JLL: Madrid is one of the World’s Most Attractive Real Estate Markets

6 March 2018 – Expansión

Madrid is one of the most attractive cities in the world for investing in the real estate sector and now competes with the global giants. That is according to a report by the real estate consultancy JLL, which places the Spanish capital on the second tier of the ranking. On the first tier, it places the planet’s seven major cities – London, New York, Paris, Singapore, Tokyo, Hong Kong and Seoul – which are now being chased by the so-called “contenders”, which are those cities that have experienced the most rapid growth in terms of real estate investment over the last decade and which, nowadays “have better development and attraction power” for large investors. Besides Madrid, the cities that stand out in this ranking are Los Angeles, Shanghai, Beijing, Amsterdam, Chicago, Toronto, San Francisco, Washington DC and Sydney.

Meanwhile, Barcelona is placed in the group of cities that stand out for their degree of influence at the global level, a category that it shares with Brussels, Frankfurt, Genoa, Kyoto, Miami and Vienna. “They are cities that have the most stable real estate markets due to their strategic locations for taking transnational decisions, hosting cultural events and doing business”, says the report Cities of the World: Cartography of Success, prepared by the consultancy firm in collaboration with The Business of Cities.

To prepare this ranking, the report is based on a rating system that takes into account 44 variables. They include the size of the markets, the infrastructure in place, the presence of large companies, the capacity to attract talent, telecommunications and the commitment to specialisation and innovation.

Infrastructure

In the case of Madrid, JLL highlights several aspects that place the Spanish capital on a clear trajectory towards the real estate peak: “Robust infrastructure, global connectivity, a large number of international conferences and conventions and a solid reputation”.

Another one of the elements that makes Madrid one of the major global destinations for real estate investment “is the forecast growth in office rents”. Not in vain, the Spanish capital is the European city where office rental prices are forecast to grow by the most during the period 2018-2020 (+3.6%), followed, incidentally, by Barcelona (+3.1%) and ahead of Manchester, Helsinki and Lisbon, according to JLL.

It is worth remembering that Madrid and Barcelona are the clear leaders in terms of the growth in residential asset prices in Spain. Homes became 17.1% more expensive in the capital of Spain and 14.8% more so in the Catalan capital, which lost ground in the last few months of the year due to the secessionist challenge, according to Tinsa. In any case, homes are still 20.3% more expensive in Barcelona than Madrid.

The appeal of Barcelona

In addition, Madrid is ranked as the fourth favourite city for commercial brands looking to locate stores, after London, Paris and Milan. Barcelona also features in the top 10: it occupies seventh place.

(…) In this regard, JLL highlights several aspects that justify its added value, such as “its tourist, cultural and business appeal”. Moreover, it points out aspects such as the fact that Barcelona is the fourth-ranked city in Europe in terms of visitor numbers.

The consultancy firm also emphasises Barcelona’s growing reputation as a smart city, “in large part thanks to the influence that the development of the 22@ business area has had in Barcelona. It has been erected as a technological hub, where large companies and start-ups are committed to setting up shop” (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Idealista: Rental Prices Grew By 24% YoY In September

11 October 2017 – Eje Prime

Rental prices are continuing to climb in Spain. In September, the average price of rental homes rose by 24%, to reach €9.40/m2/month.

By contrast, in cumulative terms during the quarter, the index only rose by 0.5%, according to the real estate portal Idealista.

Eleven autonomous regions saw their residential rental price rises over the summer. The Canary Islands is the region where rental prices grew by the most (3.8%). It was followed by Madrid (3.7%) and Cataluña (3.1%). Meanwhile, the Balearic Islands was the region that saw the most significant decrease in rental prices during the last quarter (-5.9%). By provincial capital, Valencia recorded the highest rental price rise (6.1%), followed by Guadalajara (6%) and Sevilla (5.8%).

