Tinsa: Scarce Land Supply Causes House Prices To Soar In Benidorm

18 November 2017 – El Confidencial

(…) Benidorm is not just another coastal town. Its plethora of vertical buildings makes it the third city in Europe with the highest concentration of skyscrapers and that identity stamp sparks hate and love in equal amounts. It has also allowed (…) an enormous range of prices to exist in the real estate market for those interested in buying a home. To give us an idea, for sale at the moment, we can find small apartments going for as little as €20,000, to chalets with asking prices of almost €4 million. Since its origins as a tourist destination, Benidorm has always been suitable for every budget.

Located in the province of Alicante, one of the areas that is clearly enjoying the real estate recovery, Benidorm stands out from other municipalities in the region. It has the most expensive homes per square metre in the region, with an average price of €1,585/m2 – for new build and second-hand properties – above the prices being paid by neighbours in Altea, Calpe and l’Alfàs del Pi, according to data from Tinsa. Although prices have decreased by almost 44% since their peaks, Benidorm is one of the places in Spain that is benefitting from a prevailing wind. In the last year, prices have risen by 11%, according to the latest report about coastal regions from the appraisal company.

The recovery is also apparent in terms of the number of transactions. In 2016, sales grew by almost 18% driven by the sale of second-hand homes (up by 25%), compared to the collapse of new builds (-55.8%). In fact, that is the main bone of contention in the town, the enormous shortage of new build projects underway. The construction craze during the “boom” years contributed to this situation, given that it used up almost all of the buildable land along the beachfront.

This means that the few projects that are underway are being sold in a matter of months at prices that seem eye-watering, and would have done so even at the height of the bubble. At the same time, they are generating an upward effect on the prices of second-hand properties. To give us an idea, according to data from Idealista, the price of second-hand homes amounted to around €1,900/m2 in September 2017, up by 7.6% compared to a year ago and above the prices currently being paid in certain districts of Madrid, such as Carabanchel, Latina, Puente de Vallecas, Usera, Vicálvaro and Villaverde.

“The greatest problem in this market is that no land has been generated. In 2006-2007, the legislative mechanisms for creating land were much more agile, but now, not only has the law changed on two occasions, but it seems that people are afraid of developing land”, explains Jaime Martín Calleja, Technician for Tinsa in Benidorm (…).

Scarce and very expensive new builds

Delfin Tower is one of a handful of projects currently underway. It comprises a luxury residential 22-storey skyscraper on the beachfront. The price of homes in the tower (…) range between €700,000 and €1.56 million.

Also, it is only a matter of time before the 260 homes in the ill-fated In Tempo skyscraper come onto the market (…). The price that those homes may go for is still to be determined (…).

Just opposite In Tempo, the Levante-based property developer TM is building the Sunset Drive development, which has already been sold in its entirety. In fact, according to the sources consulted, the rate of sales was so high on its first weekend on the market that the company decided to increase its prices by 20%. As such, the prices of its 265 units range between a minimum of €255,000 and a maximum of €766,000, with an average of around €2,600/m2.

Also, just a kilometre from the skyscraper, the same company is working on another project, La Emita, which comprises a dozen units – four of which have already been sold – with an average price per square metre of around €2,200 – between €440,000 and €555,000 – which are expected to be completed by October 2018 (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake