Demand for Luxury Homes Plummets in Barcelona & Soars in Madrid

23 November 2017 – Expansión

Since 1 October, demand for luxury homes has plummeted by 50% in Barcelona, with a 20% decrease in prices; meanwhile, demand has risen by 40% in the Spanish capital where prices have gone up by 10%.

Secessionism is sinking the Catalan real estate market due to the threat of uncertainty. “Demand for luxury housing has plummeted by 50% in Barcelona between 1 October and 15 November”, explains Emmanuel Virgoulay, Founding Partner at Barnes International in Spain. Whilst Barcelona falls, interest from buyers in these kinds of assets in Madrid is soaring by 40%, according to the real estate company that specialises in the premium segment.

“For every home for sale in Madrid, there are four buyers”. In Barcelona, by contrast, “the damage has already been done”, explained Virgoulay, referring to the unilateral referendum. That process has marked a before and after in the Catalan economy. The uncertainty has caused panic to spread throughout the markets, leading to the flight of more than 2,600 companies, causing the confidence of businessmen and consumers to collapse and paralysing investments. Housing, along with tourism, has been the most affected sector.

Before 1-O, Barcelona was enjoying its best moment since the crisis. The prices of high-standing properties were growing at a rate of 15%. However, since 1 October, the decrease in prices amounts to 20%. During the same month, the cost of these types of assets in Madrid has also moved by double digits, but in the opposite direction, with growth of 10%, like in the Balearic Islands. In Andalucía, the variation has been somewhat lower, between 5% and 10%, according to market sources.

In Barcelona, the rise in prices had generated a bubble. “Some owners were aligning the price of their properties with those in the most exclusive parts of other cities in Europe”, explained Virgoulay. However, investors “put the handbrake on” several months ago now. In October, there was a 50% decrease in the number of deeds signed for the sale and purchase of homes and mortgages, with buyers pulling out and preferring to lose their deposits, which can represent up to 10% of the purchase price, than going ahead with their purchases.

“Investors are going to come to Madrid because the market is safer”, explains Virgoulay. Currently, 57% of the luxury real estate acquisitions that are made in Spain take place in Madrid. The Spanish capital is the most attractive city for domestic and international investors alike. “The weight of the investor market is comparable with the market for primary residences”, he explains.

Looking ahead to year end, Virgoulay considers that, since the Government took action, with the application of Article 155, “the outlook is stable and demand has been starting to recover since 15 November”. But, 21 December is emerging as a new door to uncertainty “anything can happen once again”. Nevertheless, “Prices are going to rise, in general, but in Barcelona, it is clear that they are not going to evolve, they are going to fall”.

In Madrid, like in Barcelona, the average price of luxury housing amounts to €8,000/m2. In the Balearic Islands, where the main demand is from European buyers for second homes, the price per square metre amounts to €7,500/m2.

Barnes plans to open new offices in 2018 in locations such as the Balearic Islands and the Canary Islands. Cataluña was another one of its objectives, but, for the time being, no date has been set for that opening.

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Tinsa: Investment In Coastal Housing Soars

19 June 2017 – Expansión

Guide for investors along the coast / House prices rose in 62% of Spain’s coastal towns during the first quarter of the year, in particular, along the Mediterranean Arc and in the Canary and Balearic Islands, thanks primarily to an increase in demand from investors and foreigners. The forecasts from analysts point to a clear improvement in prices this year in more than half of the areas analysed along the coast. Antigua, in Fuerteventura, recorded the best YoY price rise in Q1 2017, up by 26.1%. (…).

The holiday home market is performing well once again in the majority of Spain’s coastal regions and some economists say that 2017 could be the year of consolidation in the real estate sector. Property prices recorded YoY increases in 84 of the 136 coastal towns analysed, based on data for the first quarter of 2017. In 2016, that figure amounted to 71 and in 2015, just 32, according to the latest report from the appraisal company Tinsa about Coastal Housing.

Political stability, following the failed motion of no-confidence, has combined with economic growth, thanks to the good outlooks from analysts. The forecasts for GDP growth show that the figure is going to exceed 3% this year for the third consecutive year. Moreover, Spain is a strong candidate to become the tourism leader at the global level, with a record forecast in terms of visitor numbers of 82 million this year. The increase in confidence has opened the financing tap, driven by demand for housing, amongst Spanish and overseas investors alike, looking to acquire a second home. (…).

The highest increases were recorded in the Mediterranean Arc – Costa Dorada, south of Alicante, the western coast of Málaga and the Cádiz coast – and the islands, both the Canary and Balearic Islands – in particular, Mallorca and Ibiza. The Atlantic and Cantabrian coasts are recovering more slowly, above all in the area of A Coruña and Asturias, in part due to more significant price decreases following the crisis. Nevertheless, that area has some exceptions, such as Guipúzcoa, where demand for holiday homes mergers with demand for primary residences.

