Spanish Real Estate Market: News for September 2021
Spanish Real Estate Market: News for September 2021
Ibiza prices growing rapidly after the pandemic
73% of luxury housing stock concentrated in 4 Spanish provinces
An Aztec pyramid will appear in central Madrid
2 September deals worth over 100 million euros
Developers invest in nursing homes
Article 28 of the Mortgage Law, limiting the sale of inherited homes, has been repealed
1. Ibiza prices growing rapidly after the pandemic
The Ibiza real estate market demonstrates a number of trends that differ from mainland Spain. Prices are growing faster than in the rest of the country. First and foremost, property values have already exceeded the peaks reached before the subprime crisis by 10.5%.
The peak price in the pre-crisis period was recorded in the third quarter of 2008, when the average cost per square meter of housing in Ibiza was 2,355 euros/m². A downward trend was observed for 10 years, and growth only began in 2018, not stopping even during the pandemic. Currently, the average cost per square meter reaches 2,602 euros/m².
Large villas are in highest demand
Both demand and prices are growing fastest in the segment of villas with 4 or more bedrooms. Currently, 24% of all supply consists of very large properties, and they still do not cover demand.
Secondary market is more expensive and in demand
Prices for secondary market properties are 2% higher than for new construction. There are several explanations for this: the small number of new builds in high-demand areas is taking its toll, as well as buyers’ desire to start using their Ibiza property immediately after purchase.
2. 73% of luxury housing stock concentrated in 4 Spanish provinces
The majority of expensive homes are concentrated in just four provinces of Spain. Currently, according to statistics, the market features 36,368 homes valued from 1,000,000 euros and over 6,000 villas priced above 3,000,000 euros, with the main part of supply concentrated in four provinces, three of which are located on the coast, while the fourth has become synonymous with ultra-luxury housing.
The provinces of Malaga, Balearic Islands, Madrid and Barcelona occupy 73% of all offers valued from one million euros and above.
Malaga is the province with the widest selection of such real estate: currently 23.1% of all market supply of expensive homes falls to the vicinity of Malaga. It is followed by the Balearic Islands with 22.9%, Madrid (15.1%) and Barcelona (12%).
Alicante with 9.7% takes fifth place in the number of homes valued from one million, followed by Girona (4.8%). The ranking of main provinces with luxury housing is completed by Cadiz (1.9%), Santa Cruz de Tenerife with 654 properties (1.8% of the total), Valencia with 620 homes priced above one million euros (1.7%), Las Palmas with 303 properties (0.8%), Biscay (280), Seville (240), Gipuzkoa (221) and Pontevedra (201).
3. An Aztec pyramid will appear in central Madrid
The newspaper Hortaleza (Hortaleza is one of the districts of the Spanish capital) reported that Madrid will soon have its own pyramid. This concerns a rather large plot of land that was previously allocated for the ambitious “Coliseum of Three Cultures” project, but that stalled, and the businessman financing it was arrested for financial fraud.
And now comes news that this plot will finally find its cultural landmark. The project’s mastermind is Spanish musician, composer and producer Nacho Cano. For his musical “Malinche,” a 30-meter Aztec pyramid with an enclosed theater for 1,300 spectators will be erected. Part of the territory will be allocated for parking for 400 cars.
According to architects’ estimates, construction of the pyramid itself will cost 8 million euros, and the entire complex will cost over 11 million euros. This monumental building will host the musical “Malinche,” created by Nacho Cano eight years ago — the love story of Hernán Cortés and the beautiful Malinche, a native resident of Mexico.
Nacho Cano’s company, which submitted an application for developing the plot more than a year ago, will pay the city council an annual fee of 450,000 euros for land use over four years.
While some district residents are happy that the abandoned wasteland with stray dogs will finally be utilized, others are outraged by the project. Concerns are also voiced about uneven distribution of cultural support from city authorities.
The history of Spanish conquest of the American continent is now being reviewed and reconsidered, and the love story created more than 8 years ago by Nacho Cano is perceived by many as offensive to the indigenous peoples of the continent. Nevertheless, forecasts indicate that the musical “Malinche,” about which a documentary film was recently released on Netflix, will still take place within the walls of the new pyramid as early as 2022.
4. 2 September deals worth over 100 million euros
In September, two deals worth over 100 million euros were registered in Spain.
Build to rent in Madrid:
- Buyer: Greystar
- Seller: Acciona
- Price: 120 million euros
Acciona Inmobiliaria sold its most popular build-to-rent project. Greystar paid 120 million euros for the project to construct 455 apartments with 1 and 2 bedrooms. The site will also house a 13-story building with an area of 24,793 m², which will become the largest rental complex currently existing in Spain. All homes will be located within the M-30 ring road, with direct access to the city center via public transport and highways. Completion of most buildings is expected by 2024. The residential complex will also have its own infrastructure, including coworking spaces, cinema, gym, restaurant, swimming pool and public spaces.
Luxury hotel Blau Porto Petro in Mallorca:
- Buyer: Ikos Resorts
- Seller: Purple Group (Grupo Roxa)
- Price: 110 million euros
Ikos Resorts acquires the five-star hotel Blau Porto Petro from Grupo Roxa for 110 million euros. The property is located near the Porto Petro marina and Mondragó natural park, in one of the most untouched corners of the island. Blau Porto Petro has 319 rooms, but after renovation the room stock will increase by 115 apartments — to 434. The hotel complex will also include six restaurants, a spa center and a huge sports field with an area of 10,000 m². Reopening is scheduled for April 2023.
Luis Herrero, CEO of Ikos, commented on the deal: “We are confident that the new project will be a great success for Ikos Resorts. Mallorca is one of the most iconic destinations” for tourism with a high level of exclusivity.
5. Developers invest in nursing homes
Major investors are entering the nursing home market in Spain. Belgium’s largest developer Cofinimmo has launched two projects in this area.
The company concluded a deal for 9 million euros to acquire a building with an area of 5,000 m² with 104 rooms in Bilbao. Management of the home will be taken over by Cofinimmo’s subsidiary — Orpea Group.
Additionally, a plot was acquired for construction of a nursing home in Alicante. Investments at the current stage are estimated at 13 million euros. Construction is expected to begin in 2021, and the building with an area of 7,300 m², designed for 150 residents, will be completed by early 2024.
Jean-Pierre Hanin, CEO of Cofinimmo, explained that with these investments the company seeks to strengthen its presence in Spain. The country with the highest life expectancy in Europe attracts a significant number of Europeans planning to move here for retirement.
It’s not surprising that big business is the first to notice prospects and develop a network of institutions intended exclusively for pensioners. Currently, the Spanish market has 382,000 places in 5,500 residences, 60% of which are private. Investors are actively developing new projects in this segment and expect the number of places to reach 407,000 by 2024.
6. Article 28 of the Mortgage Law, limiting the sale of inherited homes, has been repealed
Legal restrictions that prevented immediate sale of inherited real estate have been lifted.
According to a Fotocasa report, 59% of residents under 35 are currently looking for rental housing — 5% more than a year ago. Meanwhile, 27% interact with the buy-sell market — 4% less than in August 2020. Finally, 14% are active in both markets.
The main reasons for choosing rental, according to the report, are weak economic situation (52%), flexibility provided by rental (31%), and labor mobility (30%).