Market Report 2018-19 Spain and Andorra
MARKET REPORT 2018-2019 - SPAIN AND ANDORRA
INDEX 00
06
08
World Economic outlook
Spain’s Economy
10
The Real Estate Sector in Spain
05
Editor’s note
16
Market Trends The Spanish Residential Market
108
Andorra
EDITOR‘S NOTE
Juan-Galo Macià The GDP growth of 2.6% in 2018, even though it was slightly lower than the previous year, reflects the great strength of the Spanish economy in a somewhat unfavourable global economic situation. The sharp rise in the price of oil, the trade war, the minor growth in the euro zone and the return of Turkey, Tunisia, and Egypt to the tourism market have all burdened the economic situation at a global level. In spite of everything, Spain is not on the verge of a new recession and its economic growth is not only slowing down, but it is actually progressing forward.
By 2019, the demand from first-time buyers and an increase in tourists will make a progressive appearance. The first will focus on apartments with prices between 100,000 and 150,000 euros, and the second in the most popular resorts along the coast (Marbella, Calella de Palafrugell, Port Andratx, etc.). Young buyers will be able to buy their first homes by obtaining 100% mortgages. This will help them get on the property ladder easier.
In recent months, the housing market has been dominated by investment demand (around 50% of purchases). The lack of deposit necessary for purchasing a home has made demand practically residual, just like what happened to the tourism market.
Prices will increase by around 10%, purchases will go up by approximately 15%, and the major players of the market will be the medium-sized cities (between 300,000 and 1,000,000 inhabitants). In contrast with both, the large cities and Palma, the price recovery has so far been scarce. Last year, in many of these cities, the reduction in prices with respect to 2007 exceeded 25%.
The engines of the market in 2018 have once again been the communities of Madrid, Catalonia and the Balearic
To summarise, it will be a good year as the residential market will continue to expand and medium-sized cities
Islands. However, the real estate recovery had already started to get noticed in almost every municipality in the country and in most of the cities, the rise in property price easily exceeded the inflation rate.
will once again be the main players. These regions have taken over the two largest cities in the country, giving way to stabilisation of prices in Barcelona as well as in the Central Almond of Madrid.
Juan-Galo Macià CEO of Engel & Völkers in Spain, Portugal, and Andorra
4 | Market Report 2018-19 Spain and Andorra
Editor’s note | 5
World Economic Outlook
Consumer price inflation
Real Estate Market
2,5
The current favourable financing conditions are positive for the real estate sector on an international level. One of the occurrences in this market since the economic recovery started is the stabilisation of property prices. As indicated by the IMF, an increase in this synchronisation has been observed in 40 countries and 44 of the main cities in the developed and emerging markets.
2,0 1,5 1,0 0,5 0,0 -0,5 -1,0 -1,5
Global Growth
2013
Advanced economies
2014
2015
2016
2017
Jul. 2018
Data in %. Source: FMI
Interest Rates GDP Growth
The weakening global expansion and a slowdown of global synchronisation will affect the development of the world’s economy during 2019. The growth will be 3.5%, two tenths less than in the previous years due to the negative effects of tariffs and trade war, the weakening of some emerging markets including China, and the economy slowdown in European countries, such as Italy and Germany. In addition, the rise of oil prices, geopolitical tensions and the worsening trade situation will all weight heavily on the world’s economy. According to the International Monetary Fund (IMF), the developed markets will experience further deceleration, going from a growth of 2.4% in 2018 to 2% in 2019. Special mention should be made about the US. Helped by its fiscal stimulus, it will remain above its full potential until 2020. This year the US economy will grow by 2.5% compared to 1.6% in the Eurozone, 1.5% in the United Kingdom and 1.1% in Japan. The emerging markets will grow by 4.5%, with the Asian countries prospering the most. India and China will experience gross domestic product increases (GDP) of more than 7.5% and 6.2%, respectively. On the other hand, the Latin American companies will cause business tensions due to volatility of raw materials and financing challenges and their economy will grow by less than 3%.
Without inflationary pressures, financing conditions remain at accommodative levels and favour growth, although the central banks of the main economies continue with standardisation of the monetary policy. However, the expectations about the upcoming rate hikes by the weakening of the world economy have been lowered.
8 7 6 5 4 3 2 1 0
2011
Advanced economies
2013
2015
2017
2019
Emerging economies and the developing markets
Source: FMI
The less balanced growth has come with higher oil prices in recent years. Last year, a barrel of Brent oil was more than 85 dollars, the highest price since 2014. After stabilising around 70 dollars, the expected slowdown world-wide, and consequently, due to the lowest demand, it could put downward pressure on prices in the next few months. Similarly, inflation will continue to be contained, positioning itself around 1.7% in advanced economies. In Latin America, hyperinflation could get worse in Venezuela as a result of the financing of the large fiscal deficits and loss of confidence in the country’s currency.
Last year in the United States the interest rates were set above 2% for the first time in a decade due to the boost in economy - with the lowest level of unemployment since 2000- as well as the expectations of further fiscal stimulus. In Europe, the European Central Bank (ECB) has kept the interest rates at record low at 0% with the possibility of increasing them later than expected given the signs of economic slowdown in countries like Italy and Germany.
