Fashions change, and the preferences of second-home buyers in Spain are no exception. Whereas holiday-home hunters and expat retirees from the UK used to head exclusively for the Spanish Costas, growing numbers now appear to be heading for cities like Barcelona, Valencia and Palma. The era of the 'urban beach resort' is dawning, led by Barcelona.
The concept of an urban beach resort has been pioneered by Miami in the US, where the combination of great beaches and a nice climate, plus the lifestyle advantages of a decent-sized city, has proved hugely popular, drawing in buyers from Canada in the North, and Latin America in the South, plus fair numbers of buyers from the UK. Thanks to the demand, Miami bounced back quickly after the sub-prime meltdown, and the housing market is booming once again.
Where do you go in Europe if you want an urban beach resort like Miami? Barcelona has to be the obvious choice. The city has undergone a phenomenal transformation especially since the 1992 Olympics that helped put it on the map Barcelona has gone from being a bit of a shabby city that lived with its back to the sea, to a vibrant and cosmopolitan town with great beaches, where you also get shopping, culture, healthcare, schooling, and excellent transport links thrown in. Increasing numbers of Britons are asking themselves why buy a property in a sleepy coastal town that's hard to reach and dead out of season, when you can get so much more in a year-round city like Barcelona.
A big reason for Barcelona's growing popularity as a property investor's destination is the substantial plunge in house prices since Spain's property bubble burst. Asking prices fell almost 40 per cent peak-to-trough, making Barcelona much more accessible than it was, and cheap compared to many other cities around the globe. Now that the euro is falling against the pound, US dollar, and Swiss franc, property in Barcelona is getting cheaper by the day for buyers from outside the Eurozone, like the British.
Barcelona's growing charms as an urban beach resort, plus attractive house prices for a city of Barcelona's calibre, help explain why foreigners now make up 50 per cent or more of demand in some central districts, according to local agents. Fifteen years ago there were hardly any foreigners buying second homes in Barcelona. Sales figures from local estate agents suggest that the British are probably the biggest group of foreign buyers, followed by the French.
What are British buyers looking for in Barcelona? Part of Barcelona's attraction is the diversity within the city itself. Some buyers are drawn to the old world charm of the Gothic quarter, where average prices are around €4,500/sqm according to portal listings. Another area popular with British buyers is Eixample, built in the 19th century beyond the ancient city walls, and where prices now average €4,200/sqm. Finally, there's 'Twenty First Century' Barcelona, in the Diagonal Mar area down by the beach, where luxury flats in skyscrapers with dramatic sea views fetch prices around €7,500/sqm or more (a two-bedroom is currently of sale for €480,000, for example). This is where Barcelona most resembles Miami.
Foreign demand appears to be behind a recovery in transactions and prices suggesting Barcelona is going to be a relative hotspot this year, assuming we avoid external shocks like a Eurozone meltdown. Asking prices are already up eight per cent since bottoming out in the third quarter of 2013 (according to the biggest local portal), and transactions increased nine per cent in 2014 - the first rise since the crash, according to data from the National Institute of Statistics.
To the extent that local Spanish demand is recovering, it's focused on the centre of Barcelona and Madrid, where banks are most comfortable about lending, which suggests that prime Barcelona is the least risky bet in all Spain right now. Throw in supply constraints - the city is hemmed in by hills and the sea, with little new property in the pipeline and no building land to speak of - and you have the ingredients for a rising market in the coming years, even as the housing bust grinds on in many other parts of Spain.
It also helps that Barcelona is perceived as a safe city, which is a major plus as foreign investors look around this troubled world today. Barcelona is ranked number 15 in the 'Safe Cities Index 2015' published by The Economist's Intelligence Unit, ahead of cities like London and Paris. A safe city also implies lower risk for property investors. Maybe it's time for investors to surf the wave of the urban beach resort.
Barcelona-based Mark Stucklin runs the property info website www.spanishpropertyinsight.com helping house-hunters and professional investors make sense of the Spanish market. [email protected]
(This article was first published in A Place in the Sun Magazine.)