“Now it’s the other way around”: investors choose Valencia after a referendum in Barcelona
On October 1, 2017, a referendum on independence was held in Catalonia, 90% of those who voted in favor of separating the region from Spain. Since then, uncertainty has reigned in the real estate market of Barcelona.
If those who live in Spain and are looking for residential real estate in Barcelona for themselves, continue to search, then investors have focused their attention on Valencia, says Maria Kamysheva, project manager for Spain in Tranio. his is confirmed by other experts. “Previously, if customers fluctuated between Barcelona and Valencia, then 80% of them eventually chose Barcelona: it has better transport links and it is three times larger in size. Now the opposite is true: 70–80% of customers choose Valencia, ”says Juan Luis Herrero from Lucas Fox in an interview with the Financial Times.
According to the Spanish Board of Registrars of Property (Colegio deMistigradores de la Propiedad), although over the past few years the number of real estate transactions has been growing in both provinces, now in Valencia demand is increasing twice as fast: in the second quarter of 2017, their number increased by 8.25% against 3.15% in Barcelona, in III quarter – by 4.12% in against 1.35% in the capital of Catalonia.
The share of buyers from abroad in the Barcelona market declined for the first time in five years: from 9.50% in 2016 to 9.24% in Q3 2017. In Valencia, the share of foreigners continues to grow: from 8.59% in 2016 to 10.24 % in 2017.
According to statistics from the Rightmove portal, the budget of home buyers in Valencia is 4–5 times less than in Barcelona: 64 thousand euros against 243 thousand for apartments and 119 thousand against 573 thousand euros for houses.
Prices in the city of Valencia are really lower than in the capital of Catalonia. According to the portal Idealista, in the fourth quarter of 2017 a square meter in Valencia cost an average of 1,668 euros, in Barcelona – 4,284 euros.
According to Idealista, housing prices in Valencia peaked in the second quarter of 2007 (2 802 euros / m²), and by the third quarter of 2014 they fell by 50%, reaching a bottom of 1,400 euros / m². By the fourth quarter of 2017, the cost per square meter increased by 19%.
In Barcelona, housing prices peaked in Q1 2007 (4,732 euro / m²), by Q3 2013 they fell by almost 40% to 2,957 euros / m², and by Q4 2017 they rose by 45%, approaching the pre-crisis level.
“In Valencia, not such a rapid jump in prices, as in Barcelona, so the growth potential is greater,” – explains Maria Kamysheva.
Easier and more profitable to rent
Valencia is a more favorable market for landlords than Barcelona. Here you can easily rent up to four objects – just register them in a special registry. In Barcelona, it is not possible to rent a house for short-term rent without a license, the issue of which has been suspended since 2014.
On the other hand, according to AirDNA, which processes ads on Airbnb, the average rental price in Barcelona is about two times higher than in Valencia. At the same time, in Valencia, you can get a higher yield due to the low cost per square meter, which is 2.5 times cheaper today than in the capital of Catalonia. The same pattern is true for long-term rent: an apartment in Valencia will bring about 6% per annum before deducting expenses and taxes, in Barcelona – 5%.
Demand from tourists
Although Valencia is a less popular tourist destination than Barcelona (about 2 million visitors in 2016 versus 9 million), the number of tourists has been growing by about 5% per year over the past few years. The city has great potential: there are 313 sunny days a year, 250 days the temperature is kept above +20 ° C. 15 minutes from the city center there are two city beaches, Las Arenas and Malvaros, 10 kilometers – six wild sandy beaches. Valencia International Airport received almost 3 million passengers in 2016. “This is a great alternative to the Catalan Costa Brava. In addition, in the province of Valencia, more greenery, in contrast to the more southern Alicante, “- says Maria Kamysheva.
According to The Local, citing data from Exceltur, the number of bookings for Barcelona hotels in the first quarter of 2018 is 10% lower than last year. Probably, Valencia will be one of those Spanish cities that will be able to benefit from the situation after the referendum. Investors in real estate have the same chance.