The factors mentioned, plus the shortage of supply and the search for profitable investments will result in the prices rising in the coming months, although the increases will be moderate. It should be noted that the normalisation of the monetary policy by central banks, which will entail stricter financing conditions, the impact of trade wars and the slowdown of some large economies, will result in lower demand for property. Although at the moment there are no risks of new bubbles occurring in the real estate market, the possible increases in interest rates should be treated with caution, especially if the credit growth gets higher than expected.
Property price development by countries Year-on-year change in% during 2018
-20
-15
-5
0
5
10
15
Hong Kong Ireland
In the currency market, the dollar will be maintained at current levels in the first half of the year before weakening in the second half as a consequence of the public
Portugal Holland Croatia Spain Canada
and government deficit and debt generated by the tax laws from the Trump administration and the higher Federal reserves that will cause rate increases in the near future.
Luxembourg Germany New Zealand USA China Australia Denmark Austria
Euro / dollar exchange rate
France India UK
1,24
Belgium Japan
1,22
Italy Brazil
1,20
Russia
1,18
United Arab Emirates
1,16
Peru
1,14
Ukraine
Qatar
Source: Bloomberg
6 | Market Report 2018-19 Spain and Andorra
-10
Source: FMI
World Economic outlook | 7
Spain’s Economy
Financial situation of households
The net wealth of the Spanish households, which includes their net financial wealth plus real estate, remains solid and increased to 551% of GDP in the second quarter of 2018 compared to 543% in December 2017 – based on the latest data available at the closure of this report-.
The Outlook
The Spanish economy will slow down this year, in tune with the main countries of its surroundings, although it will still grow above the European average. Forecasts from national and international organisations point to an increase in national GDP of 2.1% -2.2%, compared to 1.6% planned for the Eurozone. The better economic performance in Spain stems from the positive internal factors, such as the increase in competitiveness, job creation, the deleveraging of the private sector and a healthy financial sector. The deceleration with respect to the economic growth of 2.5% in 2018 responds to the exhaustion of external tailwinds.
Finally, the normalisation of the ECB’s monetary policy and the possible increases in interest rates constitute to yet another economic vulnerability that still has a bulky weight of public and private debt on its shoulder. The annual inflation rate in December will be around 1%-1.2%; a stable rate compared to 1.2% at the end of 2018.
This increase mainly stems from the rising real estate wealth, which stood at 432% of GDP, amounting to more than five trillion euros, although still far from the maximum figure recorded in 2007 (584% of GDP). The financial wealth, which results from deducting the debts of the total financial assets, remained at 1.41 trillion euros, equivalent to 118.9% of GDP. The financial situation of Spanish families. Figures in billions of euros. Net financial wealth Real
estate wealth. Source: Engel & Völkers with data from the Bank of Spain and Inverco. Along with purchases and appreciation of real estate assets, the lower financial vulnerability of the Spanish families is explained by the debt process. The total gross debt has fallen to 60.8% of GDP since the 85% peak it reached in June 2010. However, in recent months, the statistics have shown a return of high debt, especially due to the rise in consumer loans and, to a lesser extent, mortgages. The increase in spending above the gross disposable income has caused the savings rate to fall to 5.2% at the end of the third quarter. If this trend continues, it will mean that public debt will continue to increase in the next few months.
The financial situation of Spanish families (Figures in billions of euros) 8
5,2%
7
Annual IPC growth
6 2,5
5 4
2,0
3
of household savings
2
The 2.5% reduction in the growth rate in 2018 responds to the exhaustion of the external economic factors. The main one responsible for this development is the foreign sector, which already reduced its contribution to GDP last year partly because of the slowdown in the tourism industry. The deterioration of prospects for the economic situa-
1,5
1 0
1,0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Net financial wealth
0,5
Real estate wealth
Source: Engel & Völkers with data from the Bank of Spain and Inverco
jan feb mar apr may jun jul aug sep oct nov dec
Percentage based on quarterly gross disposable income Source: INE
2018
tion, including the loss of dynamism in some of the main export markets of Spain, such as Italy and the United Kingdom, explains the moderation in exports.
General index. Percentage Source: INE
GDP growth in Spain 5
0
2007
2008
2009
2010
8 | Market Report 2018-19 Spain and Andorra
2011
2012
2013
2014
2015
2016
2017
T4
T3
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
2006
T2
Source: INE
-5
2018
Spain’s Economy | 9
Real Estate Sector in Spain
Price Development
Current situation
The real estate sector has accumulated five consecutive years of growth after the property bubble burst. The higher consumer trust, good financing conditions and the search for profitable investments in an environment of low interest rates result in a market in which both the purchase and sale prices can progress forward. The recovery, which will continue throughout 2019, is occurring in a standard manner but is still far from the historical maximums experienced during the full boom. All this lowers the risk of a new housing bubble in the short and medium term. The residential property market is still the engine of the sector. With the return of new-builds, the solid demand for resale properties and the growing weight of rentals means new price increases and higher demand in the coming months.
House prices will maintain a bullish path when taking valuations into account as well as sold properties. According to the Ministry of Development, the average price per square metre for private homes stood at 1,589.5 euros in the third quarter of 2018, 3.2% more than a year earlier. This data represents the fourteenth quarter consecutive rise after 26 quarters of falls started at the end of 2008. From the third quarter of 2014, property prices regained strength by 9.2%, although they are still 24.4% lower than the historical maximum recorded in 2008.