The burst of the real estate bubble meant that this sector was one of the hardest hit by the crisis. In some regions, prices dropped by 60%. (…). It is true that this decrease was less marked in some of the coastal areas, thanks to demand from tourism. Along the Mediterranean Coast, the areas that lag behind the most are the coasts of Almería and Granada, which are still recovering, as well as the south of Valencia and Barcelona, and Gerona, Tarragona and Castellón, to the north of the arc. (…). Excluding those capital cities that have a coastline, Antigua (Fuerteventura) recorded the highest house price increase, with a rise of 26.1% in the first quarter of 2017, compared to the same period in 2016. That was driven by an increase in demand, given that sales there soared by no less than 81% in 2016. The second highest price rise was seen in Gavà (Barcelona), with 17.8%, followed by Mojácar (Almería), with 17.3%. The outlook for prices in 2017 is promising. According to analysts, prices will improve in more than half of the areas analysed (52%). (…).

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Golf Property Sales Boost Recovery Of RE Market

9 September 2016 –

Spanish property sales in major tourism areas have been starting to rise over the last year or so, with a little help from the golf sector.

In fact, the golf industry is a key driver of Spanish home sales, achieving nearly 3,000 transactions in 2016 alone – and buyers can benefit from prices that often rise faster than similar homes elsewhere.

Being close to a golf course can add up to a quarter to the value of a property compared to a regular home, says a new report from the Arum Group, which develops and manages luxury resorts in Spain including Abama Luxury Residences, La Manga Club and Eldorado Playa.

More than two-thirds (68%) of golf courses in Spain have a direct or indirect link with a real estate development, according to the data produced in conjunction with the Real Federación Española de Golf.

The Arum Group has seen strong demand at its Abama Resort in Tenerife with 45 sales in 2015, almost 50% more than predicted, and rising sales from sports enthusiasts at La Manga in Murcia, which has three golf courses.

Agustin La Rocca, Sales Director at Arum Group, says, “The Spanish property market is currently on an upward curve and one of the main drivers is the golf industry. We have certainly noticed the appeal that having world class golf courses adds to real estate developments.

“At both La Manga Club and Abama, we are graced with outstanding examples and there is no doubt that they add to the appeal for our buyers. For a start it means that their views will never be interrupted or built upon and also means that the peace and tranquility of the area will be preserved.”

Golf is a big draw for foreigners in Spain and it is estimated that 160,000 Britons in the country are close to a golf resort. In total, 234,500 properties enjoy ‘direct’ access to a golf course.

Most overseas demand for Arum Group Spanish golf properties comes from the UK, Belgium and Scandinavia, but it has buyers across the globe.

The EU Referendum vote has not affected UK buyer demand, says Agustin La Rocca.Despite Brexit, British buyers will undoubtedly continue to aspire and want own their own luxury holiday homes in Spain. We have found that our clients are very focused and know exactly what they want from a second home. We do not have many competitors with the same standard of services and facilities and we expect UK demand to continue to grow.”

“The reason for buying depends on the project. Investors at La Manga Club are attracted to its renowned sporting facilities. The gated community offers world-class sporting amenities and wellness facilities perfect for second-homes investors looking for a home in the sun. On the other hand, Abama is more focused on luxury and glamour for those looking for the ultimate cuisine, golf and hotel facilities.”

With a high buyer demand, other developers are considering entering the sector, but it takes experience to be successful, says Agustin La Rocca.

“Over the past year, there have been a number of developers in Spain who have tried to develop golf resort but this is a science that needs lots of technology and it takes a lot of practice. It essential to have a highly experienced team behind the resort in order for it to be a success. In that sense, Arum Group has more than 20 years of experience in developing some of the top golf resorts in Spain.”

As well as boosting real estate sales, golf has also had a positive impact on the Spanish tourism industry with visitor numbers increasing 36.3% in the first quarter of 2016 compared to the same period in 2015, in the region of Murcia alone.

La Manga Club, a 1,400-acre resort in Murcia popular with sports enthusiasts, has seen strong sales thanks to its on-site sporting facilities including three golf courses. It also reports, a rise in visitors using the available rental accommodation. These findings are supported by the Murcia Tourist Board, which recently released data highlighting that tourists staying in private rented accommodation in the region has risen by 25.6% in 2016 compared to the same period last year.

There is a similar story at the Abama Resort in Tenerife, which features an 18 hole Dave Thomas designed golf course and tennis academy. 45 units were sold in 2015, almost 50% more than predicted, with all purchasers attracted by the lifestyle offered by the resort and its amenities. (…).

In May 2016, across all Spanish property sales, not just golf villas, 32,512 homes were sold, up 23% year-on-year, according to the National Statistics Institute. It is the highest figure since January 2013 and the fourth consecutive month of double-digit annual increases.

