Following steep property price declines of around 42% between 2007-2014, today’s Spanish property market is bursting with confidence and activity nationwide, buoyed by an improving economy, a new government and sustained foreign investment…
In the third quarter of this year, asking prices for properties in Madrid and Barcelona are up 7% and 9% per cent respectively since last year, while sales nationwide are up 10%, confirms data from the Spanish National Statistics Institute (INE).
According to the FT, investors see that the Spanish economy is growing and businesses that had previously employed a “wait and see” mindset are making their moves into commercial real estate.
“From 2010 to 2012, international investors didn’t want to touch the Spanish market with a stick,” Fernando Encinar, co-founder of property portal Idealista told the FT. “We’ve passed from a brutal lack of trust in the Spanish economy, to now when you speak with investors they say ‘give me yield’.”
The FT writes that the recovery has come in stages, which tallies with VIVA’s own reading of the market.
The initial post-recession upturn first registered in 2013 in areas like Marbella, which was somewhat shielded from the worst effects of the crash. Then, opportunistic investors began eyeing opportunities that may have represented high-risk at the time, but high-risk meant the chance of high-returns.
Firms such as Goldman Sachs, Cerberus Capital Management and Blackstone began snapping up property, and eventually private individuals followed suit.
“There’s been a clear recovery of consumption in Spain, as well as a drop in unemployment,” said Miguel Pereda, the chief executive of shopping centre chain Grupo Lar. Pereda said that sales across its stores have been up 9.2% this year as consumer confidence grows across the country.
In the commercial real estate sector, investment has grown 25% in the space of a year, with CBRE calculating investments in 2015 at €13 billion. Residential sales have also been increasing by double-digit figures for the past 18 months, and this is in turn causing a snowball effect of increased demand and rising prices.
“After six years of being a taboo topic in economic circles, real estate developers are being invited back into the official cocktails,” said one jubilant developer of property.“The stars are lining up again.”