Financing
The normalisation of the ECB’s monetary policy goes to show that mortgages will become more expensive in the upcoming months, although the conditions will not be restrictive and interest rates will remain at accommodative levels. The Euribor, the reference rate to which most of the mortgages in Spain are linked to, has already started to reflect this trend. The Euribor rate closed at -0.129% in 2018, after accumulating nine consecutive monthly advances. Although the rate is currently negative, the rise has meant that last year the mortgage rates went up for the first time since 2014, both in the case of semi-annual and annual reviews. For example, the monthly payment amount for a mortgage of 120,000 euros for a term of 20 years and a rate of 1% would be changed to 544.99 euros based on the December Euribor rate. This equals to 3.2 euros more per month than a year before.
The main risks for the sector would be tougher lending conditions once the ECB starts to raise interest rates in the second half of the year.
The property prices in each autonomous community have increased by 11%, with Madrid (8.3%), La Rioja (6%), the Balearic Islands (5.2%) and Catalonia (4.8%) in the lead. On the contrary, in seven of these districts, the property prices have fallen. These include Cantabria (-2.7%), Galicia (-1.7%) and the Basque Country (-1.2%). For municipalities with more than 25,000 inhabitants, the highest prices for private homes can be seen in San Sebastian, Sant Cugat del Vallès, Ibiza, Barcelona, Santa Eulalia del Río, Pozuelo de Alarcón and Madrid, all for above 3,000 euros / sqm. According to the National Institute of Statistics (INE), which refers to house purchases, the Price Index of Housing (IPV) stood at 7.2% in the third quarter of 2018. When taking into account the type of property concerned, the annual variation for new-builds was 6.1% and 7.3% for resale. By autonomous Community, Madrid (10.9%), Catalonia (9.1%) and the Balearic Islands (7%) have recorded higher increases.
Euro/dollar exchange rate
IPV Annual Rate General index, new-builds and resale (%)
8 7 6 5 4
T1
T2
T3
T4
T1
2017 General Index
T2
T3
2018
New builds
Resale homes
Data for the end of the third quarter of 2018. Source: INE
The 10 most expensive municipalities in Spain (Figures in euros/sqm) San Sebastián
3.356,1
Sant Cugat del Vallès
3.328,4
Ibiza
3.318,3
Barcelona
3.300,1
Santa Eulalia del Río
3.188,5
Pozuelo de Alarcón
3.053,1
Madrid
3.016,0
Getxo
2.928,5
Castelldefels
2.912,6
Majadahonda
2.912,2
Data for the end of the third quarter of 2018. Source: Ministry of Development
Average price of private housing per square metre (€/sqm)
0,050
2.200
0,000
2.000
-0,050 -0,100
1.800
-0,150
1.600
-0,200
1.400
-0,250 may 2016
sep
jan
may 2017
Source: Engel & Völkers with data from the ECB
10 | Market Report 2018-19 Spain and Andorra
sep
jan
may 2018
sep
1.200 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4
jan
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Data for the end of the third quarter of 2018. Source: Ministry of Development.
The Real Estate Sector in Spain | 11
Property purchases by municipality
Mortgages and purchases Andalucía
Total National
Cataluña Comunitat Valenciana
2014 347.170 2015 383.107 2016 436.574 2017 509.847 2018* 410.883
Comunidad de Madrid
The high number of mortgages granted to home buyers is another sign of the property market’s good state of health. Between January and November 2018, a total of 324,253 mortgages were approved, which is 12% more than in the same period of 2017. There are already five consecutive years with increases in mortgage approvals and two in which more than 300,000 are taken into account. However, these figures are far from the million or more mortgage approvals that were recorded back in 2006 and 2007.
Canarias Castilla y León Castilla-La Mancha País Vasco Galicia Región de Murcia Islas Baleares Aragón Principado de Asturias Extremadura Cantabria C. Foral de Navarra La Rioja Ceuta y Melilla
60% of mortgages are variable rate and 40% are fixed rate. This means four out of 10 mortgages are fixed-rate, compared to one in ten back in 2005, due to the interest rate increases that are expected in the coming months.
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
90.000
Data at the end of the third quarter. Source: Ministry of Development
Registered property sales based on the nationality of the buyer
Number of approved mortgages
Year 2018
1.600.000 Nationalities
1.400.000
%
% foreigners
1.200.000
United Kingdom
2,0
15,5
1.000.000
Germany
1,0
7,5
France
0,9
7,4
Belgium
0,8
6,3
Sweden
0,7
5,8
Romania
0,7
5,4
Italy
0,7
5,4
Morocco
0,6
4,8
China
0,5
3,9
Russia
0,4
2,9
Netherlands
0,3
2,7
Norway
0,3
2,0
Ukraine
0,2
1,6
Poland
0,2
1,5
Algeria
0,2
1,3
Ireland
0,2
1,3
Bulgaria
0,1
1,1
Switzerland
0,1
1,0
Denmark
0,1
0,9
800.000 600.000 400.000 200.000 0 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
*Data up to November. Source: INE
The property sales figures are also positive, which even exceed the number of mortgages given to borrowers. According to the latest data from the Ministry of Development, between January and September of 2018, there were a total of 410,883 homes sold, which represents an increase of 11% compared to a year earlier. Andalusia, Catalonia, Valencia and Madrid are the autonomous communities with the most sold properties.
