Spanish property market news November 2021

Foreigners are returning and buying more and more houses and flats in Spain. Do not lag behind them and the Spaniards – the number of sales transactions have already exceeded the figures of 2008! Here we reviewed the trends that emerged in the Spanish property market in November, big deals and fascinating events.

The Philippine business holding Grupo Emperador offered Marta Álvarez's company 400 million euros for the purchase of the Torre Titania Tower.

The 104-metre tower has 23 floors and is located in a luxury land on Calle Raimundo Fernández Villaverde, opposite the Nuevos Ministerios station and in close proximity to Paseo de la Castellan. While El Corte Inglés occupies only the ground floors of the Tower, the rest was successfully let as offices.

The El Corte Inglés retail group has been getting rid of non-core assets since 2015 by selling its commercial properties. The tower in the centre of Madrid and the land around it have long attracted investors, but so far all previous offers El Corte Inglés has received have been deemed insufficient. They have never been offered such a large amount for the assets, and it is quite possible that next year a sale will take place.

All the more so because Grupo Emperador is not new to the Spanish market. They have already bought Torre Espacio from Grupo Villar Mir at Cuatro Torres on Paseo de la Castellana in Madrid and some space at Torre Caleido and Torre Diagonal in Barcelona. They have also invested in local wineries: Fundador, Terry, Harveys, Esplendido and Tres Copas.

The property market is taking stock of the year and making predictions for the future. So far things are looking very optimistic for sellers.

According to Spain's National Institute of Statistics (Instituto Nacional de Estadística), in September they registered 53,410 property sales and purchases. This is an increase of 40.6% year-on-year and 7.1% month-on-month compared to September 2020. The figures may not say much on their own, but they are the highest number of registrations in 13 years!

Among the provinces Valencia Autonomous Community leads in terms of the number of transactions, where per 100 thousand citizens it was 190 transactions.

An interesting trend with the change in preference of buyers for new buildings: newly built account for 20,5% of all transactions, and although statistically the majority of transactions involve second-hand properties – 79,5%, demand for new buildings for the year increased by 30%.

In Spain, new buildings are now experiencing a real boom, and this is not only due to the revival of construction work after the pandemic.

Spaniards choose new buildings for a number of reasons, among which the clear advantages of this type of housing, says Maria Matos, the representative of Fotocasa. Figures for new buildings could be higher, but the supply in this market is limited.

New build properties for sale in Spain

• Calculation method

The analysis was carried out by UVE Evaluations by calculating the mortgage payment, which corresponds to a loan of 80% of the value of the offer, with a term of 24.58 years and an interest rate of 1.52%. As input data taken the average for June 2021, published by the Spanish Mortgage Association, as well as data on the properties for sale and rent from the Idealista portal.

On the basis of these data was calculated mortgage payment (1), the rent per square meter (2), and estimated what percentage represents the loan payment in relation to the lease (3). If this figure exceeds 85%, it would be a fairly reliable indicator that renting is the best option in a particular municipality.

Figures between 75% and 85% are not so clear-cut and you have to look at each case individually. But if the ratio is below 75% it will almost always be preferable to buy a property.

In 1992, the Galician village of Aceredo was deliberately flooded in order to build a dam and reservoir. It all started with an international agreement signed in 1968 between Spain and Portugal to build the Lindoso Dam. Although the dam and reservoir were great engineering achievements, the project required Spain to flood some of its land and lose it almost forever.

The process of residents relocation was not an easy one, but in 1992 they had to go. Aseredo and four nearby villages - O Bao, Buscalque, A Reloira and Lantemil - went under water. So why did Aceredo become popular among them?

The level of the reservoir varies according to the season and Aseredo, which is located on the high ground, shows up again year after year. In other villages, when the water level drops, you can only see the tops of buildings and spires of churches. But the water has completely left Aceredo for the first time in 30 years and now you can walk its streets.

Over the three decades that the village spent underwater, mud filled the houses and the metal began to rust. But when the water backed off, it turned out that many things remained intact. Car wrecks and personal belongings, though covered in mud, remained in the same places where the locals had once left them.

And even the drinking fountain still works and clean water continues to flow from it, despite the fact that there are no residents left to drink from it.

The sight looks rather frightening in the photographs. One can only imagine what it was like to see the homes of the residents of Aceredo, many of whom have moved into nearby places. Journalists filmed them strolling confusedly through the newly opened streets, walking into the empty houses and looking at what was once their all.

Indeed, it was like the return of a ghost.

In November, the Barcelona City Council used its right of first refusal and bought the residential building from the owner for 9.95 million euros to turn it into social housing.

The owners of the building were about to sell it and already received an offer. But the City Council exercised its right to withdraw the transaction.

But then Mayor Ada Colau decided to buy the building to increase the public housing stock in Barcelona.
The 3,976 square metre property, located in the Ensanche district, has 33 apartments, several commercial spaces on the ground floors, as well as an attic, lofts and storage rooms.
According to estimates by the idealista portal, it costs an average of €1,211/month to rent a flat in the area, and in this particular building it cost €368/month to rent a room according to 2014-2018 data. So it's still a question of who won in this situation: the owner, who was forced by the laws to keep the rent at the same level, or still the city, who bought a building that is far from new for that amount.
Why has the Spanish press paid so much attention to this purchase? The mayor's supporters speak of the protection of the rights of the poor, while her opponents talk about the mismanagement of the budget and the inability to manage the housing stock.

