less than 42,400 units. While in 2018, nearly 518,000 operations had been carried out, with a monthly average of 43,200. Also a new phenomenon: in November, there were more sales in the Valencia Community (5996) than in Catalonia (5885) or in the Community of Madrid (5021). Andalusia is still the region with the most sales with 8,400 units in November.
In 2020, price increases of 1 to 5% according to experts
Will housing prices drop in 2020? Are we facing a new real estate bubble? Should we buy now or wait? 2019 marked a turning point in the Spanish real estate market. Neither purchases nor property prices have increased as they have done in recent years. Standard & Poor’s forecasts real estate prices to rise 3.5% in 2020, while Moody’s is more optimistic with + 5.5%. Real estate portals are shared with an increase in 2020 of 1% to 4% depending on the sites. Bankers’ forecasts also range from 1% to 4%.
Price and location first!
According to the union of Spanish architects, the main factors of choice for the purchase of housing in Spain are first of all the price (86% of the real estate buyers put it forward) ahead of the location (81%). Then further the area (69%) and the distribution of rooms (65%). Next come the quality of materials (57%), architecture (48%), common areas (45%) and energy consumption (only 40%!). Among the owners, only 51% know the “Certificado de Eficiencia Energética”, and 57% the ITE (“Inspección Técnica del Edificio”).
First delivery of housing from containers in Barcelona
In Barcelona, the first building containing social housing made from containers has opened. The City Council organized a visit to the building for information for the population. These are 12 apartments from 30 to 60 m2, on 4 floors, located in the Gotico district. They will be primarily intended for families awaiting priority social housing. The energy certificate for each accommodation has an AA classification. The energy consumption is four to six times lower than that of a conventional construction with the same characteristics.
Gross residential rental profit of 7.4%
According to the Idealista real estate portal, gross rental profitability of residential property remained stable in 2019, at 7.4%. In the two large Spanish cities, it is lower: 5.2% in Madrid and 4.8% in Barcelona. The purchase of an office for rent in Spain offers a gross yield of 9.9%, compared to 8.8% in 2018 (Madrid: 6.7% and Barcelona: 6.5%). Commercial premises have profitability of 8.9% (8.2% in 2018) and for garages; it is 6.7% (6.3% in 2018).
Haya’s sales on 940 properties
Haya Real Estate sells 940 real estate properties with discounts of up to 40%. They are mainly housing, but there are also garages and cellars. Three regions contain more than 600 properties: Catalonia, the Valencia Community and Andalusia. The most frequently cited provinces: Barcelona, Alicante, Valencia, Tarragona, Cadiz and Granada. The sales campaign will last until March 31 and includes housing from 40,000 euros to just over 200,000 euros.
Less Airbnb in Spain!
The association of Spanish tourism professionals Exceltur identified in 2019 a decrease of 4% in the number of beds in tourist accommodation while, over the same period, there was a 2% increase in hotel capacity. This is the first time in 10 years that the surface area of Airbnb et al. has been reduced in Spain! In 2018, there were 430,000 beds in tourist accommodation: for the first time, they exceeded hotel capacity (407,000 hotel beds). In 2019, there were 415,000 hotel beds (+8,000), while there was a reduction to 413,000 beds in tourist accommodation (-17,000). The cause of the drop in tourist accommodation capacity is mainly due to the implementation of more restrictive municipal regulations. Especially in Barcelona, Madrid, Valencia, Palma or San Sebastian.
Madrid and Barcelona in the European Top 10
According to a PricewaterhouseCoopers (PwC) survey, Paris is the most attractive European city for investors and real estate funds in 2020. Largely thanks to projects linked to Grand Paris (investments of 30 billion euros). Berlin, Frankfurt and London follow. And Madrid appears in fifth position, while Barcelona returns in the Top 10 in ninth place (after being in 27th position in 2019). The reasons for the two major Spanish cities in the Top 10: Spain ‘is one of the fastest growing European economies, one of the European countries where alternative workers (student residences, retirement homes, social rental projects…) have the most potential.
Buy a business in 2020 and pay for it in 2021!
