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The Real Estate Recovery Cools Off In Valencia

12 May 2017 – Las Provincias

The recovery will have to wait. The signs of reactivation that were seen in the real estate development sector in the Community of Valencia in 2015 cooled off again in 2016. Although the number of operations involving land purchases grew by 38% last year, from 511 to 826, the fact is that they involved smaller spaces. This means that the surface area sold to property developers decreased by 10.6% from 2.3 million m2 to 2 million m2, according to data from the Ministry of Development.

The only exceptions were in the tourist areas to the south of Alicante and in the city of Valencia. “The area to the south of Alicante is still the most active place, with significant property development activity (c. 2,000 homes under construction), led by a significant recovery in purchases by non-residents. The typical buyer at this initial stage of the recovery can afford to acquire a home with own funds or with a significant down payment, representing more than 40% of the property value”, said the Director of Sales and Marketing at Solvia (Banc de Sabadell), José Peral.

In 2015, demand for buildable residential land increased along the Alicante coast, primarily in the coastal tourist towns that spark the most interest in the international market, such as Xàbia, Dénia, Benidorm, Calpe and Orihuela-Costa. Thus, in some of these areas and, in particular, in the latter, the supply of available land decreased considerably and transaction prices increased, which is why some property developers have started to move to the northern coast of Alicante, for example, to Finestrat.

Nevertheless, this trend, which started in the south of Alicante is now moving to other areas. For example, the new build market in the city of Valencia did an about-turn in 2016 after several years of inactivity, according to Peral. Currently, a great deal of activity is being undertaken: a lot of projects are already underway, building permits have been granted for others, and others still are in the pre-sales process.

This situation explains the focus being placed on these markets by the new players arriving in the Community of Valencia, such as the fund Neinor Homes, which is constructing its first projects in the Valencian neighbourhood of Malilla and in Playa de San Juan de Alicante.

In terms of the capital’s metropolitan area, there has been a slight uptake in demand for buildable residential plots of land in towns with more than 20,000 inhabitants. It is also worth noting the number of transactions involving plots of land (…) for family homes, involving small and medium-sized local property developers.

Original story: Las Provincias (by A. Castillote and Á. Mohorte)

Translation: Carmel Drake

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