The property sector takes off strongly in Valencia
The Valencia real estate market faces 2016 with highly favourable prospects. This is confirmed by the figures recorded in the first quarter by Engel & Völkers, the leading German real estate brokerage that markets luxury properties all over the world. The data that has been thus far collected shows the positive momentum that began in 2015 and suggests this year may be the final property sector takeoff in the city, as is apparent from Valencia Market Report 2016 prepared by the company.
The fall in house prices during the recession years and the wide range of properties and plots available are an excellent investment opportunity, especially considering the significant upturns that have already been registered in other major cities such as Madrid and Barcelona," as stated by Miguel Angel Cantos, director of the Metropolitan Market Center (MMC) Engel & Völkers in Valencia.
During the first quarter of the year, Engel & Völkers has achieved a turnover of 587,701 euros in Valencia, which is triple the 189,224 euros in the same period of 2015 and exceeding the figure for the entire 2014. A good start featuring positive forecasts even though the company already quadrupled their turnover profits in 2015 and managed to reach 1.5 million euros from the 391,257 euros back in 2014.
This good performance has contributed to Valencia becoming one of the regions with the highest economic growth. This is a positive trend that will continue throughout this region as supported by the productive activity in industry and construction sectors. It is also worth bearing in mind that in the first half of last year, and for the first time since 2008, an increase in the construction sector's employment rate occurred.
Despite this recovery, Valencia is the fifth Spanish community where it costs less to buy a house. According to the real estate index report, the number of years on average it would take a full time working citizen to purchase a property in Valencia is around 6 years. This is almost two years less than the Spanish average and less than half that in the Baleares.
Prices and demand for housing by area
The price range of properties in Valencia, although very uneven among different areas, can be set within the 1,500 euros / sqm and 4,000 euros / sqm for renovated properties. If the property needs renovation, the range is reduced by about 600 euros / sqm on on average.
However, the difference between the various city districts is huge and interannual variations were recorded in the last year alone. As an example, increases of up to 7% should be noted in areas such as Campanar against falls from 9% in the some sought-after neighbourhoods.
These contrasts are divided sharply between the attraction of demand for property against the reduction in supply. The areas that are most sought after and attractive for buyers are the beach, Eixample and houses overlooking the river as well as Ciudad de las Artes and las Ciencias (the City of Arts and Sciences.)
By contrast, in the nearby cities or even in the well-connected residential areas, the demand still does not fulfill properties' supply, which is why Engel & Völkers does not anticipate significant price increases for 2016, with the exception Campanar, one of the favourites by local customers because of its proximity to the centre and also by international investors who buy a second home to spend long periods here or obtain tax residence through the acquisition of construction.
Regarding the buyer profile, during last year, this has increasingly included international clients, when there has been a change in the nationality of the investor. While the exchange rate of the ruble has slowed the real estate appetite of the Russian buyer, it has increased the interest of customers in Eastern Europe and the Middle East.
Rentals, marking national character
In Valencia, Engel & Völkers focuses its rental operations in the most popular city districts and has seen a significant upturn in Eixample, particularly in the market area of Colón, a trendy neighbourhood where there is potential interest
The profile of city tenants is marked by national character: the Spanish make up 85% of the rental clients compared to 15% of foreigners. International customers, with the French, Germans and British, look for a house to live in all year in a city with a high quality of life and an ideal climate that's not found in their countries of origin.
The rental market has become one of the main pillars of the Valencian real estate sector. The flexibility provided by some legislative changes in the leases, the still unstable labour market, the change of mentality from buyers and the high profitability offered to the owner has meant that leases have put an increasing weight in the operations of Engel & Völkers.
However, buying an apartment for rent in the most sought after areas represents a return of around 5%. Figures not seen since the housing boom that happened years ago.