2014 was the turning point for the real estate assets investment. The recovery over that period allowed figures to reach record levels which Spain had not seen since the onset of the economic crisis, a positive trend that has consolidated during 2015.
During 2015 Barcelona had organisations worth over 1,800 million euros, representing an increase of 43% compared to 2014 when they were closed.
Of this amount, almost 50% corresponds to investments in offices and hotels 20%, representing an increase of more than 25% over the previous year. Meanwhile, in residential investment (renovations) the increase amounts to slightly more than 11%, despite a small part of the total volume grew 40% compared to 2014.
85% of the investment in Catalonia has been carried out by international investors, among which are the Socimi (listed REITs) whose capital comes mostly from abroad. Meanwhile, listed companies represented 30% of total investment.
Engel & Völkers, aware of the growing demand among its customers, has decided to replicate the same strategy in Barcelona and carry out their operations in residential areas. In the middle of last year, this agency decided to boost its commercial division that specialises in the sale and rental transfer of premises, buildings, offices, hotels, industrial buildings and lands under a territorial organisation allowing advisers who have a broad market knowledge offer many types of properties to customers.
In this sense, in the last six months Engel & Völkers has advised many customers about rental operations, handovers and sales of commercial premises, offices, hotels and residential buildings that require renovation. In this period, significant demand for commercial premises in the Eixample and Gracia has been noted, while there has been higher demand for buildings and hotels, all centrally located in Ciutat Vella and Raval neighbourhoods.
The origin of the investment in capital consists of more than 70% from foreigners, mainly from countries like France, Russia, Israel and China.
The profile of buyers who have savings and investments includes family businesses and those of foreign origin who come to promote their businesses and improve their credit rating at the banks.
This significant upturn in investment demand has resulted in price increases, which in some areas such as Ciutat Vella, Raval and Borne, are between 7% and 10% in a period of less than six months. At the same time a fall in yields has been noted, although productivity could have reached 7% over the last two years, it currently moves between 4.5% and 5.75%.
A direct consequence of this increased demand and closure of operations is the reduced supply of products in the market, caused in part by product retention from owners who are waiting for better prices in the future.
Throughout 2015, the largest number of transactions advised by Engel & Völkers corresponds to local trade under sales, rentals, and transfers in the Eixample and Gracia areas as well as investment operations in residential buildings and hotels, in the old town.The price range of operations that were closed down during 2015 around the neighbourhoods of the city, has followed this pattern:
Looking ahead to 2016, the outlood is an increase in prices, although not as pronounced as prices during the last half of 2015, partly due to the small slowdown in investment operations from foreign capital. Having clarified the political landscape and upper roadstead the current retention of assets by the owners - they expect a rapid increase in prices - we expect more product offerings in the market to re-occur from the second quarter, allowing a rise in the number of businesses that will operate.
In this context, Engel & Völkers Commercial has planned to expand the number of staff members in their division. The target set for next May is to double the number of advisers in order to reach up to 40 agents who specialise in this sector.Prospects for 2016 are positive in a context where the price increase is absorbed by demand. There will be a bag of buyers who were previously not satisfied during the years of the crisis and currently have more confidence and security. Against this solid support, there will be greater local demand for foreign capital, the evolution of the political situation in Catalonia and the rest of Spain, which can result in a certain slowdown in the investment decision during the first quarter of this year will be a contrast. Once these uncertainties about foreign capital are solved, - investors whose demand is aimed at markets where the legal framework is clear, will consider taking the opportunity to invest in Barcelona rather than in other major European cities.