Speak to most Spanish property agents and developers and they are likely to tell you that the market has finally bottomed out, but sales data from various sources is still conflicting, with some surveys showing selected strong property price growth and some indicating falls.
For instance, the latest index from the Spanish Property Registrars shows prices rising 5.12% in the year to June 2015, the highest rate since the global economic crash. Prices are also accelerating, rising 2.8% in Quarter 2, 2015, up from 2.65% in Quarter 1.
The latest figures from Bankinter suggests prices rising 2% this year and 4% next, with 50,000 new home sales in 2015 and 80,000 in 2016 while website Hogaria says prices in the year to July are down 4%.
OPP.Today asked Guifré Homedes Barcelona Office Manager, of long-standing consultancy Amat Immobiliaris and Julian Walker, founder of the new PropertyandSpain website what was really happening on the ground, how the market is likely to perform this year and how strong their sales are.
We first wanted to know if the Spanish market has reached the bottom yet. Mr Homedes says,
“In our opinion, the overall market has bottomed out, but must take into account that market behavior is very different depending on the zones. In cities such as Madrid and Barcelona or some coastal areas, the market bottomed out in early 2014.
It is difficult to affirm it for 100% of the territory, but we could say that, yes, a few months ago we hit the bottom. In our case, since 2014 we noticed a significant increase in sales compared to 2013.”
But Julian Walker believes the performance of different sectors varies. “There are two property markets in Spain, the domestic residential market and the international market; the latter concentrated in resorts along the Costas and Spain's islands. As regards the international market, in the most desirable parts of the Costa del Sol, Costa Blanca and Mallorca, prices have already begun rising again.
“Looking at the international market as a whole, 2015 would appear to be a turning point. Prices have settled at 30-40 per cent below the peak in 2007/08 and are being supported by a shortfall of - and demand for - quality new-build. A similar level of upward pressure is occurring on prices in key Spanish cities, including Madrid, Barcelona and Valencia, where investors are fuelling the market. It's a different story in the domestic residential sector although it's improving gradually - by the end of April this year, the rate of price decline had slowed to 3.9 per cent annually.”
Even so, both say there has been a major rise in demand from international real estate buyers. “Our company is specialized in Barcelona’s market and its peripheral residential area," explains Guifré Homedes. “Since 2011 we have noticed a significant increase in foreign buyers. At the moment sales to foreign buyers in our Barcelona office are approximately 50%.
“Historically, in certain coastal areas in Spain - as well as in many islands - have always been foreign buyers but over the past five to six years this profile has changed and today the foreign buyer already has a significant weight in the property market of Madrid and Barcelona. The data say that in 2014 between 12% and 13% of the Spanish property market were foreign purchases.
“The most common nationalities vary depending on the zones; the market is dominated basically by British, French, Russians, Germans, Belgians and Scandinavians. In our case, Russian and North African buyers were foreigners that we have in 2014; in addition to his we had also French, Belgian, British and Chinese.
“In recent years buyers’ nationality has changed due to international factors. Last year’s Russians where the most important buyers but now they have less presence in the market. However, probably in 2015 British, Swiss, Chinese and North Americans are having more purchasing power since their currencies are stronger than Euro.”
“Demand from international buyers is up on 2014, with British buyers spearheading interest,” agrees Mr Walker. “The weaker euro has made a huge difference for UK buyers this year, although how the £/€ exchange rate will pan out during the second half of the year is unknown. Otherwise the market is spread pretty evenly between other European, in particular Germans, Belgians and Dutch, and Scandinavian buyers. Russian buyers still comprise a fair share of the market but their numbers have noticeably dropped off following the country's economic woes this year.”
And both also agree that the Spanish property market is set to rise by around 2%. Mr Homedes says that price rises are totally related to areas. “For example, within the same city of Barcelona evolution is very different depending on which the district. In the most demanded neighborhoods, 2015 has begun with little available stock and surely this is going to raise prices faster than expected.
“It should also be noted that in some areas prices are anomalously low as they readjust to absorb a very large stock and to improve sales percentage increase. It does not mean that this trend has to be maintained.
“We believe that prices may rise between 2% and 3%. In very specific areas with low stock and high demand we saw it increased above 10% last year, although there are many exceptions.”
Mr Walker adds, “I've seen figures of 2-3 per cent floated for the international market, and I'll go with that.”
Amat Immobiliaris has seen an upturn in business in 2014 and believes business will continue to rise in 2015. “The number of transactions increased very significantly, in about 50% and in volume of operations it was over 15%. We believe 2015 will be a year generally similar to 2014.”
Even during the market doldrums, Amat Immobiliaris retained its staff and it says the strategy has paid off and has allowed it to expand faster than others.
“Our company underwent a different process before and after the crisis compared to other companies. In 2005 we already saw the crisis coming, although probably not as intense and long as it has been, but we several measures to deal with it the best way.
“When it began we took several decisions, including not dismiss anyone from the sales team or reduce investment in marketing. Objectives were clear: having a powerful sales team in order to be prepared when banks had to sell properties. We knew that this had to happen. We had to make ourselves noted and show that our company had not disappeared as many others.
“Although things were tough, especially in 2008 and 2009, time has proven we were right and it was a wise strategy. During the crisis we have doubled the number of offices and commercial equipment increased more than 30%.”