Spain is becoming the darling of international capital - financial groups and international investors have stepped up their game on the country's luxury hotel assets. This is due to recovery of demand for tourist services and kind of "low" entry prices to this market.
Experts now estimate the annual potential of deals in this segment of the market at €2 billion for 2022, and by November 2021 Colliers estimates that investments in luxury and ultra-luxurious hotels amounted to €2602 million, while by the end of the year this figure will increase due to deals in the process of enclosing.

Just a couple of examples of recent deals.
One of the biggest projects in Spain, which is now launching, will be the Four Seasons Marbella Resort, which will be the gateway to the country for Belgian property developer Immobel and American group Fort Partners. The companies are investing €740m in the development of this exclusive complex, which will include a 120-room hotel from the Canadian chain and a residential complex with 55 villas, 75 apartments and 32 townhouses and private residences.
At the end of November, Blasson Property, founded by Antonio Pan de Soraluche, Francisco Melia and Enrique Benjumea, will invest $180 million in the Punta Negra hotel in Mallorca, managed by the H10 chain. It is a 137-room boutique hotel located on the Costa de Blanes, with private access to two coves with crystal clear water.
Also under the Canadian hotel giant's logo, the future Four Seasons of Formentor hotel will open in the summer of 2023 . Behind the project is the Andorran fund Emin Capital, which on behalf of various investors, including the Rodina family fund (an investment vehicle of the Mexican Chico Hernandez family), bought the asset from Barceló a year ago for 165 million euros.

The fund plans to reform the hotel and adapt it to Four Seasons standards with an additional investment of around €70 million. "The whole process requires extensive reforms to respect and protect the environment. The estimated duration is two years, so it is expected to open in the summer of 2023," Emin Capital said.
If the hotel for hundreds of millions of euros is a bit off your budget, it is worth looking at a more realistic form of investment in the Spanish tourism industry. The aparthotels are the best choice for this matter, especially the new projects under construction.
According to a report by Fotocasa, 59% of people under the age of 35 are currently looking to rent a home, 5% more than a year ago. Meanwhile, 27% interact in the sales market, 4% less than in August 2020. Finally, 14% are involved in both.

The main reasons for choosing to rent, according to the report, are the weak economic situation (52%), the flexibility provided by renting (31%), and job mobility (30%).

Last month the General Council of Notaries (Consejo General del Notariado) published a report on the real estate market transactions of foreigners. The number of property acquisitions made by foreigners in the first half of 2021 increased by 47.0% over the same period last year. This increase took place due to the improvement in the Covid-19 situation, and the natural decrease in the number of transactions for the quarantine period. However, there is still room for growth - transactions carried out by foreigners accounted for 15.4% of total national sales, lower than the average from 2012 to 2019 (18.7%).

Where do foreigners buy property in Spain?

Sales increased in all autonomous communities, but the leaders were Asturias (83.2%), Galicia (81.8%), La Rioja (79.1%) and Castile-La Mancha (76.3%) .


Just above the national average (47%) growth was recorded in Castilla y Leon, Aragon, Cantabria, Mercia, Andalusia and Catalonia. The statistics in the number of transactions compared to last year in these regions was between 64.7% and 49.8%.


The lowest growth was seen in the Basque Country (32.2%), the Valencian Community (34.3%), Navarra (37.3%), Extremadura (38.3%) and the Canary Islands (39.0%).


It was noted that the French led in terms of the share of sales among non-resident foreigners in Castilla y Leon, Aragon, Catalonia, La Rioja, the Basque Country and Navarra.


On the other hand, Germans were the main buyers in the islands and Cantabria, while the British chose Andalusia and Murcia.


Moroccans and Romanians avoid the regions of Galicia and the islands, and places where there is a higher activity of buyers from Germany, Italy, Portugal or the UK.

Who buys Spanish property?

Moroccans (10.8% of all foreign deals), the British (9.7%) and Romanians (6.5%) are the top 3 nationalities of property buyers in Spain.

If we consider countries outside the European Union, the natives of them took 13% and the sales made by foreigners of all nationalities have increased, with the exception of the Swiss (90.2% of transactions in the past periods), Germans (75.1%) and Moroccans (74.8%).

What do foreigners prefer?

Non-residents are buying more expensive houses and flats than locals. The average cost per square meter in Spain was 1,481 euros, while foreigners were buying a property with an average price of 2,452 euros per sq m.

The highest average prices per square meter were paid by buyers from Sweden (2768 euros per square meter), Denmark (2680 euros), Germany (2676 euros), Switzerland (2464 euros), the US (2266 euros) and Norway (2223 euros).

In the next price category, with an average cost per square meter of 1,863 euros, buyers from Russia, as well as the Netherlands, France, Belgium, Italy and Ireland were the leaders.

Citizens of the United Kingdom, who are residents of Spain, paid on average 1.580 euros per square meter. Those who do not have residence in Spain, bought more expensive housing with an average price of € 2.027 per square meter.

The lowest amount was paid by Moroccans (640 euros per square meter), Romanians (967 euros) and Ecuadorians (984 euros).