Barcelona is the Spanish city with the most expensive average absolute rental price, of €18.3/m2/month. It is followed by Madrid, at €15.3/m2/month, whilst Zamora and Ávila, which both have an average rental price of €4.5/m2/month, are the two cheapest cities in which to rent a home in the country.

Original story: Eje Prime

Translation: Carmel Drake

Fotocasa: Rental Prices Rose by 1.7% In January

24 February 2017 – Expansión

The price of rental housing in Spain rose by 1.7% in January to €7.61/m2/month, according to data from the real estate portal Fotocasa. This figure represented the most pronounced monthly increase since December 2007, when prices rose by 1.8% with respect to the previous month.

In addition, the price of rental properties increased by 7.9% YoY with respect to the same month in 2016. This data also represents a record, in line with the monthly one, given that it represents the largest YoY rise since 2007.

“The rental market is experiencing significant tensions in terms of prices as a result of greater pressure on demand, given that despite the reopening of the credit tap by banking institutions, many Spaniards are unable to access financing and are being forced to seek refuge in rental properties as their only means of accessing a home”, said Beatriz Toribio, Head of Research at Fotocasa.

Ten autonomous regions saw increases in their rental prices, with rises ranging from 1.7% in Cataluña to 0.2% in the Community of Valencia. By contrast, seven autonomous regions saw decreases in their rental prices in January. The decreases ranged from -0.4% in Castilla y León to -1.5% in La Rioja.

Barcelona is the most expensive city

The most expensive city to rent a home in January was Barcelona at €15.25/m2/month after prices rose there by 13% YoY. It was followed by Ibiza (€13.81/m2/month), Sant Cugat del Vallès (€13.47/m2/month), San Sebastián (€13.15/m2/month) and Sitges (€13.06/m2/month).

At the other end of the spectrum were Lucena in Córdoba (€3.35/m2/month), Fuensalida in Toledo (€3.40 /m2) and Almendralejo en Badajoz (€3.42/m2/month), as the cheapest towns in Spain to rent a home.

Original story: Expansión

Translation: Carmel Drake

Housing: Rental Yields Now Exceed 5%

3 February 2015 – El País

Property has become a safe haven again for savers and retirees.

Rental properties offer returns of between 5% and 7%. After almost seven years of falling prices, credit constraints and low yields on bank deposits, property “has become a safe haven again for savers and retirees” said Jesús Duque, Vice-President of Alfa Inmobiliaria.

Buy-to-lets have become a good investment option once more, as they provide much higher returns than those offered by financial institutions. Furthermore, prices continue to fall, although that trend is now slowing. The price of second-hand homes in Spain decreased by 0.1% during the month of January to reach €1,592 per square metre, according to the latest real estate price index published by Idealista. The year-on-year decrease was 5.1%. Nevertheless, the outlook is set to change as prices in five autonomous regions (Murcia, Valencia, Cataluña, Madrid and the Balearic Islands) increased.

To generate income, one cannot buy just any house. When looking to invest, one should focus on homes that have permanent demand, i.e. those with a central location. The most stable investments are properties located in middle class neighbourhoods, since they have risk-reward relationships that offer more stability over the long-term.

“It is much more worthwhile to invest in a neighbourhood in any city, rather than in a house on the beach, where the possibility of renting is usually limited to the summer months”, explains Duque. The greater the rate of rotation, the lower the profit. Several months may pass between tenants during which time the owner receives no income and also has to upgrade and repair the property. “Whenever possible, if you are looking for a stable investment, you should try to rent out your property for long periods”, said the expert.

Family homes amd those with space for at least two adults are better than one-person studios, for one-income households. And, almost more importantly, you must ensure that the rent will be collected and that it will cover the investment. This can be done through an objective analysis of the tenant’s ability to pay, but can also be supplemented by non-payment protection insurance, which although decreases the profitability of the operation, does provide security.

One should keep in mind that from the expected yield of 5% to 7%, an owner should deduct 1% to cover the payment of IBI, community costs, garbage collection, insurance and the repair and maintenance of the property.

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake