TWO FACES The year 2019 had two very different faces. The first half of the year was characterised by a steady rate of sales, very similar to 2018, and prices remained largely unchanged. The market was also affected by the systematic delay in the delivery of new builds due to a lack of supplies. On top of that, a change to the Spanish Mortgage Law was introduced, which adversely affected both families and property developers. With regards to the rental sector, the first half of the year brought constant legislative changes, whether it was measures being approved, approved and then revoked, or being announced but not presented. The result of this absurdity speaks for itself: no new supply has been generated and, in some areas, prices have even increased, just when we thought that they had reached their maximum. During the second half of the year, economic and political instability had a negative impact on the market. For a couple of months, our sales suffered, of new builds ocasionally, but mostly of second hand. There was greater legal stability in the rental market, despite more changes being introduced at the end of December. Gradually, we were able to put on the market different new property rental projects by the few property developers who are beginning to invest in them. And lastly, our final observation is that, for both rental and sale, the price sensitivity of the market is very high and, in some areas, we have found that transactions have stalled because they exceeded the limit. They have not just slowed down, they have stopped completely.
MARKET REPORT
GuifrĂŠ Homedes Amat Managing Director @guifre77
2019
2
This report has been prepared with the own data of Amat Immobiliaris
RENTALS CONTRACTS AND PRICES In 2019, Amat Immobiliaris closed 10% more contracts than in the previous year. This increase is essentially due to the completion of new property projects intended for the rental market. This point is important given that supply continues to fall short of the demand, meaning that the appearance of new rentals on the market results in an increase in contracts. The new supply is concentrated in the Sant Just Desvern area, a fact which had caused an 25% increase in rentals in this area. In Barcelona, there was an increase of 19% and in Sant Cugat, a decrease of 11%. This decrease could be due to a regulation issue since the constant legislative changes with regards to rentals has, in our case, led to a drop in supply during the first half of 2019, with the resulting lost opportunities.
Number of contracts and renewals RENTALS 700 600 500 400 300 200 100 0 2014
2015
2016
2017
Renewals
2018 Contracts
2019 Total
The price range has remained high and we have even seen a slight increase in Barcelona where it was thought that they had reached their maximum. Also, this increase has been observed in all districts. The main reasons for this are a lack of supply accompanied by high demand. In addition, the new supply injected into the market by way of projects intended for the rental market have been aimed at clients with high purchasing power. Throughout the year, the demand has far exceeded supply. This has meant that prices continue to be very high, like in previous years, and there has even been an increase in places where we thought they had reached their maximum. It is true that new supply has been generated in some places, mainly aimed at the medium-high income end of the market. As a result, rental prices have remained very high, at around 1,200 euros per month or above on average. In Barcelona, the average rental price was 1,231 euros per month. To get an idea of how expensive rent has got in the city, we only have to compare this price with that of 810 euros, which was the average rental price in 2013, only six years ago.
PRICE RENT IN BARCELONA
15,52
18
12,98
16,22
16 14 12
16,30 15,21
Price RENT
13,06
15,06
MARKET REPORT
â‚Ź/m2/month
3
10
14,49
2019
2013
Amat’s turnover in the rental sector is concentrated in Sant Just, with 45% of the total. The rest is divided equally between Barcelona and Sant Cugat, with 22.5% in each city.
8 6 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sant Just
Sant Cugat
BCN
ALQUILER
In Sant Cugat, the average price of rent is 1,391 euros and in Sant Just, 1,192 euros.
% RENT contracts by price range 50
The usual price range is between 1,000-1,500 euros, which represent 46% of the deals closed. In 2013, 50% of rents were below 800 euros.
45 40 35
Average RENT price by building type
30
4.000
25
3.000
20 15
2.000 10 1.000
5
0
0 2010 2011 2012
House
Flat
2013 2014 2015 2016 2017 2018 2019
Sant Just | House
Flat
Sant Cugat | Flat
BCN
0 - 600 601 - 800 801 - 1000 1001 - 1500 1501 - 2500 2501 - > 2013
2014
2015
2016
2017
2018
2019
TYPE OF PROPERTY RENTED 63% of flats that enter the market are rented in less than two months, 28% from two to threee months and 9% in more than three months.
MARKET REPORT
Turnaround
2019
4
< 2 months
2-3 months
> 3 months
63%
28%
9%
Notably, owners who intend to rent at a price 10% above the market price are the ones who take the longest in finding a tenant. This means that trying to rent at too high a price comprimises the profitability of the property, since it will be left empty and will therefore not generate any revenue for a longer period of time. So, owners be advised, it is more profitable to rent quickly than to wait for a higher monthly income that might never arrive. The flats that are rented out for less than 1,000 euros take a maximum of one month in being rented. Therefore, they start to generate revenue almost immediately since this 30-day time period is in practice equivalent to the time it takes to prepare the property and find the next tenant.
The surface area of the properties rented out in 2019 has increased, probably because the supply of new properties that we have put onto the market consists of mainly 3- or 4-bedroom apartments. In Sant Just, the average surface area of the apartments that came on to the rental market increased by 25%. Overall, there was an increase in surface area of 10%. Today, there are still few renovations and refurbishments intended to improve sustainability and energy saving, a factor not taken into account in refurbishment projects. Neither does it figure as one of the required characteristics from a demand-side point of view and is given a lesser priority. Although one of our priorities is to opt for promoting sustainable housing, we believe that, if things donâ&#x20AC;&#x2122;t change, the constant changes to the legislative framework and the increasing pressure that owners face could become a disincentive to this type of investment. In general, people are looking for threebedroom apartments but, due to high rent prices, tenants often end up with two-bedroom apartments. The supply of small apartments is small, especially those with one bedroom. In general, there is little demand for one-bedroom apartments, which were quite common before the 2008 crisis. This type of apartments caters to
ALQUILER
a very specific clientele, very different from the standard tenant. Properties with four bedrooms or more are also difficult to rent because of the high upfront costs. Only few families or other tenants who are able to share are able to meet these costs. It is true that there is very limited supply intended for the rental market. There are still Demand according to surface area
Demand according to No. rooms
< 65m2
65-95m2
95-120m2
> 120m2
18%
28%
17%
37%
Energy rating
4,5%
very few property developers who invest in this segment of the market, although we have noticed a slight upward trend in this direction, largely due to lack of new land. In these cases, the property developments are targeted at the middle and upper end of the market. The high price of land in Barcelona means that the few developments intended for the rental market are built outside the city.
14%
6%
1 ROOM
2 ROOMS
3 ROOMS
4 ROOMS
11%
24%
43%
22%
13%
46%
6,5%
10%
AMATâ&#x20AC;&#x2122;S COMMITTMENT TO SUSTAINABILITY
Amat began to offer this information in October 2018 in the city of Barcelona. It was then extended to areas like Esplugues and Sant Just, and it will soon be available for Sant Cugat del Vallès.
An indicator of the amount of green areas surrounding homes
A display system that can be viewed on our website
Index ratings:
MARKET REPORT
In addition to working with property owners to raise their awareness of this, we also have other projects like Greendex. Although still not crucial from a sales point of view, the quality of the environment surrounding a property is becoming increasingly more important as an added value for potential buyers or tenants. Hence the increasing importance of being able to offer objective information on the environmental characteristics of different areas of the city. This is essentially what Greendex is. It shows the amount of green spaces surrounding a specific property. This index is further complemented by GreenMAP, which goes a step further in determining quality.
At the same time, work is in progress to expand the information offered in the index to include information relating to street traffic and air quality, two factors we expect to become more important. In fact, the level of traffic circulation is already seen as an important factor when choosing a property as customers associate this with noise and reduction in quality of life.
5 VERY GREEN SURROUNDING AREA
NOT GREEN SURROUNDING AREA
2019
At Amat Inmobiliaris, we have always believed and advocated that owners should constantly improve and update their properties and the buildings in which the properties are located. Today more than ever we believe that these constant improvements should be made with a view towards sustainability and greater energy efficiency.
ALQUILER
TENANT PROFILE The contracts closed in 2019 give us a profile of a relatively young tenant, since 41% are under 40, followed closely by those between the age of 41 and 50, which made up 39%. The indicators show that, as people get older, renting becomes less of an option for those searching for a new home, or not even an option at all according to the percentages shown in the graphic. Only 16% of the rental contracts closed last year were for tenants between the ages of 50 and 60, far less than the 39% belonging to the younger age group. The numbers drop even further in the next age group that comprises all persons over the age of 60, a mere 4% of the total of contracts closed.