According to the INE, between January and November of 2018 there were 481,220 property sales, 10.6% higher than the same period in 2017. By 2019, the forecasts point to exceeding the half a million sold properties, as per what happened last year.
Rest
2,7
21,6
Foreigners
12,6%
100,00%
Nationality
87,4%
TOTAL
100,00%
Source: Spanish Association of Registrars
12 | Market Report 2018-19 Spain and Andorra
The Real Estate Sector in Spain | 13
Rentals
Property ownership in Spain Figures in %
According to statistics, the rental properties continue gaining adepts in Spain and have already reached a total of 16.9%. On the other hand, the percentage of owned homes is below the 77% minimum of the historical figures, which began in 2004 and reached the maximum in 2005 with 80.5%. Despite this development, the records still differ from Europe, where on average, 69% of households own their property.
Asturias
Cantabria
País Vasco
Galicia
Navarra La Rioja Castilla y León
Cataluña Aragón
The rental boom responds to a change in preferences by the housing trend regime as more people opt for investing in a buy-to-let property. The potential profits from a buy-to-let property range from 5% and 8% annually, especially for properties situated in large cities and on the coast.
Madrid
Valencia
Castilla-La Mancha Extremadura
Balearic Islands
Murcia
In the coming months, the measures related to the rental market that are negotiated within the framework of General State Budget could result in an element of uncertainty.
Andalucía
Canary Islands
Property ownership in Spain Figures in %
67,3 % - 71,9 %
81
72,0 % - 77,4 %
77,5 % - 80,6 %
80,7 % - 83,3 %
83,4 % - 85,0 %
80 79 78 77 76 2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: INE
14 | Market Report 2018-19 Spain and Andorra
The Real Estate Sector in Spain | 15
Districts of the city of Barcelona
Barcelona
Barcelona
Horta-Guinardó Sarrià-Sant Gervasi
1.608.746
34.669 EUR
27.558 €
4.515 €/m²
2%
Population or number of inhabitants
Average Gross Income
Disposable Income
Average Price 2018
Interannual Variation
Nou Barris
Les Corts Sant Andreu
Gràcia
In 2018, house prices in Barcelona increased by 2% and exceeded 12% in the outer areas of the city. This is a change of trend with respect to previous years and it will continue throughout 2019 due to three factors: the different price levels, the different types of buyers and the increasing number of tenants who are becoming home owners.
The rental market was affected in 2018 by two reasons: a growing number of tenants in central areas moved to the outskirts of the city and there was a decrease in the number of foreigners looking to rent a house during the first 6 months of the year before their numbers started increasing during the second half of the year.
Throughout the first quarter of 2019, it is foreseeable that the house prices in Barcelona are about to experience a slight drop in the most premium areas. This will be a great opportunity for buyers and it will turn the Catalan capital into a very attractive city compared to other European cities. The increase in economic and
By 2019, the real estate market will take a year to pause in Barcelona capital, although in the surroundings it will once again record double-digit growth. Even though in 2019 the prices will fall in the Catalan capital, the decrease will be prompt and in no case should it be considered as a real estate bubble. There will not be a
political stability will cause the huge return of foreign investors who are attracted by the favourable conditions for doing business as well as the climate and the incomparable quality of life of the city. In turn, the continuity of low interest rates, the wage increases, the rise in employment and the ease of granting mortgages by banks will cause a medium term increase in the number of national buyers.
crisis nor will it occur in the near future.
With regards to the outer area of the city, the forecast is of continuity in the growth of prices and purchases. In many locations the price increase will even exceed 15% and in the entire periphery of Barcelona it will be around 10%.
34 | Market Report 2018-19 Spain and Andorra
Eixample Eixample Dreta Sant Martí Ciutat Vella Sants-Montjuïc
Prices in euros/sqm
1.000 € - 1.500 €
1.500 € - 2.000 €
2.000 € - 2.500 €
2.500 € - 3.000 €
3.000 € - 3.500 €
3.500 € - 4.000 €
4.000 € - 4.500 €
4.500 € - 5.000 €
5.000 € - 5.500 €
5.500 € - 6.000 €
6.000 € - 6.500 €
Les Corts
6.330
Sant Martí
4.500
Sant Andreu
3.840
Sarrià-Sant Gervasi
5.950
Sants-Montjuïc
4.090
Nou Barris
3.510
Eixample
5.400
Gràcia
3.980
Horta-Guinardó
3.020
Ciutat Vella
5.200
Market Trends. The Spanish Residential Market | 35
Districts of Barcelona
Ciutat Vella
The proximity to the sea and the great cultural offer of Ciutat Vella places this district in the top favourite list of interested investors who want to buy a second home both for holiday use and to rent out. These investors are, together with the young couples, the main buyers in the more trendy and sought-after neighbourhoods like El Born and Gótico, where the most popular property type is a flat with two bedrooms, two bathrooms and terrace. However, the best advantage of the homes in this district is that they have preserved their original features like hydraulic tiles and original woodwork and they are located in stately buildings with modernist details. There is a rise in families looking for properties in Gótico and Born area and investors in Raval and Barceloneta. The price adjustment experienced last year in the most prime areas of Ciutat Vella was around 15%. For 2019, stability in prices is expected with an increase in the number of purchases by the national client and the lack of international buyers.
