Barcelona property prices on the rise
There are strong signs that the real estate market in Barcelona is performing differently from the rest of the beleaguered Spanish property market and is set to encounter increasing stability in 2011.
The latest Barcelona Property Market Report covering the third and fourth quarters of 2010 from Lucas Fox International Properties confirms that Barcelona real estate has some independence from the national housing context.
Contradictory data findings on the Barcelona real estate market have been released by various agencies in recent months. Using a combination of their own data, national and local statistics, the report found that online housing advertiser.
Idealista’s month to month prices by square meters suggested that there was no growth in average housing prices, whereas housing portal Kyero showed an increase in Barcelona asking prices during the second half of 2010.
The sales prices of Barcelona properties remained steady for the second two quarters of 2010, with a drop in average floor prices from €4,131 per square meter in July to €4,046 at end of the year, the report says.
During the third quarter, the average sales prices for Barcelona remained steady at €4,065 per square meter. While the most exclusive districts of Barcelona were higher with Sarrià-Sant Gervasi at €5,101 per square meter, Les Corts at €5,026 per square meter and Eixample averaging €4,407 per square meter.
There was only -0.5% sales variation between the third and final quarters of the Barcelona property market in 2010. City averages sat at €4,046 per square meter while in the luxury market Sarrià-Sant Gervasi had the maximum sales price of €6,035 per square meter.
Only between 10 and 15% of property transactions in Barcelona involve foreign buyers. This is in complete contrast to property trends in other parts of Spain, for example the Costa del Sol, which has a large majority of foreign buyers.
The main international groups of clients buying Barcelona property at present are from Europe, the United Kingdom, Russia and the USA. There is also a strong local market, with Catalan residents buying the bulk of property in the city, the report reveals.
In 2010, real estate activities accounted for 17% of all foreign direct investment in Spain, adding €1.980 million to the economy. In 2010, a total of €3.952 million was added to Cataluña, Barcelona’s provincial region from gross foreign direct investment. Barcelona and the Cataluña region receive a third, some 34%, of all Spain’s foreign investment.
It also found that interest in Barcelona real estate for short term rentals remained healthy during the traditionally slower winter period and in the luxury property districts of Sarrià-Sant Gervasi and Les Corts, housing prices increased marginally in the final quarter to the end of 2010.
‘Many Lucas Fox clients choose Barcelona due to the quality of life that the city offers. This comes down to a combination of the Mediterranean climate, Spanish culture and gastronomy, and the fact that it is a very safe place to live with a real sense of community,’ said Alex Vaughan, Lucas Fox director.
‘Barcelona luxury property trading remained solid for the second half of 2010 with a particular improvement in the number of transactions in the last quarter. The comparative steadiness of the Barcelona property market is testament to the backing of local Catalan and international property buyers who believe in the longer-term future of the market in Barcelona,’ he explained.
‘Overall, Barcelona properties are showing greater market stability than is evident from assessment of the national picture,’ he added.
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The price of building land in Barcelona has fallen 60% in the past year. New equivalent properties could theoritically be built at less than 50% of current asking prices. Obviously banks will not lend for such a project because 1) they are already over exposed to property and 2) if new build came on to the market at lower prices, asking prices of existing stock would be lowered to compete.
I should add that there are likely to be more sellers than buyers of Barcelona property for the foreseeable future because of the aging population; i.e.lack of young people, fewer households being created and elderly people dying at a faster rate and leaving property vacant.