Investing in Barcelona. The value of Spanish real estate market assets has suffered a huge discount as a result of 7 years of economic crisis (circa 40% accumulated decline). Prime properties’ value has been severely affected by the economic crisis; the number of transactions has been dramatically reduced by the investors’ uncertainties about: (i) the generalized contraction of Spanish economy, (ii) the bond crisis and the risk of an eventual bailout, (iii) an unemployment rate hovering near 25%, (iv) public debt as a percent of GDP at 98% and (v) the political and economic scandals.
The structural reforms (fiscal and labour policies, anticorruption measures, employment promotion, etc) underway by the Spanish Government following the European Commission guidelines have changed the market outlook; The International Monetary Fund (IMF) has recently confirmed that point improving its growth forecast for Spain predicting that the economy would expand 2% in 2015 (World Economic Outlook report, April 14th 2015).
At the present moment, the outlook of Spanish property market is improving. In the case of the city of Barcelona, the real estate market reached the bottom value in the middle of 2013. Since then it has recovered a 10% of its value.
Barcelona is one of top 10 most visited cities in the world and the 4th city in number of tourists in Europe (2015 Global Destination Cities Index). With a warm climate and excellent infrastructures (International Airport and Port, High speed trains, and road infrastructures) Organization of Exhibitions with global impact (Mobile World Congress) and a huge cultural offer: Music and Theatre (Gran Teatre del Liceu, Auditori Nacional, Primavera Sound, Sonar), Museums (MACBA, MNAC, CCCB, HUB), Sports (FC Barcelona, Water sports, Marathon, Triathlon, Tennis Tournament Godó in RCT Barcelona, International Jumping Competition CSIO at RC Polo, F1 and Motorbike races at Circuit de Catalunya), Gastronomy (internationally awarded restaurants) etc.
There are singular properties in Barcelona in terms of: architectonical style (Modernist, the Catalan version of Art Nouveau style jewels, neoclassical, novecento and avant-garde, etc) and date of construction (properties of 19th and 20th century) below their long term average price.
In a low interest rates scenario the real estate market may be higher returns than other investments. Furthermore, international investors (outside the euro zone) can benefit of the Euro devaluation versus Dollar (18% between January 1rst 2014 and 25th February 2015) and versus Sterling (12%). Considering the discount of the value and the devaluation prime properties are between 50% and 40% below their price.
Capital market is very selective in terms of assets and location and so it is acting: from the beginning of 2015 the number of transactions of prime properties has improved and we estimated a huge push on that market.
In our opinion, the price of prime properties available on the market can achieve high returns in the following years, meaning an excellent opportunity to invest in. That opportunity is even better for international investors (out of euro zone) who may benefit from the euro devaluation.
2015: a year to invest in prime properties. If you need any addition information, please contact us: BarcelonaMMC@engelvoelkers.com