The Barcelona real estate market faces 2016 with very favourable prospects. The progressive consolidation of the sector supported by the positive trend of macroeconomic variables and the recovery of residential construction will allow an average price increase of 7% . This is one of the conclusions from the Barcelona Market Report 2016 as prepared by the German firm Engel & Völkers.
The study, presented today by Joan-Galo Macià, the CEO of Metropolitan Market Centre (MMC) Engel & Völkers in Barcelona said that " the interest of national customer and the growing presence of international buyers allow prices to remain upward, reaching increases of 12 % in the best areas of the city. "
On the supply side, the sector's recovery is reflected in residential construction in 2015 as the third consecutive year of recovery with 6,000 new housing starting in the province of Barcelona. A trend that will continue throughout this year because the building industry expects to construct 10,000 more new homes.
The good results that were obtained by Engel & Völkers in Barcelona back in 2015 were supported by three solid pillars: increasing number of domestic customers, strong demand for rentals and the impetus given to the division of commercial sector- a specialised line of business sector; the figures obtained in the first months of 2016 confirm that they continue to be the main strengths of the company.
The most sought after areas
The strong demand was mainly foreign-led including from Germans, French, Italians, Dutch, Argentinean and Swiss. The renewed interest of national customer has allowed the sale of homes in Eixample to increase by 20% in 2015, which Engel & Völkers expected to repeat this year. This is an increase that puts the average prices in better areas up by 5,250 € / sqm, reaching levels of 11,000 € / sqm in the most exclusive properties of Paseo de Gracia.
These prices directly compete with the elite Zona Alta, which houses the most exclusive properties in the city and where almost no new construction developments go on sale for less than € 9,000 / sqm.
Another residential district with known character Les Corts, where 85% of purchases stem from Spanish clients, presents a broader line that was offered in Gracia house price range where you can find properties from 1,500 € / sqm which range from small flats in Vall d'Hebron to most popular houses of 5,000 € / sqm in Vila de Gracia.
The rental businesses double
The rental market has become one of the main pillars of the Barcelona property market recovery. The flexibility provided by some legislative changes in leases as well as the still unstable labour market, the change of mentality and high profitability offer for the owner have meant that rentals have put an increasing weight in Engel & Völkers operations.
However, buying an apartment for rent in the most sought after areas represents a return of around 5%, levels not seen since the years of the housing boom and exceed any other financial assets.
The figures obtained by the German firm in 2015 support this trend. Thus, within the positive developments in both segments, note that the rent for registered businesses have doubled over the previous year while sales, a much more mature market for Engel & Völkers, grew by 33%.
In Barcelona, Engel & Völkers focuses its rental operations in the most popular districts of the city: Sarria-Sant Gervasi, Eixample, Ciutat Vella, Les Corts and Gracia, where it observed that the profile of foreign lessee is formed by families of high purchasing power interested in prime locations or students who prefer central areas. The number of international customers who have opted for renting through Engel & Völkers has increased sixfold in 2015. This is led by French, English and Italian.
The type of upscale property for renting in Barcelona is a property of more than 150 square metres, located near international schools and more than 3,000 euros per month price.
Strong comeback in investment offices
2014 marked the turning point in investing in real estate assets reaching figures not seen since the onset of the economic crisis, 2015 has meant the consolidation of this positive trend. Barcelona closed operations worth over 1,800 million euros, representing an increase of 43% over 2014. Of this, almost 50% were investments in offices and 20% on hotels.
In this context, with funds and SOCIMIs having entered the scene and family office businesses or families of foreign origin who begin to see promoters having managed to restructure its debt and return to available bank credit. This significant upturn in investment demand for the product has an associated price increases, which in some areas such as Ciutat Vella, Raval and Borne, these are between 7% and 10% in a period of less than six months.
Looking ahead to 2016, the outlook is for an increase in prices, though not as much as during the last half of 2015. Having clarified the political landscape and the current asset retention by the owners which Engel & Völkers expect a rapid increase in prices Engel & Völkers expected to reappear a greater supply of product on the market from the second quarter, allowing a surge in the number of operations.
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