Property prices in Ciutat Vella
Eixample
Sants-Montjuïc
Passeig de Gràcia, Rambla de Catalunya, Enric Granados and Passeig Sant Joan are the most sought-after streets in the elegant area of Eixample. Passeig de Gràcia is a prestigious area and has always boasted of having the most stately homes in Barcelona. This area directly competes with the pleasant Rambla and the quiet and semi-pedestrian Enric Granados. The last area is perfect for walking and well connected to the city. Passeig Sant Joan is highly popular for having more affordable homes than the rest of the mentioned areas.
This district has still maintained its real estate growth, which began in 2017 thanks to an increase in property demand and prices. This rebound stems from Miquel Bleach and Salvà streets, located in the neighbourhoods of Hostafrancs and Poble Sec, respectively, as the most expensive areas in the district after reaching average prices of around 5,800 euros / sqm.
(Figures in euros / sqm)
Minimum
Maximum
Average
Raval
2.000
4.500
3.000
Gótico
2.500
5.100
3.800
Barceloneta
3.500
5.500
4.500
Sant Pere, Santa Caterina i Ribera
3.500
6.500
5.000
In 2018, the international clients led the purchases in the district by up to 58% compared to 42% by national buyers. In the lead are the French, with 20% of the purchases, followed by 12% Chinese, Italians (8%), Swedes (8%) and the rest were Dutch, Austrians, Belgians, German and Americans.
In 2018, the average price of apartments in Passeig de Gràcia reached 10,410 euros / sqm, which is double the amount of 5,038 euros / sqm in Passeig Sant Joan. The district with the most purchases in 2018 (up to 40%) was Eixample Dret, followed by Eixample Esquerra, with 23% of purchases. The situation in the nerve centre of the city has placed Eixample in the crosshairs of international clients, accounting for 52% of the purchases of the district compared to 48% national buyers. The Chinese have been the top buyers with 15% of the purchases in 2018, followed by the French and Americans (12%) and Poles (10%). 12% are from other European countries and 39% are from the rest of the world.
Urban transformation, which aims to restore the district’s traditional architecture, as well as its central location and the varied leisure and gastronomic offer attract both national and international clients. The first accounts for 85% of purchases who are young couples and singles looking for their first homes. These properties range between 50 and 80 sqm and investors who buy such properties do so for letting purposes.
The most sold types of properties are penthouses and mainly large-size houses with high ceilings, original fea-
On the other hand, 15% of purchases made by foreigners from Asian countries focus on homes located in classic
tures, such as cement tiles and large terraces.
estates that have preserved their original features. Property prices in Sants-Montjuïc
Property prices in Eixample
(Figures in euros / sqm)
(Figures in euros / sqm) Maximum
Average
Hostafrancs
4.120
5.880
4.710
5.410
La Bordeta
3.500
4.420
4.000
11.760
5.650
Sants-Sants
3.170
4.880
3.990
8.190
4.750
Sants-Badal
2.940
2.940
2.940
Font de la Guatlla
3.310
4.660
3.930
Poble Sec
2.540
5.810
4.360
La Marina del Port
3.470
4.290
3.760
Maximum
Average
Eixample Esquerra
3.990
6.960
Eixample Dret
3.770
Sagrada Familia y Fort Pienc
3.380
Nova Esquerra y Sant Antoni
36 | Market Report 2018-19 Spain and Andorra
Minimum Minimum
3.360
7.650
4.650
Market Trends. The Spanish Residential Market | 37
Sarrià – Sant Gervasi
Les Corts
The most premium neighbourhood in this district is the sophisticated Pedralbes that, framed between the hills of Collserola and Avenida Diagonal, is within easy reach to the city. Pearson Avenue remains as one of the most expensive addresses in Barcelona, reaching an average price of 10,000 euros / sqm.
Sarrià, Sant Gervasi and Turó Park have a wide offer of properties ranging from penthouses to large detached family homes with gardens. The average price of these properties is over 4,700 euros / sqm. The profile of the buyer consists of people with a high purchasing power who are mostly locals, although the international buyers did emerge in 2018. These clients have shown particular interest in properties in the high zone with prices over 3 million euros, which is a safe investment for them.
Detached houses of up to 700 sqm, with at least six bedrooms, on plots of more than 1,500 sqm with large garden and absolute privacy and views over the city are the typical properties found in this prestigious avenue. The buyer profile of these homes is mostly foreigners from different nationalities such as Russian, Ukrainian, Swiss, American and Romanian, and many of them are entrepreneurs and athletes.
Turó Park and Tres Torres remain as the most sough-after locations.
Property prices in Sarrià – Sant Gervasi (Figures in euros / sqm)
Minimum
Maximum
Average
Sant Gervasi – Galvany
4.210
6.530
5.330
El Putxet i el Farró
2.950
7.320
4.720
Sant Gervasi – La Bonanova
3.300
8.300
5.350
Sarrià (Santa Amèlia – Casco Antiguo)
4.710
8.160
6.370
Les Tres Torres
5.830
6.440
6.040
Vallvidrera
2.520
4.170
3.290
Balmes
4.400
5.380
5.000
Turó Park
4.980
10.050
6.990
During 2018, the housing market slowed down and as a result, it took on average 8 months to sell a property. Looking ahead to 2019 we foresee a gradual adjustment in prices to respond to the national client’s demand. The rest of the district, which perfectly combines the residential character with the hustle and bustle of all the services it offers, has a high demand from national customers. With an average price of around 4,500 euros / sqm, the most common buyers are families with children who are looking for semi-detached houses or apartments with a minimum of three bedrooms and over 100 sqm. Les Corts entered a period of maturation in 2018 in which there were still purchases carried out, but it didn’t experience significant price increases.
