Forcadell, in cooperation with the Universitat of Barcelona (UB), presented the report “Informe del Mercado Inmobiliario 2018, Actualidad y Perspectivas”.The publishing, presented the 28th June in the Axa Auditorium, has been directed by Ivan Vaqué, partner and CEO of Forcadell, Toni López, partner and head of the Corporate area and Dr. Gonzalo Bernardos, tenured Professor of Economy and Director of the Real Estate Management and Consulting Master of the UB.
Dr. Gonzalo Bernardos, as the managing director of the periodic publication, highlights 15 trends of the market, drawn out from the Forcadell-UB report:
1. "In 2018, residential home sale prices will register an 11% price increase and a 23% rise in purchase/sale transactions. In contrast to past years, the improvement of the market will be noticed in all the municipalities of the country.
2. In the best locations in Barcelona, Madrid and Palma, the price of homes will peak in 2019.As of 2020, in these cities the prices could start increasing, or going down slightly.
3. There are more opportunities in Lleida and Tarragona than in Barcelona. In the first two cities, the real estate cycle is on the upswing, and in the case of Barcelona, it is in the final part of the cycle. However, a large part of investors would much rather buy in the catalan Capital. The reason is that prices have risen considerably, and this offers added security.
4. The excellent example of growth of the Spanish economy, based in exports and investment in capital goods, rules out the possibility of a real estate crisis of the magnitude of the one that went down between 2008-2014.Notwithstanding, further on in 2021, home prices in Spain might suffer a slight decline, if interest rates rise considerably and the euribor exceeds 3, 5 % in the next year.
5. So far, banks have been very cautious offering mortgages. Therefore, there is not a financial or property bubble. It is worth highlighting the fact that in 2017, 41% of homes were bought without the aid of financial banking products.
6. Since 2017, the drive of the residential market has been investment demand and replacement buyer demand. With the progressive surge of mortgages at a 100% rates, the improvement of the employment market and the rise of wages, demand for access to the first property in the case of young people will substitute investment and replacement demand as the main market boosts.
7. The scarcity of credit to buy plots of land and demand of a minimum pre-let sales of 50% in many municipalities block small local promoters into increasing the construction of new developments. In 2018, building permits for homes will reach 125.000 units, only 13, 6% of those scheduled in 2006.
8. The steps suggested by Ada Colau, the mayor of the city, do not resolve the issue of housing in Barcelona, but rather make it worse. The two main effects are:
-By generating greater uncertainty, there will be a decrease in the number of promotions, reducing supply and causing a price increase.
-By forcing to assign 30% of new construction units into social housing, this measure will act as a tax on landowners, property developers and buyers. Landowners will be paid less for their plots, developers will get less profit and buyers will see higher prices.
9. Homes to rent in Spain are not expensive. In 2017, and after considering inflation, it is 30, 3% cheaper than in 2007.The problem here is not rent prices but low wages. In the whole of the country, prices will continue to rise until 2020. After this date, a large transfer of tenants who could decide to buy and become owners, this would be factor which could lower prices considerably.
10. In Barcelona and Madrid the rent market is starting to see symptoms of entering a slowdown. There is a triple market:
-Homes with rents between €1200 and €1500.Slight and growing excess of supply.
-Homes under €1200.Increasing excess of demand, especially under €1000.Most of these homes get rented in less than 15 days.
11. The steep rental prices for the Spanish population are having a double effect of moving out of the centre of the city and spreading into the periphery:
-To other rented homes for those with less income
-To buy homes for those who can afford to pay a minimum monthly mortgage of €1200
12. Tourist flats are not the main culprit of the rise in rent prices in Barcelona.If that was the case, this increase would only occur in Ciutat Vela, l’Eixample and Gracia, and it has been happening in all the districts in the city. The economic recovery and the fact that catalan Capital has become one of the most interesting cities for real estate at a global scale have had a greater influence in the rental prices increase. In addition, since the arrival of Ada Colau to the town hall of Barcelona the number of homes to rent has declined in approximately 2.000, while the price has increased 33.3% ( from €13.2/sqm to €17,6/sqm).
13. The economic uncertainty has not significantly affected the office market. The number of rented sqm continues to grow, and the great novelty is the quantity of co-working spaces. The use of those spaces is proving they are notably more profitable than the traditional system of office rentals.
14. The logistic warehouse market has a huge lack of space. The economic recovery and e-commerce are the main culprits of the incredible increase in demand. Considering the yields offered by rentals and market value appreciation expectation, it is currently the most profitable segment in Commercial Real Estate.
15. The retail market has had an excellent rental evolution in prime zone and little improvement in the rest of the zones. In the first case, tourism is the differentiating factor. In the second, the problem lies in the low wages. These hold back a consumption reactivation, limiting the sales for retailers and stores and thus their capacity for payment of the retail premises”.
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