Spanish real estate news 04/09/2023
14% of those looking for housing want to leave the city to live in the suburbs
A recent analysis on "Living Outside of Cities" by Fotocasa Research in 2023 indicates a growing preference for housing outside major cities in Spain, continuing a trend seen in 2022 with slight variations.
While 32% of housing seekers currently live in provincial capitals, only 31% of them are looking for properties in these areas for purchase, and 25% for rent. In contrast, there's a higher demand for housing in rural areas, suburbs of large cities, and coastal locations compared to the number of people already living there.
The motivations for this trend include seeking a quieter environment (39%), more affordable prices (31%), the desire for a terrace or garden (30%), and an overall improvement in quality of life (28%).
Offices are being converted into housing as a solution to the lack of residential stock in Spain
The real estate industry is undergoing rapid transformation due to factors like the teleworking revolution, hybrid work models, and the continued growth of e-commerce after the pandemic.
Offices are a key asset class facing conversion, particularly in the United States, where a rising trend involves repurposing office spaces into residential or living spaces due to high office vacancy rates, such as New York with over 16% vacancy and San Francisco with 27%.
This shift is impacting urban ecosystems, affecting businesses like restaurants and retail, leading investors to redirect their assets towards more profitable solutions, with housing being a primary choice.
Barcelona, the number 1 home exchange destination in the world
Barcelona is a top choice for HomeExchange members for their vacations, with over 85,000 overnight stays in July and August alone, showcasing the popularity of this house-swapping platform in the city.
Catalonia, including Barcelona, ranks fifth globally among HomeExchange members' favorite destinations, with 124,637 overnight stays during the summer months, marking a 34% increase from 2022 and a total of 187,178 overnight stays this year, showing a 35% rise from the previous year.
Other Catalan provinces like Lleida, Girona, and Tarragona have also seen increased numbers of overnight stays, with Lleida experiencing a 43.5% growth in 2022 and Girona and Tarragona showing significant increases as well.
Half of renters plan to buy a home in the next five years
Approximately 50% of renters in Spain are considering buying a home within the next five years, according to a survey by Tuio, a Spanish home insurance company, which aimed to understand how the current economic and real estate market situation affects their insured customers' housing plans.
Older respondents (above 50 years old) and those with lower incomes (€2,000 or less) are more inclined to keep their current homes, with 82% and 75% respectively expressing this intention. Meanwhile, 51% of those aged 30 or younger plan to move into a home they own, as do 47% of renters. About 85% of respondents say that the current economic situation influences their decision to buy or rent a home.
The location and surroundings are the most crucial factors for choosing a home, as stated by 59% of respondents. As age increases, the importance of location also rises, with 63% of those over 50 years old emphasizing this aspect. Among higher-income individuals (over €4,000), the size and layout of the home also play a significant role (30%).
A substantial majority (80%) prefers homeownership with a mortgage over renting, with those aged 31 to 40 years old showing the strongest preference (87%). Even among those with children, 83% prefer homeownership with a mortgage over renting.
The hotel sector is the asset that has attracted the most investment in the second quarter of 2023
Spain welcomed over 50 million visitors in the first half of the year, marking a 14% increase compared to the same period in 2022 and surpassing pre-pandemic 2019 levels. The surge in tourism has driven investment in hotel accommodations, becoming the top asset class for real estate investment in Spain during the second quarter of the year, accounting for 41% of total investments, according to CBRE.
Changing travel behaviors have emerged, with tourists now preferring shorter stays averaging around six days, but their spending in the country has increased by 5.1% compared to 2022. This shift in demand has led to the rise of alternatives such as corporate apartments for business travelers and serviced apartments offering various amenities.
Luxury accommodations have garnered significant interest from investors, accounting for over half (52%) of hotel investments, particularly in the 5-star and 5-star GL categories. These assets are seen as resilient and liquid, making them attractive options in an uncertain environment. The District, an international real estate summit, will explore these trends and how hotel assets are adapting to meet current user profiles and remain attractive for investment. Experts like Christian Hribar, Ramón Garayar, and Fernando Rodríguez will discuss current models in hotel promotion and investment, taking into account today's challenges.