Property prices in Les Corts (Figures in euros / sqm)
38 | Market Report 2018-19 Spain and Andorra
Minimum
Maximum
Average
Pedralbes
5.130
7.920
6.330
Pearson
7.090
13.880
10.490
Les Corts
3.740
5.880
4.860
Maternitat i Sant Ramon
3.390
5.500
4.380
Market Trends. The Spanish Residential Market | 39
Gràcia and Horta-Guinardó
The charming Gràcia district continues to attract international clients who show a clear preference for Barcelona’s bohemian neighbourhood par excellence. The wide and varied gastronomic and cultural offer, which has often been referred to as ‘Brooklyn’ or ‘Soho’ of Barcelona together with the variety of amenities and services, have turned this area into one of the most attractive districts.
For its part, in the adjoining district of Horta-Guinardó, buyers choose to reside in one of the most emblematic areas of Barcelona. The oasis of Font d’en Fargas where the demand, which is mainly from domestic buyers, focuses on houses with garden, detached or semi-detached properties, joins the other areas of the district where two or three bedroom flats are in high demand.
Vila de Gràcia, which comprises of 5 neighbourhoods, has an average property price of 6,250 euros / sqm, followed by Rambla del Prat, Verdi, Torrent de l’Olla and Gran de Gràcia, which have all reached a stage of maturity. For 2019, the prices are set to become stabilised.
Property prices in Gràcia and Horta-Guinardó
While the French, Italian and English clients look for one or two bedroom flats to rent, the Brazilians, Serbs, Austrians, Argentines and Spaniards prefer larger homes or top-floor flats to live with their family.
Nou Barris and Sant Andreu
Sant Martí
The urban changes linked to the arrival of the new AVE train station are the key to the revival of Sant Andreu, a district that experienced the highest price rises in 2018 with 5,790 euros / sqm. The new La Sagrera railway station is a major high-speed train station in Barcelona and has increased the district’s desirability.
The profile of the buyer in the growing district of Barcelona consists of national clients. Spanish buyers account for 80% of purchases compared to 20% by foreigners, led by the Chinese, Russians and Nordics who look for high-rise flats in modern buildings. Diagonal Mar, the industrial zone that has been transformed in recent years in one of the most premium areas of Barcelona, is the most sought-after location for these international clients who have accounted for 40% of purchases in 2018. Next to the beach of Llevant and well connected with the centre of the city by public transport, the properties are spaces, bright and airy, and boast spectacular views of the sea or the park.
(Figures in euros / sqm)
Minimum
Maximum
Average
Gràcia Nova
3.200
5.490
4.530
La Salut
2.860
4.290
3.120
Vallcarca-Penitents
1.370
4.510
3.110
Vila de Gràcia
2.710
7.660
5.170
Font d'en Fargas
3.360
4.030
3.780
Guinardó
2.190
3.710
3.020
Montbau
2.010
2.750
2.260
The price of Diagonal Mar homes, which are highly popular among investors, range between 5,000 and 12,000 euros / sqm, a maximum amount which exceeds figures in the most exclusive neighbourhoods in the city.
This area, where the most modern and innovative character of Barcelona is fused with the presence of the ancient nucleus, will cause profound changes in the lower part of the neighbourhoods of Sagrera and Sant Andreu. Nou Barris, however, still has room for improvement in terms of easier access to financing by the banks, improving the job market and being perceived as a district where investment opportunities with which you can make big profits through buy-to-lets and capital appreciation exist. Property prices in Sant Andreu
Much more affordable, in the price range of 4,500-5,500 euros / sqm of moves the housing of other areas of the district that are sought by customers, such as Vila Olímpica, Poblenou and El Clot, the latter being in high demand. In Vila Olímpica, the demand is focused on large apartments of about 150 sqm with communal areas and garage, while in Poblenou, Spanish families make up the buyer profile of 3 bedroom and 2 bathroom flats.
Property prices in Sant Martí (Figures in euros / sqm)
Minimum
Maximum
Average
Vila Olímpica
3.200
5.500
4.500
Parc i la Llacuna del Poblenou
3.800
5.000
4.500
Poblenou
5.100
6.000
5.550
Provençals del Poblenou
3.000
4.000
3.500
(Figures in euros / sqm)
40 | Market Report 2018-19 Spain and Andorra
Minimum
Maximum
Average
Nou Barris
1.870
4.760
3.510
Clot
3.800
5.000
4.300
Sant Andreu
2.260
5.790
3.840
Diagonal Mar i Front Marítim
5.000
11.000
7.000
Market Trends. The Spanish Residential Market | 41
Rentals
In 2018, the rental market in Barcelona has achieved the longed for stability in prices. Although there is balanced supply and demand, prices would still need to decrease in order to meet the demands of the national client. However, the approval of the new decree law could draw a scenario in which there is a reduction in property supply that would not be give margin to the price drop. It is expected that throughout 2019, the more central locations could see rent price stability while in the most affordable neighbourhoods or the outer areas of the city a slight increase in rental prices might be on the cards.
