October has been a month full of political uncertainty in Catalonia. But despite the bad market situation, since 1-O Engel & Völkers' Barcelona branch has brokered deals worth 34.8 million euros, it represents an increase of 23% over the same month in the previous year.
Although the October turnover was lower than the registered figures in September, the 28% increase compared to the same month in 2016 for residential property sales, a segment that represents more than 80% of the company's income, has made it possible to overcome the intended purpose. On the other hand, the revenues in the residential rentals division have remained stable whereas the revenues in the commercial (tertiary sector) have fallen by 8%. Regarding the number of completed property deals, Engel & Völkers' Barcelona branch has closed 61 new sales and 92 rentals.
Even though investment requires legal, economic and political stability, and uncertainty is never a good ally, especially if it continues over time, the Managing Director of Engel & Völkers' Barcelona, Oriol Canal, wants to highlight the adjustment effect that the current situation has had on prices. "Prices in the Catalan capital have been rising excessively, up to 22% in the most sought after areas and many sellers are already anticipating similar or higher increases next year," says Canal.
"The uncertainty during the month of October has removed the speculative component of these sellers who are now willing to sell at the market price and are no longer asking for 20% more. This is good news for the sector as it will probably lengthen the bonanza cycle, laying the foundations for more sustained growth over time with a healthier and more solid demand," he adds.
In Canal's opinion, this new scenario can be interpreted as "moderate price increases of up to 4% per year in the next few years". The lack of property supply in the face of growing demand, both in the residential segment and in the tertiary sector, has been causing very significant price increases that could have negative effects on the sector in the long term.
Canal admits that some purchase cases have been delayed after 1-O, especially among investors, but he underlines that they have not completely lost interest in the city and are waiting to see how the current political events evolve.
Photo: Oriol Canal - Director General de Engel & Völkers Barcelona
It is also worth mentioning the change in the profile of the company's client, where the national buyer has gone from representing 60% to 83%. While investors postpone their purchasing decisions, local demand from first-time property buyers has not died down, especially in the upper area of Barcelona (Zona Alta) and Vallès. Chinese and Dutch are the leading foreign customers for buying property.
"This period of uncertainty is making us gain significant market share as many owners value our premium services even more in such difficult times when selling their property. This has caused an increase in the number of properties we have available in our portfolio. In fact, in October we have offered 12% more properties for sale than last year," says Canal. "Therefore, by following our strategic growth plans, in October we employed 32 new real estate consultants to strengthen our three lines of business in Barcelona, in addition to the 11 we hired for the recruitment, administration, marketing and finance departments. "