7 December 2016 – La Vanguardia
They used to own a flat in a good location in the centre of London. They sold it and with the profits they bought an entire four-storey building in Barcelona. That is the story of a British family, which has become the new owner of number 68 on Calle Hospital in the heart of the Raval neighbourhood. The property, constructed more than a century ago, needs to be completely renovated. Once that has been done, the four floors will be put on the market for rent, whereby benefitting from the current market of rising prices and within a few years, the owners will sell the property.
That is how British families with investment potential are managing to generate guaranteed returns from real estate assets. A property like the one on Calle Hospital costs around €1 million. After the renovation, the rental income is unlikely to fall below €1,000/month. Such properties can be sold subsequently for more than €1.5 million, at least.
This real estate “play” is not a unique case. The consultancy firm Aguirre Newman has closed the sale of two buildings in Eixample to a British investor group within the last few weeks. “The property is in a bad condition, but they will take care of the renovation, and then put it up for sale straight away”, explained Anna Gener, Director General of the firm in Barcelona.
Over the last year, Brits have realised that Barcelona offers them high returns, regardless of whether they buy or rent. “Brexit has meant that there are increasingly more investors who are interested in buying assets here”, said Albert Sarrias, Commercial Director at Engel&Völkers in Barcelona, although he recognised that “we will only see the real effects in the long term, for the moment, they are browsing more than they are buying”.
By contrast, for Miquel Laborde, owner of the real estate management company Laborde Marcet, the divorce between the UK and the EU is not the driver behind the latest phenomenon. “It is a simple matter of returns. British investors can earn more money here from investing and selling than they can in London”. The reason, beyond any fluctuations in the euro-sterling exchange rate, is that prices in the residential sector in the British capital are at historical highs and they seem to be peaking. The price per square metre of a new home in the centre of the British capital ranges between €10,000/m2 and €15,000/m2. (…).
17.66% of house sales to foreigners in Spain are made to Brits, according to data from the College of Registrars. They are followed, at a considerable distance, by wealthy French, German, Swedish and Belgian investors.
These types of operations in the residential sector are mainly concentrated in the centre of Barcelona Raval, Born and Eixample are the preferred locations although the real estate agents lament the limited supply of products on the market. (…).
Small investors prefer to put their money in the residential sector. Offices and buildings, measuring more than 5,000 m2, generate more rental income but only Socimis and large investment funds can afford them. (…).
Original story: La Vanguardia
Translation: Carmel Drake