Original story:

Edited by: Carmel Drake

Bankinter Revives Fixed Rate Mortgage War

9 June 2016 – Expansión

A new battle has commenced in the war between the banks to grant fixed rate mortgages. One of the most active entities in the commercial supply of these products, Bankinter, is redoubling its efforts. Yesterday, the bank announced widespread cuts in interest rates on its 5-, 10-, 15- and 20-year mortgages. Bankinter, whose fixed rate mortgages were already amongst the most competitive in the market, has cut the interest rate on its ten-year home loans from 1.75% to 1.6%; on its fifteen-year home loans from 2% to 1.8%; and on its twenty-year home loans from 2.3% to 2.1%.

The zero interest rate environment in the Eurozone has led the banks to offer fixed rate mortgages, given that 12-month Euribor, which is the index to which most floating rate mortgages are linked, is trading at negative rates (-0.018%). In this context, it is more profitable for the banks to offer fixed rate mortgages, given the limited margin they are able obtain on their variable rate products.

The main advantage for customers is that they know the amount of interest they will have to pay on the day they take out the mortgage; that figure is fixed and will not vary for the duration of the mortgage term. In other words, clients are protected against possible interest rate rises, although they would not benefit from any further hypothetical decreases.

Bankinter’s fixed rate mortgage has an arrangement fee of 1%, with a minimum of €350. It also charges a penalty of 0.5% during the first five years of the life of the loan in the event of its total or partial repayment, and of 0.25% thereafter, as well as a commission of 0.75% to offset the interest rate risk, in the event that the early repayment generates a loss of capital for the entity.

If Bankinter’s fixed rate mortgages are taken out to purchase a primary residence, then the value of the loan may not exceed 80% of the purchase price or appraisal value (the lesser of the two amounts). If the product is requested for a secondary residence, then the limit is 60% of the lower of those two values.

In addition, in order to benefit from these interest rates, the bank requires its borrowers to receive their salary into their Bankinter account, as well as to take out life assurance and home insurance with the entity. The applicable interest rates are higher if these products are not contracted.

The reductions also apply to the fixed element of Bankinter’s 15- and 20-year mixed (fixed and floating) rate mortgages, which decrease to 2% and 2.3%, respectively.

Original story: Expansión (by A.R.)

Translation: Carmel Drake

Aliseda: 10 RE Trends To Watch In 2016

23 December 2015 – El Mundo

We are coming to the end of a year that has been characterised by the consolidation of a new cycle in the housing market, marking an end to the crisis that began in the third quarter of 2007 and reached its peak in 2013.

On the basis of sales data and market analysis performed by Aliseda Inmobiliaria, the real estate servicer has identified ten trends for 2016.

1- Most sales will involve second-hand homes

As a result of the reduction in the real estate stock, due to the absence of new property developments, the sale of second hand homes in Spain will gain prominence ahead of the sale of new builds.

2- Three-bedroom homes will continue to be the star product

Especially when we are talking about primary residences, buyers will continue to prefer this kind of home given that “the sensation of luxury begins with the sense of space”.

3- Foreigners will be the main buyers of secondary residences

Interest from foreigners in holiday homes has been particularly noteworthy during the years of the crisis and continues to be significant today. 65% of the secondary residences sold in our country have foreign buyers. By contrast, when we talk about primary residences, 95% of the buyers are Spanish.

4- More financing: recovery of domestic demand

Greater access to credit favours financing, and so in 2016, we expect to see a recovery in the number of homes sold, increasing by 15-20% with respect to 2015.

5- Price stabilisation

The general trend is towards stabilisation after years of decreases, but there are still provinces, those with the greatest volume of stock, where prices are still falling. Land prices, another one of the key indicators of recovery, are growing in the primary urban centres such as Madrid, Barcelona and the Costa del Sol, and these increases are beginning to spread to other areas, such as Alicante, Córdoba and País Vasco, amongst others.

6- Spain is still a country of buyers (rather than renters)

Faced with the option of renting, given the benefits that can be obtained in this regard, Spaniards will still prefer to purchase their own homes. It is possible that in the future the trend will change slightly to fall in line with European trends.

7- A home is regarded as an investment

Buying a home will continue to form part of the Spanish “philosophy of life”, in the sense that home owners are more protected by current legislation.

8- Cranes will return to the cities

In 2015, the number of construction permit approvals increased by 20%, and it is expected that this positive trend will continue into 2016, with a significant supply of potential buyers. Demand for new homes could reach 80,000-85,000 homes and demand for replacement stock could amount to 70,000-75,000 homes. Moreover, homes on the coast will continue to increase in number.

9- Property developments on the increase

Compared with the years before the real estate crisis, when the number of new build permits reached 750,000, the current figures amount to around 50,000, although this figure is expected to continue to increase with more new build permits. We could see up to 200,000 homes being constructed per year in the short term.

10- Young people will be the stars of the show

Young people have been most affected in terms of their ability to access housing in recent years, due to the economic crisis. Currently, they are the cohort that is expressing the greatest interest in acquiring a property and they are going to play a key role in the sector in the future.

Original story: El Mundo

Translation: Carmel Drake