The real estate sector reaffirms its recovery in Spain with the ‘prime’ market boom.
The strong interest shown by investors in the real estate market triggered the growth of the sale of luxury residential properties in the first half of 2018. This happens after the uncertainty generated by the turbulent political situation in Catalonia caused a significant drop in the number of high-end housing transactions in said area. The real estate agency Lucas Fox, focused on the prime residential segment, estimates a 13% decrease in the number of operations carried out in Catalonia during the first six months of the year.
Despite the Catalan atony, the number of prime residential property transactions grew in the Spanish real estate market by 27% during the first half of 2018, according to the latest report by Lucas Fox. This translated into a sharp increase in the average price of sale, which went up 19% in the first half of the year.
According to the data of the Ministry of Development, luxury real estate transactions (those carried out for an amount greater than 900,000 euros, according to Lucas Fox) increased by 34% in 2017 compared to the twelve months previous.
Another of the large luxury real estate companies, Engel & Völkers, intermediated sales totaling 1,019 million euros throughout Spain during the first six months of the year, 13.4% more year-on-year, a sign of the good moment experienced by this segment of the residential market, thanks to the strong interest of investors seeking profitability above 10%. Engel & Völkers highlights mainly the increase in the volume of business in Barcelona, Madrid and Valencia, which was 27%.
These data also serve to confirm the good timing of the Spanish real estate sector in general. According to the National Institute of Statistics (INE), 217,539 housing transactions were carried out between January and May this year, which represents an increase of 13% over the same period last year. The sale of new housing accounted for 18% of total transactions, with a total of 38,328 new residential properties transferred.
Ferrán Font, director of studies of the real estate portal Pisos.com, points out the expansive situation in which the Spanish economy finds itself as the main factor favoring this moment of boom. “A minor stoppage and access to credit, which begins to be facilitated a bit more, place us on a very favorable occasion”, comments Font. In fact, the number of unemployed decreased by 458,900 people in the last twelve months, which represents a decrease in unemployment 10.79% higher than that registered during the same period of 2017.
The areas where luxury home sales rose the most were the main Spanish cities and holiday destinations, which recorded a historic record in the number of prime residential property transactions, according to the Lucas Fox report.
In Madrid, the number of transactions mediated by the real estate company in charge of the study increased by 20% during the first half of 2018. In addition, the total value of these transactions increased by 10% with respect to the first six months of 2017. According to the Ministry of Public Works, the number of luxury residential real estate transactions increased by 54% in 2017 compared to the previous year.
The political situation in Catalonia at the end of last year had a significant negative effect on operations on high-end housing, according to Lucas Fox. Both the number of sales and the total value of transactions decreased significantly during the first half of the year. to the same period of 2017 (see attached information).
By contrast, in Valencia, the real estate agency recorded increases in the two aspects that decreased in Barcelona. The number of purchases intermediated by Lucas Fox increased by 10% during the first six months of the year, while the total value of operations did so by 24%. In the capital of the Valencian Community, according to the Ministry of Development, the total value of sales transactions grew by 17% in the first quarter compared to the same period last year.
In the Barcelona region of El Maresme there was an 80% increase in luxury operations during the first six months of the year, despite the political uncertainty that the region experienced at the end of last year, according to Lucas Fox. However, there was a 27% reduction in the total value of the transactions, due to the reduction in the average price of the commercialized properties. Thus, the average price of homes sold fell by 60% compared to the first half of 2017, reaching an average amount of 538,000 euros for residential property.
In the Barcelona city of Sitges – another of the main centers of Catalan luxury – 8% fewer transactions were mediated compared to the first half of 2017. In addition, the total value of operations also fell by 20%. The average price of homes sold stood at 1.1 million euros, an amount lower than the same period of the previous year by 13%.
Regarding the prospects of evolution for the luxury real estate market, Joan-Galo Macià, CEO of Engel & Völkers for Spain, Portugal and Andorra, says that since 2014 “has grown steadily in Spain”, both in number of operations as in the average price.
In this same line, Macià emphasizes that the expansive phase of the real estate sector, led until last year by major cities such as Barcelona, Madrid and Valencia, is gradually giving way to medium capital and the premium market of coastal areas, more focused on the second residence, in which “there is a growing interest in high-end housing”.
According to the CEO of Engel & Völkers for Spain, Portugal and Andorra, the most sought-after areas for residential investors are currently the Costa del Sol, with the rebound of new construction in cities such as Marbella, after several years of paralysis, Costa Blanca, the Balearic Islands and the great capitals, such as Madrid, Barcelona, Valencia and San Sebastián. Precisely, in Marbella the number of luxury transactions has risen no less than 50% year-on-year.
Foreign investors account for 66% of the luxury.
This year is being very positive for the real estate sector, reaching sales figures significantly higher than those of 2017. This boom is due to the expansive situation of the Spanish economy, but also to the strong foreign investment in the real estate market in Spain. According to data from the Association of Property Registrars, almost 17,000 residential properties were transferred to international clients during the first quarter of 2018, which represented 13% of total sales and 2,000 homes sold more than between January and March 2017. .
In Barcelona, national customers led the ranking and Americans ranked second, with 18% of transactions, ahead of the British, with 8%. The Ciudad Condal was the place with the most transfers to international clients. 6% of first quarter sales in Madrid were made by foreign citizens, 1% more than in the previous year. Foreign buyers accounted for 10% of sales in the first quarter in Valencia, 1% more than in 2017.