Aliseda Real Estate launched the “Negocio Fácil” Plan, which consists of the sale of 1,100 commercial assets (warehouses, offices, premises and hotels), grouped into more than 400 real estate groups, for a value of 162 million euros. This plan is aimed at entrepreneurs and real estate investors and provides financing facilities. The buyer will pay 5% at the time of purchase and the remaining 95% can be paid a year later. This campaign will run until March 31. The province with the largest number of assets under this plan is Navarre, with a total of 49 units, followed by Biscay (39), Barcelona (36), Seville and Pontevedra (28), La Coruña and Granada (25) and Murcia (19). By type of property, almost half are commercial premises (47.44%). Offices and industrial premises occupy almost the other half (24.05% for the first and 23.83% for the second). The Negocio Fácil plan also includes 12 hotels.
According to the international consultancy firm CBRE, the Madrid-Barcelona axis must be strengthened to attract more foreign investment. Together, the two main Spanish cities are more attractive than separately. Also according to CBRE, it is more rational to invest in Madrid rather than in Frankfurt, Paris or London. Large investment funds are increasingly starting to cite the Spanish capital, which has great potential for attraction. But beware of national and local political stability.
12.725 billion euros of real estate transactions in 2019
The year 2019 set a new record for direct investments in real estate assets (offices, shops, logistics, hotels, portfolios, residential and alternative assets) in Spain, with transactions worth 12.725 billion euros, or 5% more than last year, according to the latest report from BNP Paribas Real Estate. The office market recorded the highest investments, with 4,600 million euros, a record and a doubling compared to 2018.
Confidential and Express News in February 2020
- In 2020, the increase in rent prices in Madrid and Barcelona will be further high. However, it will be more moderate than in the periphery of the two major Spanish cities where it may exceed 10%!
- The municipality of Barcelona is asking the government to limit the rise in rents while the municipality of Madrid is asking … exactly the opposite, that is to say, leave prices free.
- Nadia Calviño, the Vice-President of the Spanish Government Minister for the Economy and Digital Transformation, is opposed to the regulation of rents.
- In 2021, the Plaza de la Puerta Del Sol in Madrid will be entirely pedestrianized. The buildings surrounding the square will also be uniformly illuminated.
- The municipal law desired and implemented by Ada Colau, the Mayor of Barcelona, aimed at reserving 30% of new real estate promotions for social housing had the opposite effect than that expected! The housing stock affected by the new permits for the first three quarters of 2019 is down 55% compared to the same period of 2018.
- Real estate professionals in Catalonia have come up against a new regional law requiring, for example, to reserve 40% of the housing stock for social housing when land is declassified from tertiary to residential.
- Also in Barcelona, the City Council is working on a reform of the IBI (property tax). It would be based not only on the value of housing, but also on the income of the owners and the type of occupancy of the housing (it would be lower for resident owners).
- According to the Swiss bank Julius Baer, Barcelona is the most attractive city in Europe for wealthy customers. Main reason: lower property prices and luxury products than in other European cities.
- According to Forbes, Madrid has 15,000 millionaires, not far from Paris (19,000), the same as in Dubai (15,000) and twice as many as in Berlin (7,000). But much less than in New York (85,000), Hong Kong (79,000), Moscow (71,000), Beijing (61,000) and London (55,000).
- The office market in Barcelona continues its expansion cycle with growth of + 4.4% in 2019, reaching 400,000 m2. It’s the second best year in the Catalan capital in the last 15 years, behind 2015.
- According to CBRE, coworking could represent 6% of commercial real estate in the coming years.
- The INE estimates the total amount of rents for residents of Spain in 2018 at 21 billion euros. This is almost 50% more than in 2008. This increase is largely due to the increase in the number of households who chose the rental (+ 35%).
- Investments in the hotel sector in Spain only reached 2.5 billion euros in 2019, or … 2.4 billion less than in 2018, which was an exceptional year.
- The American Blackstone fund brings together the majority of its Spanish real estate assets into a giant of 20,000 properties (Testa Homes).
- The Brexit effect: you hear everything and its opposite. Our opinion: until January 1, 2021, no major upheaval to wait since the advantages enjoyed by the British in Spain are preserved in 2020, apart from the right to vote. Then there will certainly be possible bilateral agreements, notably for public health insurance.
- In its list of 52 places to visit in 2020 worldwide, the New York Times has selected 3 sites in Spain: Asturias (capital: Oviedo), the island of Menorca (Balearic Islands) and the Val d’Aran (Catalan Pyrenees)).
As for Bloomberg’s ranking of the 24 best tourist destinations in the world in 2020, only Andalusia appears (and the interior is acclaimed).
News in February 2020
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