% CONTRACTS
Tenants
41% < 40 years old
39%
16%
4%
40-50 years old 50-60 years old
> 60 years old
This data probably reflects several characteristics of our society, where older generations are mainly property owners. It also shows that there is little incentive for those aged over 60 to live in rented properties more suited to their actual needs rather than in the ones they own. But, without a stable rental market, it will be difficult for them to take this step.
PRICE INDEX At Amat, we believe the price index is a useful tool that reflects reality because it is based on deposits paid to Incasòl, the Catalan Land Institute. Therefore, it provides a real snapshot of the market, although there may be a slight discrepancy because of the time needed to update the information. In addition, the areas covered by the index were extended this year. The actual revenues received by Amatâ&#x20AC;&#x2122;s customers are in line with this index because they are located between the average price
line and the next category up; we can conclude that we get the market price. This graph shows some jumps in price which correspond, in almost every case, to the arrival of new properties on the market. It is normal that the first time they are rented, they are rented at a higher price but, the next time they are put on the market, the price will be more in line with the index.
Actual revenue Vs Index trend RENTALS 25
20
MARKET REPORT
15
2019
6
10
5
0 Linear (Actual)
Actual Low Ind. Linear (Low Ind.) Linear (Index)
Index High Ind. Linear (High Ind.)
SALE In 2019, there was a 12% fall in sales in relation to 2018, mainly in the months of October and November due to economic uncertainty and the political upheavals during these two months.
The overall sales volume fell for the first time in four years, again mainly in October and November. Turnover volume SALE (millions/€)
Number of transactions SALE 360 300 240 180 120 60 0 2012
2013
2014
2015
2016 Sant Just
2017
2018
Sant Cugat
2019
2012
2013
2014
BCN
2015 Total
2016
2017
Sant Just
2018
Sant Cugat
2019 BCN
SECOND HAND Second hand house prices remained stable in Barcelona and Sant Just, with figures between 360,000 and 430,000 euros. On the other hand, we found a notable increase in Sant Cugat, where prices have escalated from 430,000 euros in 2018 to 630,000 euros. The reason for this is that a large number of transactions carried out for a value of over one million euros are located in this area. Average price 2nd HAND SALES (thousands €)
If we look at the global picture, we can see a decrease in the number of properties sold for a value of up to 300,000 euros, while the number of those between the value of 450,000 and 600,000 and those above 900,000 euros increased. The middle-high price ranges, which disappeared during the crisis, are still scarce. In contrast, the higher end is increasing, although slowly. % transctions 2nd HAND SALES according to price range 60 50 40 30
0 0 300.001 450.001 300.000€ 450.000€ 600.000€ 2012
2013
2014
2015
2016 Sant Just
2017
2018
Sant Cugat
2019 BCN
The predominant price range is between 300,000 and 450,000 euros, the same as in the previous year, although the transactions carried out within this price range in 2019 made up 54% of the total, compared to 24% four years earlier.
2013
2014
2015
600.001 750.000€ 2016
2017
750.001 900.001 900.000€ > 2018
2019
Regarding price per square metre, we observed a decrease in Barcelona, where prices have gone from 4,400 €/m2 to 3,700 €/m2. On the other hand, the maximum price per square metre that we sold increased, which was 6,800 €/ m2 in Diagonal Mar, while in 2018, this maximum price was recorded in Pedralbes, at 6,700 €/m2.