The Areas Most in Demand Engel & Völkers focuses its rental activities on the most popular districts of Barcelona: Ciutat Vella, Sarrià-Sant Gervasi, Eixample, Les Corts, Gràcia and Sant Martí. Nevertheless, the growing demand can be seen in El Vallès, mainly in Sant Cugat, and Badalona. The streets with the most rental demand in 2018 were Passeig de Gràcia, between Passeig Sant Joan and Urgell, where the average prices are around 20 euros / sqm.
• Ciutat Vella: The continuous demand for rental property within the old part of the city has kept the average price at 20 euros / sqm in 2017, the highest in Barcelona next to Eixample. The most searched properties for rent are between 50-80 sqm. • Eixample: Furnished and well-located properties in the most emblematic streets of the city, with special interest in modern architectural estates with character, are the most sought after in a district where the average price equals Ciutat Vella within the 20 euros / sqm range. The monthly rent is on average 1,670 euros.
• Les Corts, Gràcia y Sant Martí: in these areas, there is strong demand both nationally (because of its neighbourhood, the residents who have always lived in Gràcia, Les Corts, and Poblenou and want to continue living there) and as for the international clients, they are attracted by the proximity to centre of the city and for the uniqueness of these areas. Diagonal Mar is one of the main highlights as it’s chosen by the international client for its modern properties that boast views towards the sea and the beach. The most popular homes in these districts are between 50 sqm and 90 sqm, with average prices that are around 16.5 euros / sqm in Les Corts and Gràcia and 19 euros / sqm in Sant Martí. There are two factors that will be the main driving forces behind the increased demand: on the one hand, the increase in the number of young people leaving home and wanting to live on their own thanks to more employment and, on the other hand, the international demand that will continue with full force in the city. In terms of property supply, it should be noted that more and more rental homes are of high quality since most of the properties that were previously rented out have now been sold so investors look for more renovation properties to buy for cheap before renting them out for profits.
• Sarrià-Sant Gervasi: Foreign families looking for properties that are over 150 sqm in the most exclusive areas make up the profile of the tenants in a district
Rental prices in Barcelona
where the proximity to international schools in the area is highly valued. The average income that tenants pay in this area exceeds 2,300 monthly euros.
42 | Market Report 2018-19 Spain and Andorra
(Figures in euros / sqm)
Minimum
Maximum
Average
Sarrià-Sant Gervasi
14
20
17
Eixample
14
30
20
Ciutat Vella
16
25
20
Les Corts
14
20
16,5
Gràcia
14
20
16,5
Sant Martí
15
30
19
Market Trends. The Spanish Residential Market | 43
Badalona and Hospitalet
Santa Coloma de Gramanet
Badalona
Badalona
Hospitalet
The construction of the harbour and the extension of the port docks represent a total renewal for the real estate market of the outskirts of Barcelona. The increase in demand in Badalona will continue throughout 2019 and prices will be an average of 2,560 euros / sqm. In areas such as Sant Adrià de Besòs, the property prices have already reached 3,720 euros / sqm.
This municipality is part of the metropolitan area of Barcelona and only 8 km from the centre of the city. This is the area chosen by families and young couples who are looking for buy their first home.
With the high percentage of national buyers who make up 90% of the purchases carried out in Badalona in 2018, the profile consists of those who opt for well-located 3 bedroom flats of around 100 sqm with garage close to the centre or near the sea.
The real estate market of Hospitalet has a high percentage of national clients. 90% of buyers are Spanish compared to the remaining 10% who are foreigners, led by the Chinese. The pre-owned flats of about 90 sqm are the most in demand at prices in the range of 3,000 euros / sqm.
Sant Adrià de Besòs
Barcelona Badalona
Property prices in Badalona
Property prices in Hospitalet
(Figures in euros / sqm)
(Figures in euros / sqm)
Minimum
Maximum
Average
2.010
3.070
2.560
Hospitalet
Minimum
Maximum
Average
2.580
3.780
3.180
Hospitalet
Badalona Hospitalet
44 | Market Report 2018-19 Spain and Andorra
Market Trends. The Spanish Residential Market | 45
Barcelona’s surroundings Barcelona’s surroundings
Vallès Oriental and Occidental
Vallès Oriental
El Vallès is an increasingly popular option among families who are looking for a well-connected first residence, with a wide range of amenities and parks. The most in demand properties are detached houses and townhouses that range between 250 and 300 sqm.
Vallès Occidental
In 2018, 50% of the buyers in this area were buy-to-let investors. In Vallès Occidental, the foreign client accounted for 20% of the purchases and in Vallès Oriental, 10% of the buyers were foreign.
Barcelonés Baix Llobregat
Garraf
Sant Cugat remains the most premium area, with an average price of 3,320 euros / sqm. The most expensive areas that are close to this town are located 12 kilometres from Barcelona. These include Eixample / Torreblanca, where prices have reached the highest in Sant Cugat (5,280 euros / sqm), followed by Parc Central / Can Matas and Mirasol, where they range between 4,770 and 4,500 euros sqm, respectively. The entrenched but growing demand in Sant Cugat goes hand in hand with
trend in prices continues in 2019, although in a more sustained way. In Sabadell, where demand is shared between English type townhouses and terraced apartments, preferably located in the centre, the average property price comes at 1,900 euros / sqm, a higher amount than in two of the most outstanding towns in Vallès Oriental: Cardedeu and Caldes de Montbui. These two areas, next to urban centres and excellent road connections with Barcelona are the most in demand and their property prices have reached 1,880 euros / sqm and 1,320 euros / sqm, respectively.
