Russian money has revitalized the luxury market, together with the Chinese and Arab money, and has revitalized the Spanish real estate market, mainly the one at the Mediterranean coast. In view of this situation, the agencies have decided to throw themselves into them to improve their sales. Last year there was a big increase in the number of Russian millionaires wishing to buy high segment houses, looking for sun and quality of life. And the descent of the Spanish housing sector due to the crisis has helped the entrance of an eager medium class this year, a tendency that should increase in the next few months.
“There are very good opportunities right now in homes at the coastline and the Russians have money that they wish to spend in order to obtain sun and beaches, this is what they are looking for”, David Scheffer, managing director of Engel & Völkers in Spain, points out. All real estate companies have seen an opportunity and have started to attend tradeshows in Moscow or St. Petersburg. They have also hired Russian staff to talk to potential customers and have started to publish their web pages and leaflets in that language. “We need to adapt”, a spokesperson for Look & Find declares. Solvia, the real estate company of Banco Sabadell, has moved in this direction, opening up its webpage in Russian in order to “take advantage of this growing tendency”.
Buyers in the luxury segment are owners of companies of a certain size, they have money and live “in an ugly and cold country”, and this is why they have found the perfect holiday destination in Spain and they want their own home, “and they can afford it”, Scheffer explains.
They buy houses with prices ranging from five to ten million Euros, although the real estate agencies specialized in these customers also point out that there are sales of properties with two digits. The foreigners dominate the luxury real estate market and the Russians represent approximately 15% of the customers received by agencies. “The Spaniard is currently the seller”. On the other hand, the entrance of Arabs has increased after the halt of the last few years. However, Chinese citizens do not have any interest in buying, as confirmed by the main international agencies with presence in the Mediterranean coast.
The rich Russians have been followed by the medium class. The fall of the housing prices in Spain since the peak in 2007 is over 37% and has speeded up this year as a consequence of the end of the tax benefits, according to the figures by Tinsa. The fall of the second quarter was of 10,5%. This situation has affected mainly metropolitan areas and the Mediterranean coast and has helped the entrance of the medium class in the Spanish real estate sector.
The Russian, Chinese and Middle East millionaires are the ones that have helped the growth of the luxury segment in general, and this has had an influence in the rental market of trade premises. A report by the real estate company Cushman & Wakefield published this week points out that the majority of the luxury groups such as Louis Vuitton (LVMH), Max Mara, Prada, Kering or Richemont have seen a great increase in sales in the last year, which has forced these brands to increase the number of square meters in their shops in those cities where they were already present and to open up stores in new cities.
The lack of space in the “luxury streets”, such as Serrano in Madrid or Passeig de Gracia in Barcelona has two consequences: the price per square meter will rise as there is more demand than offer and they are starting to look for first floors in order to extend their stores vertically.
The experts at Cushman & Wakefield point out that in the last two or three years Barcelona has seen a greater growth of investors in prime store locations, as these brands had less presence there. Nevertheless, in view of the increase in business since 2012, they expect a “greater growth of the luxury brands in Madrid in the next few months”.