7
2019
10
MARKET REPORT
20
VENTA
The indicators show that prices in the central districts of Barcelona have remained the same, or have even decreased in relation to the previous year, while in the more peripheral districts such as Sants-Montjuïc and Sant Andreu the average price per square metre has increased. This phenomenon is largely due to the snowball effect where price increases seen in previous years in other areas of the city have driven up prices in these areas. It is also due to the fact that new properties are being built in these neighbourhoods, with prices on the rise. In Sant Cugat, the average price per square metre has remained at 4,000 euros, with no variation. On the other hand, the maximum we sold increased from 5,600 €/m2 to 6,150 €/m2 in the centre of the city. In Sant Just, the change in the average price per
square metre was minimal, from 3,200 €/m2 in 2018 to 3,160 €/m2 in 2019, with an increase in the maximum price from 5,200 €/m2 to 5,600 €/m2. The biggest change in this sector was observed in Esplugues, where the average price per square metre increased significantly, from 2,400 €/m2 in 2018 to 3,700 €/m2 in 2019. It can be noted that this high price is due to the fact that the bulk of transactions carried out were mainly in the high-class areas of this municipality, such as the Ciudad Diagonal neighbourhood. In other areas of Baix Llobregat, prices have barely changed, which were on average 2,400 €/m2 in Sant Feliu and 3,078 €/m2 in Sant Joan Despí. It must be emphasised that price trends are very closely related to the supply placed on the market during the year and the whole market does not necessarily follow this trend.
PRICE 2ND HAND SALES IN BARCELONA €/m2
3.777
4.522
5.328
3.469
3.217 3.566 5.633
4.365
Evolution of average price 2nd HAND (thousand €) 9.000
MARKET REPORT
8.000
2019
8
7.000 6.000 5.000 4.000 3.000 2.000 1.000 0 1T
2T
3T
2013
4T
1T
2T
3T
2014
4T
1T
2T
3T
2015
4T
1T
2T
3T
2016
4T
1T
2T
3T
2017
4T
1T
2T
3T
2018 Sant Just
4T
1T
2T
3T
4T
2019 Sant Cugat
BCN
VENTA
TYPE OF PROPERTY BOUGHT 2ND HAND Demand according to surface area
Demand according to No. rooms
< 90m2
90-120m2
120-180m2
> 180m2
24%
49%
20%
7%
0%
Energy rating
4%
1 ROOM
2 ROOMS
3 ROOMS
3%
15%
59%
2%
13%
54%
4 ROOMS >4 ROOMS
19%
3%
19%
8%
BUYER PROFILE 2ND HAND
46%
36%
8%
< 40 years old
40-50 years old
50-60 years old
10% > 60 years old
Origin of the buyer ASIA
3%
3%
20%
9%
Salaried workers
Business owners
Liberal professionals
Retired
70%
Economic group
29%
35%
29%
< 40 years old
40-50 years old
50-60 years old
7% > 60 years old
Origin of the buyer
26%
35%
Salaried workers Business owners
13% Liberal professionals
16%
10%
Public officials
Retired
Financed transactions
NATIONAL
77%
100%
Buyer age
BARCELONA
20%
Financed transactions
EUROPE
Buyer age
46%
51%
Economic group
23%
23%
8%
47%
27%
26%
MARKET REPORT
NATIONAL
94%
SANT CUGAT
Economic group
9 < 40 years old
40-50 years old
50-60 years old
> 60 years old
Origin of the buyer NATIONAL
73%
Salaried workers
Investors
Financed transactions
EUROPE
AMERICA
RUSSIA
10%
10%
7%
60%
Liberal professionals
2019
SANT JUST
Buyer age
VENTA
NEW BUILDS In 2019, the new property market was identical to that in 2018 and, in fact, is what pulled the market. If the overall sales volume decreased, we can confirm that it was essentially due to the performance of second hand transactions. The performance of new builds always depends on the developments that come onto the market and, in recent years, the existing supply remained relatively stable, especially in Sant Just, L'Hospitalet and Sant Cugat. In 2018 in L'Hospitalet, the average price per square metre was 3,149 euros, while in 2019 it decreased to 3,052 €/m2. In the Maresme area, the main developments were sold in Masnou and the price went from 2,900 €/m2 to 2,953 €/m2. In Sant Just, the price went from 3,150 €/m2 in 2018 to 3,300 €/m2. The market prices are very reasonable and this is why they have stayed the same in relation to Buyer age
2018. The supply is very much determined by the purchasing power of the buyers, meaning that property developers don’t have much room for manoeuvre with regards to rising prices. Nor is there a large enough volume of foreign investors to increase the value of the property. Sales rates continued to be very high, reaching almost 10 apartments per month in Sant Just Desvern. In the rest of the areas, sales rates have remained between 3 and 4 apartments per month (3.5 in L'Hospitalet, 4 in Sant Cugat and 3 in Barcelona). Average sales in 2019 were around 7 properties per month, a figure which decreased in the months of October and November, the same as what happened with the second hand market, with 1 or 2 new properties being sold each month. However, the level of sales began to increase again in December, and the trend continued in January of this year.
