Barcelona real estate market: 2 months after the split
The last few years the real estate market in Barcelona has experienced a boom. in 2013, prices reached the bottom and began to grow rapidly: according to the portal Idealista, by the third quarter of 2017 they increased by 46% to 4,335 euro / m², almost reaching the pre-crisis maximum of 4,732 euro / m². According to the Barcelona City Government (Ajuntament de Barcelona), the number of real estate transactions increased from 9 thousand in 2013 to more than 14 thousand in 2016. According to Statista and Barcelona Turisme, the number of tourists during the same period increased from 7.5 million to 9.1 million people.
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. How did the local market react to the changes?
Drop in demand
According to Alina Batyrshina, Tranio real estate sales manager in Spain, in October 2017 the number of applications for the purchase of real estate in Barcelona decreased on an annualized basis by about 40%.
Customers who submitted bids before October 1 were divided into three groups: those who already live in Spain and are looking for residential property for themselves – they continue to search, investors who have refocused from Barcelona to Valencia or Germany, and those who have previously doubts, and there was not enough motivation to buy – now they refuse to deal and call the cause of failure conflict in Catalonia.
The focus of many foreign buyers has shifted from Barcelona to Valencia. “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 Spanish Property Insight, citing Lucas Fox, in October, the demand for real estate in Catalonia fell by 20%, while in the rest of Spain it grew by 38%. The leaders were Madrid (+45%) and Valencia (+42%). Prices in Catalonia, according to the company, decreased by 3-5%. The real estate market reacted more strongly to the crisis: according to the Spanish edition Expansión, citing data from Barnes International Realty, luxury real estate in Catalonia fell by 20%, while in Madrid, the Balearic Islands and the Costa del Sol more expensive objects on 10 %.
According to the real estate appraisal company Tinsa, in Catalonia the number of loans issued in October decreased by 10%, while in the rest of Spain their volume increased.
Banks still provide mortgage loans to residents in the amount of up to 90% of the value of real estate, but only in Catalonia have financial institutions reduced LTV to 70%. Some experts believe that the conditions for issuing mortgage loans will continue to tighten.
Outflow of tourists
According to the largest business association in Spain, Aecoc, the number of tourists in Barcelona can be reduced by about 20%. The occupancy rate of hotels will drop to 80%, since tourists now think twice before booking a room, writes Bloomberg, citing a message from one of the local trade associations.
According to the company STR, which deals with the analysis of the international hotel business, during the first five days after the referendum in Barcelona, revenue per number (RevPAR) significantly decreased. The worst decline in annual terms was recorded on October 4: -27.5%.
As for the occupancy of hotels, the only market in Barcelona, where this figure rose from August to October, was Sants-Montjuïc (+ 0.4%, according to STR). However, this is explained by the fact that at the end of August, the world’s largest cardiovascular disease prevention congress (ESC Congress 2017) was held, in which more than 30 thousand people stayed in hotels in the area.
“Since the beginning of October, in hotels in Barcelona, they are massively canceling group reservations for 10 or more rooms,” said Javier Serrano, STR manager for Spain and Portugal. – With the onset of political unrest, the growth rates for Barcelona slowed. This will negatively affect the occupancy rate until the end of the year, which, in turn, may lead to a decrease in room prices in the coming months. ”
Excitement touched the market and short-term lease. The number of apartments booked on Airbnb in October decreased by 11% compared with September. The decline could be explained by the change of the season, but in 2016 the number of bookings during this period, on the contrary, increased by 4.4%.