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Market Report

• For 2019, Engel & Völkers forecasts an increase in sale and rent prices in the Catalan capital. 
• In Catalonia, the municipalities around the City of Barcelona, such as Sant Joan Despí, Sabadell, and Terrassa will once again be the driving force of the market. 
• The premium second homes market in the Pyrenees will put Cerdanya, Vall d'Arán, and Costa Brava in the lead.

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Barcelona, 6th March 2019. The real estate market in the city of Barcelona will be steady throughout 2019. While the capital will experience a year of stable property prices, the outer area of the city will once again go through double-digit growth. This is one of the conclusions from the 2018-2019 Market Report of Catalonia, prepared by the German firm, Engel & Völkers. 

During the last fiscal year, the pattern in property price trends between the city and its surroundings has already been recorded. As the report explains, "the difference between the slight increase of 2% recorded in the property prices in Barcelona City in 2018 and the increase of 12% in the outer area is due to three reasons: the price gap between both zones, the different buyer profile and the rise in the number of tenants becoming homeowners ". 

The report, which was presented today by Oriol Canal, the General Director of the Metropolitan Market Centre, (MMC) of Engel & Völkers in Barcelona, and Constanza Maya, the Director of operations and expansion of Engel & Völkers for the MMC and the franchise network in Spain, Portugal and Andorra, explains about the steady balance in the real estate sector in Catalonia during the year 2018 as well as forecasts for the coming months. 

“Throughout this study it is foreseeable that the property prices in the city of Barcelona will experience a slight decrease in the most premium areas with fewer sales, which will present a good opportunity to buy in this city compared to other European cities. “ Canal said. "The increase in economic and political stability will result in the influx of foreign investors to return to the city because of the favourable conditions for business, climate and the incomparable quality of life in Barcelona," added Canal. 

"In turn, the continuity of low interest rates, the rise in wages, the increase in employment and the ease of granting mortgages by banks will result in an increase in the number of national clients purchasing properties in the medium term," highlights Canal. 

For the entire region of Catalonia, Constanza Maya foresees that "just like last year, many families that are currently living in rented accommodation will buy their own homes". Cities such as Sant Joan Despí, Terrassa and Sabadell with competitive prices are ahead of Barcelona, and typically second homes in locations such as Costa Brava and the Pyrenees will once again dominate the most prestigious areas in 2019. 

Barcelona, a highly homogeneous city 

Unlike the other major Spanish cities, such as Madrid or Valencia, where the most expensive areas have experienced triple or quadruple price increases, the distribution of prices by districts in Barcelona is somewhat the same. The price range in Barcelona’s ten districts is between 3,000 euros / sqm and slightly more than 6,000 euros / sqm, while a third is in the range of 4,000 euros / sqm. 

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In the first districts of the ranking - Les Corts and Sarrià-Sant Gervasi - the most sought-after premium areas include Turó Park, Tres Torres and Pedralbes, where the prestigious Pearson Avenue one of the most exclusive addresses in the city is located. However, in the year 2018, Les Corts and Gràcia have entered a maturity stage with steady property sales but without any significant price increases. 

Diagonal Mar is in the top ten as one of the most exclusive areas of Barcelona, reaching average prices of 7,000 euros / sqm. Just behind Diagonal Mar, we can find Eixample Right where the average price reaches 5,650 euros / sqm.

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Vallès and Baix Llobregat, an excellent choice for first-time buyers


Just a few minutes away from Ciudad Condal, the regions of Vallès and Baix Llobregat are popular options among families who are seeking to buy their first home in a well-connected area, with a wide range of services and parks. Most of the Baix Llobregat buyers who account for 95% of purchases are national. However, in Sant Cugat and the most premium area of Vallès, the national buyer is 75% compared to 25% of international customers. 

Sant Cugat remains on the list of cities with the highest price per square metre in Spain, with a strong but growing demand that joins the progressive increase of municipalities such as Sabadell, where the upward trend in prices is expected to continue – although it will be in a more sustained way in 2019. 

Baix Llobregat, Martorell, Corbera, Cervelló and El Papiol stand out as the areas with the most demand in the north, while Molins de Rei, Sant Boi, Viladecans and Cornellà are the urban centres that concentrate the greatest interest in the south. For 2019, prices are expected to reach record highs of more than 10% in the most central areas and a greater number of sales with more moderate prices in the most remote areas. 

Heading towards a sanitised rental market


In the year 2018, the rental market achieved the desired price stability in Barcelona. As previously mentioned, a growing number of first-time homeowners had led to a healthy price adjustment in the best locations in the city, which could continue in 2019, while in the outer areas of the city there will be a slight upward trend. It should be noted that Engel & Völkers has increased its rental operations in Barcelona with foreign customers increasing from 61% to 65% throughout the year 2018. 

The average rent prices have remained between 16.5 and 20 euros / sqm in the most popular districts of the city, with Ciutat Vella and Eixample in the lead, followed by Sant Martí and Sarrià-Sant Gervasi. 

The tenant profile consists of families with high purchasing power who are interested in prime locations, young couples and students tend to prefer more central areas, while maintaining the growing demand in areas close to the city, such as Sant Cugat and Badalona. 

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The new-build flats face the challenge of protected housing


The high prices of new-builds, together with a decrease in demand for this type of property from foreign buyers have caused a moderate fall in new-build property sales. This is a reduction that has also resulted in lower demand from investors. 

In the medium term, the actual problem for the new-builds will be the scarcity of supply derived from the modification of the General Metropolitan Plan of Barcelona. The new measure requires 30% of the new build constructions and major renovations to be reserved for protected housing . With this latest proposal, builders will have more plots of land in the outer areas of the city available where they will also obtain higher profitability, which will reduce the supply in the capital as a result. 

61% of new-build buyers in Barcelona are national customers compared to 39% foreign buyers. One in four foreign buyers is French, followed by the Swiss who make up 13% of the purchases, Turks 10%, Americans 8%, while the rest is divided between British, Belgians and other nationalities. 

In Barcelona, the average price of a 100 sqm new-build property with 2 or 3 bedrooms stands at 580,000 euros. 

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The attractiveness of coastal and mountain properties


The second home market is another major attraction for investors in Catalonia. The greatest dynamism of this type of market is centred around the coast and the Pyrenees, where Costa Brava is the most sought-after area for both national and international investors. 

Cadaqués, with prices that reach 10,500 euros / sqm for luxury villas by the sea, together with other exclusive destinations such as S'Agaró, make up the most attractive and highly-sought areas. Sant Francesc also stands out, which is one of the most prestigious developments in the south of the Costa Brava with prices of up to 8,000 euros / sqm. 

With regard to mountain properties, it is worth mentioning two of the most exclusive and preferred destinations among the Catalans: Cerdanya and Vall d'Aran. Specifically in the Aranese market, the year 2018 led to an increase in the number of national buyers, which already accounted for 80% of purchases compared to 20% for international buyers, who were led by the French and the British. With start of the recovery period in the winter of 2015/16, after four years of hardly any activity in the real estate market, the second home sector has made a strong comeback in these areas of the Pyrenees. 

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