Real estate leaves pandemic behind

BarcelonaThe real estate market is gaining strength with the recovery of almost all of its sub-sectors, especially residential, offices and logistics. There are some elements that show this, such as the increase in leased office space and logistics warehouses, but also the increase in residential sales. An increase that affects both new and second-hand apartments and, moreover, with the return of buyers and foreign investors.

This Thursday, the National Institute of Statistics published data of home sales and purchases. Both in Catalonia and in Spain as a whole, not only have pre-pandemic levels been exceeded, but it has been the best month of February since 2007, just before the housing bubble burst. According to the INE, home sales increased by 22.4% in February in Catalonia compared to the same month last year, to 7,934. This is the best February since 2007 (then it was 11,466 homes). Of the total, 7,412 were free market housing and 522 were subsidised, while 1,395 were new and 6,539 were second-hand. In Spain as a whole, home sales rose by 24% in February, to 53,623, also the best figure since 2007.

Ferran Font, head of studies at the Pisos.com portal, is clear that these figures show that "there is no trace of the pandemic" and points out that the market maintains a dynamism not seen in a decade. But he warns that it will be necessary to be alert in the coming months to some factors, such as the geopolitical situation or "the changes in the ECB's interest rate policy which would make mortgage payments more expensive, as well as the roll out of the housing law or the effectiveness of Next Generation funds".

One factor helping to revive the residential market in Barcelona is the return of foreign buyers and investors from abroad. Home purchases by foreign nationals soared 41% in 2021, as reported by the Association of Notaries of Catalonia. The deputy dean of this professional corporation, Raquel Iglesias, indicates that this growth is closely linked to the previous year's fall due to covid, but "highlights a certain return to normality". According to the Association, and despite this impact of the pandemic, the sale and purchase of homes by foreigners in Catalonia has almost tripled and has gone from 6,216 operations in 2011 to 17,493 in 2021. The French continue to be the main drivers of this market, with 47% of the total, followed by the Germans, with 11%.

Notaries are not the only ones to have noticed this return of foreign buyers. Iñaki Unsain, president of the Spanish Association of Real Estate Personal Shoppers (AEPSI), assures that large international real estate portfolios are returning to Barcelona. "The quality-price ratio of the city's homes is one of the biggest attractions among international [investors]." The Eixample, above all, but also Les Corts and Sarrià-Sant Gervasi are the most attractive districts for these buyers. Foreigners who, if they have a high purchasing power, are looking for off-market properties, that is to say, high standing homes that do not appear in ads on real estate portals. These are buyers who are looking for very special properties and maximum confidentiality.

Record investment

There are several reports that show the recovery of the real estate market. The latest, published this Thursday by BNP Paribas Real Estare, indicates that Spain is heading towards a record year for investment in the sector, which will reach €15bn this year. The first quarter, according to this report, closed with an investment of €3.68bn, the second best quarter in the last three years and the fourth since records start.

The CEO of BNP Paribas Real Estate, Borja Ortega, highlights that the expectations for 2022 "are very optimistic" and assures that there is investor interest in all subsectors, but "a very high level of activity is expected for residential, hotel, office and retail" properties. In fact, this segment has accounted for 56% of all investment in Spain and one operation in Barcelona stands out: the purchase by Patrizia fund of 1,500 rental properties in the Catalan capital for €600m.

As for office space market in Barcelona, more than 92,000 square meters were leased in the first quarter, 6.5% more than in the same quarter last year, according to consulting firm Cushman & Wakefield. In the office market, the consulting firm CBRE highlights the resurgence of the city centre, after a few years of maximum prominence of 22@ and Plaza Europa. Even so, according to BNP Paribas, of the €178m invested in the first quarter, 75% went to the 22@ area.

Regarding the logistics sector, all reports indicate that it is the investors' big bet. "The will to invest is still strong," explains Gerard Plana, director of the industrial logistics department at Forcadell. In addition, the lack of new surface areas close to Barcelona drives rental prices upwards. The availability of space is minimal, 2.5% of the total area, which has driven rental prices up 7% to €7.5 per square meter per month, according to CBRE.