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The price of rent in Spain rises by 3.4% in July, the lowest increase in ten
The monthly rental price for housing in Spain has dropped by 0.2%, with a 3.4% decrease in the annual variation, bringing the average price to €11.59 per square meter per month in July, according to Fotocasa's Real Estate Index.
This 3.4% year-on-year increase is the lowest in the past ten months, signaling a trend of decreasing rental price growth. However, in several autonomous communities, rental prices are still surging, reaching historic highs in nine of them, with increases exceeding 10% and even 30%.
Limited residential rental supply is contributing to the upward pressure on prices, as many properties have been sold, converted into tourist rentals, or left vacant. Sixteen communities have seen year-on-year price increases in July, with the Balearic Islands experiencing the most significant rise at 30.1%, followed by the Canary Islands, Cantabria, and others. Castilla-La Mancha is the only region with a decrease in rental prices compared to the previous year, at -2.9%.
The national average rent for a room is 405 euros per month
The changing rental market in Spain is causing difficulties for many sectors of the population in finding housing, with the increase in room rentals in shared apartments being a notable and potentially risky trend, according to property portal Pisos.com.
Pisos.com attributes this shift to the current instability and legal uncertainty in the rental market, which has been influenced by new housing legislation and its rent control measures. Many property owners are opting to sell rather than rent their properties, reducing the rental supply and driving up prices.
This situation has led to a proliferation of room rentals, with the national average rent for a room reaching €405 per month in June, a 5.59% increase from the previous quarter. Barcelona has the highest average room rent at €631 per month, followed by Madrid, Palma, and Vitoria-Gasteiz. The portal highlights that the controversial aspect of the new housing law is rent control, which has sparked significant debates within the sector due to mixed experiences in other countries with similar measures. However, these regulations only apply to long-term rentals of primary residences, leaving room rentals largely unregulated under the current law.
Home mortgages fall by 21.9% in June
The number of mortgages on homes registered in June 2023 was 33,478, a 21.9% decrease compared to the same month in 2022. The average mortgage amount for home purchases was €143,796, representing a 0.7% year-on-year decline.
The total value of mortgages on homes in June 2023 reached €4,814.0 million, a 22.5% decrease compared to the previous year. The monthly comparison showed a 0.2% increase in the number of mortgages and a 1.7% increase in the capital borrowed. The average interest rate for these mortgages was 3.19%, with a typical term of 24 years, and a split of 40% variable rate mortgages and 60% fixed rate mortgages. The initial interest rates were 2.84% for variable rate mortgages and 3.45% for fixed rate mortgages.
Portuguese real estate fund, CA Patrimonio Crescente, buys a logistics asset in Murcia for 12 million euros
The Portuguese real estate fund CA Patrimonio Crescente has acquired a logistics property in Murcia, Spain, from Moyca, a European seedless grape company, for €12.4 million.
The deal includes a 20-year leaseback agreement with the previous owner, allowing Moyca to release capital for land acquisitions and expand its production capacity.
CA Patrimonio Crescente, Portugal's largest real estate fund, now has 19 properties in Spain, with a total investment of approximately €80 million.
Barcelona and Madrid, the 16th and 25th most expensive cities in the world in the logistics segment
The global cost of prime logistics (rent, services, and taxes) has increased by an average of 10.1% year-on-year until June, surpassing the record increase of 8% in the same period in 2022.
Savills' Global Warehousing Costs report ranks Barcelona as the second most expensive location for prime logistics in Europe, just behind Paris, with $124.7 per square meter per year, while Madrid stands at slightly over $89 per annum.
Although the rate of cost increase has slowed down in the first half of 2023 (4.4% growth compared to 5.4% in the same period in 2022), the higher cost of warehousing is expected to persist due to factors like e-commerce growth, industrial tenant demands for better-located and more efficient spaces, and ongoing demographic and structural trends.