Economic group
47%
29%
12%
12%
50%
27%
< 40 years old
40-50 years old
50-60 years old
> 60 years old
Salaried workers
Business owners
90%
11%
Liberal professionals
8%
Public officials
Retired
Financed transactions
Origin of the buyer NATIONAL
4%
EUROPE
AMERICA
RUSSIA
CHINA
5%
2%
2%
1%
86%
PRICE NEW BUILDS IN BARCELONA €/build m2 SANT CUGAT
4.322
MASNOU
2.593 Amat point of sale
SANT JUST
3.288
MARKET REPORT
HOSPITALET
2
1
6 8
6
2017 2016 2015 2014
3.923 3.237 2.874 2.463
7
2017 2016
4.926 5.785
8
2019 2018 2017
3.482 4.019 4.219
10
2019
3.052
2017 2016 2015 2014
6.270 5.966 6.150 4.864
2
2019
5.300
3
2019 2018
3.824 3.932
1
4
2019
6.452
5
2017 2016 2015 2014
6.173 5.479 7.044 4.174
3 5 4 7
Diagonal Mar
VENTA
TYPE OF NEW BUILD BOUGHT Demand according to surface area
Demand according to No. rooms
< 90m2
90-120m2
120-180m2
> 180m2
1 ROOM
2 ROOMS
3 ROOMS
4 ROOMS
24%
54%
21%
1%
3%
16%
64%
17%
Energy rating
38%
62%
Price of the property / Gross annual household income Source: Bank of Spain, housing market indicators
7,3 years
8 6 4 2
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
0
One fact worth noting is that the yearly gross income that families must set aside to buy a home continues to increase. The standard length of time in neighbouring European countries is around four to five years whereas here it is well over seven years. The decrease in prices seen during the years of the 2008 crisis are no longer a reality, but this has not been accompanied by any real recovery in wages. We only have to look at the developments over the last three years, in which prices have increased a lot faster than wages, which has exacerbated the problem.
AMAT LUXURY
As in 2018, plots for building new single-family homes continue to be sold. Major investments are involved because construction prices have to be added to the price of land in these custombuilt homes. This market is very active in Sant Cugat where you have areas such as Valldoreix where these types of projects are possible, and to a lesser extent in Sant Just since, due to the terrain, there is less supply.
WHAT TO EXPECT IN 2020? Before the crisis caused by the spread of COVID-19, forecasts suggested that this year would be consistent, showing characteristics very similar to the previous two years, which we can say were good years. Uncertainties
started to appear on the horizon due to the trade war between the United States and China and the fluctuations in interest rates. However, the year started off well from a commercial point of view.
But the virus has pushed the market into a black hole much deeper than might be expected. At present, it is impossible to predict whether there will be price adjustments and exactly how we are going to feel its effects.
MARKET REPORT
The profile of buyers of luxury homes mainly corresponds to local business owners, who know the area where the purchase is made. However, foreign buyers who are connected to
businesses in the area are also common in Sant Cugat. In Barcelona, buyers are mainly from other European countries. The product they are looking for are homes located in upscale residential areas of the city.
11
2019
The luxury housing market is relatively small with regards to the number of transactions, but given the high prices involved —over one million euros— it is significant. It is a stable market which doesn’t usually experience fluctuations. Amat Immobiliaris operates in the markets in Barcelona, Sant Just Desvern and the surrounding areas, and Sant Cugat de Vallès. We have extensive experience in this high-end sector both in Sant Just and Sant Cugat de Vallès.
P R O P E R S A L E S P E R S O N E S . T E C N O L Ò G I C A M E N T A V A Ç AT S
Barcelona · Via Augusta, 3 · Sant Cugat del Vallès · Av Rius i Taulet, 17 · Sant Just Desvern · Bonavista, 63
Membre de
Servei de Qualitat