Property prices in Vallès (Figures in euros / sqm)
Minimum
Maximum
Average
Vallès Occidental
700
5.280
2.790
Vallès Oriental
600
2.990
1.640
the continuous increase in Sabadell, where the upward
Vallès Oriental and Occidental Baix Llobregat Garraf
46 | Market Report 2018-19 Spain and Andorra
Market Trends. The Spanish Residential Market | 47
Baix Llobregat
Matadepera
Rentals
In the Vallès Occidental region, there is a municipality located at the foot of the Sant Llorenç del Munt Mountain only 35 minutes from Barcelona. Matadepera offers more affordable properties than other locations closer to the city in a natural and peaceful environment highly valued by young middle class families with young children.
The rental properties most in demand are the 3 bedroom flats and townhouses that have communal areas . In urbanisations, the properties with the highest demand from tenants are detached houses with garden. These are especially popular among tenants between 35 and 45 years of age with children. With regards to centrally located flats, the profile of the tenant consists of young couples and people from 60 years of age upwards.
In 2018, the average property price increased by 5% compared to the previous year, the same increase is expected for 2019. The increase in new-builds by private sellers who buy a plot of land and build a house on it will boost the residential market to grow by up to 15% -20% more compared to the previous year. The price increases have been mainly registered in the centre, the Golf-Can Vinyers and Verge de Montserrat, where the most expensive addresses are located in Matadepera, especially in Passeig Àngel Guimerà, where the highest average price is between 3,000 and 2,500 euros / sqm. The majority of buyers are from the region of Vallès Occidental, a small number come from Barcelona and its surroundings and finally, foreigners from the EU make up an even smaller proportion.
In 2018, the average rent price in Matadepera was between 6 and 9 euros / sqm. In a market with scarce supply it is foreseen that prices could increase by up to 5% in 2019.
Rental prices in Matadepera
Just a few minutes away from Barcelona, there is an area with residential character and a very complete offer of amenities and services that is divided into north and south. Martorell, Corbera, Cervelló and El Papiol are the areas with more demand from the north, while Molins of Rei, Sant Boi, Viladecans and Cornellà are the urban areas that concentrate most of the population of Baix Llobregat Sur. Detached houses or residential complexes with garden areas are the most sought-after types of properties by families with children and young couples who choose to live in this metropolitan area due to its excellent public transport network.
(Figures in euros / sqm)
Minimum
Maximum
Average
Centro
7
11
9
Verge de Montserrat
8
11
9
Golf/Can Vinyers
8
11
9
Can Prat/La Plana
7
11
9
Cavall Bernat/Can Robert
5
6
6
Can Solá del Racó/Pla de Sant Llorenç
5
6
6
Les Pedritxes/Rourets
5
6
6
Most of the buyers are national, who make up 95% of purchases, compared to 5% of expats who have chosen to move to Spain, led by the Chinese and European buyers. On the other hand, 100% of the customers in the regions of Anoia and Bages are national buyers.
For 2019, prices are expected to experience increases of more than 10% in the most central areas and a greater number of purchases with more moderate price increases in remote areas.
Property prices in Baix Llobregat (Figures in euros / sqm)
Minimum
Maximum
Average
Castellbisbal, Martorell i Papiol
990
1.860
1.260
Vallirana, Cervelló
1.170
1.690
1.240
Corbera, Pallejà
1.160
1.650
1.350
Molins de Rei
1.750
3.350
2.650
Torrelles, Sant Viçenç dels horts
1.180
1.810
1.490
Sant Boi, Viladecans
1.660
2.360
2.060
Cornellà
2.580
3.780
3.150
Property prices in Matadepera (Figures in euros / sqm)
Minimum
Maximum
Average
Golf
2.300
2.900
2.600
Cavall Bernat/Can robert
1.400
2.300
1.850
Centro
2.150
3.700
2.925
Drac parc
1.650
2.600
2.125
La plana/Can prat
1.900
2.800
2.350
Pedritxes/Rourets
1.250
1.900
1.575
Verge de Montserrat
2.350
2.900
2.625
48 | Market Report 2018-19 Spain and Andorra
Market Trends. The Spanish Residential Market | 49
Credits Editor Engel & Völkers Spain S.L. Avenida Diagonal, 640 6th floor E-08017 Barcelona Spain Drafting PR Stakeholders Layout Vänster and Lei Coordination Paula Cruells Silke Dittrich Sources For the preparation of this market report, all the data and statistics have been collected from the following entities and agencies: Tax Agency (AET), European Central Bank (ECB), Bank of Spain, Bloomberg, College of Property Registrars, International Monetary Fund (IMF) ), Inverco, Idealista, National Institute of Statistics (INE), Ministry of Public Works, Housing and Land Observatory, Organisation for Economic Cooperation and Development (OECD) and Tinsa.
All the information has been thoroughly researched. No responsibility can be taken for the accuracy of the content. The reproduction of content protected by copyright is only allowed with the consent of Engel & Völkers Spain S.L. provided that an appropriate reference to the source is made.