Are you looking for justifications to buy or sell real estate in Barcelona? The key information you need to be aware of before investing in this market will be covered in this article.
After a dip during the worst of the Covid-19 pandemic, Barcelona’s property market has recovered to be one of the most booming in Spain. Since 2014, both property values and rental prices in Barcelona have increased significantly. Therefore, we will explain why now is a good time to buy property in Spain (especially if you are a foreigner) and what the real estate market in Barcelona is expected to look like in 2023. This information is relevant whether you are an American or Foreign Investor looking to buy property in Spain or you are simply looking to make a real estate investment in Barcelona for business purposes.
Is it wise to make investments in Barcelona?
Real estate investments have historically been secure in Barcelona. The capital of Catalonia is no exception to the peaks and troughs that are common in real estate markets. Due to this, property investors who are looking to weather market downturns may find that their patience pays off in Barcelona a little more than in other markets.
The Catalan city also stands out for having various neighborhoods with drastically different socioeconomic statuses. To help those who live in apartments that are too small, we have made a selection of our most expensive houses in Barcelona so you can compare them and select the type of housing that best suits your needs. This is why we have published various articles in our luxury real estate agency discussing the most expensive apartments in Barcelona.
Why should you make an investment in Barcelona?
Due to the cost of living crisis in Barcelona and the war in Ukraine, the next few years will be challenging for all real estate markets. Nevertheless, investing in a market with a solid track record can still be a wise move when all factors are considered. Let’s examine eight of them.
Decent mortgage rates are still accessible
Mortgage rates today are very competitive when compared to the last 20 years or so, so locking in your rate now will ensure that you know exactly how much you will pay each month and for how long. This gives borrowers a sense of security and the ability to make future plans. Even though there is a down payment up front (typically around 20%), buying a home with a mortgage often results in lower monthly payments than renting the same property, especially if you decide to make improvements to your home over time.
According to Kevin Monger of Mortgage Direct, “While these things are difficult to predict with accuracy, our guess would be that rates will go up further during 2023, but less sharply than we saw last year.” With China’s zero-covid policy ending and economies becoming less and less dependent on Russian gas and oil, the inflation should be under control by the end of the year and growth should resume in the Eurozone after what may only be a mild recession. We can envision the ECB gradually lowering interest rates beginning in early 2024, at which point the Euribor would start to decline. Rates won’t drop to below 2% again, as they had until the second quarter of last year, but we believe they will stabilize and then begin to decline over the following few years. Obviously, there is still a great deal of uncertainty due to the ongoing war in Ukraine, but we certainly hope that things turn out this way.
Inquiries have increased 40% so far this year compared to the monthly average for Q4 2022, which is a great start to the year. We anticipate strong demand this year because interest rates are still below previous record lows, house prices are still affordable, and the Iberian peninsula continues to be a very popular place to live or own a vacation home.
Favourable rental yields
Barcelona has seen a high demand for rental housing, particularly recently with the resurgence of business travel and the influx of international students and workers (specifically, that profile of foreigners who want to live in Barcelona as expatriates), which has led to price increases in the rental market and improved profit margins for investors. According to The Living Property Telescope 2022, Barcelona is the most expensive place to rent in Spain with an average monthly rent per square meter of 21.8€. The neighborhoods with the highest rental yields, according to the valuation platform Tinsa, are Nou Barris (4,7%), Ciutat Vella (4,5%), Horta Guinardó (4,4%), Eixample(4,3%), Sant Andreu (4,1%), and San Mart (4,1%). Barcelona’s average monthly rent is about 1200 euros, but it rises sharply in prime locations and newly constructed homes. For leases that need to be renewed between April and May 2023, new legislation has barred landlords from raising existing rental rates by more than 2%.
Spain won’t experience a technical recession in 2023
The International Monetary Fund (IMF) estimates that Spain will not only be one of the few European nations to avoid a “technical recession” in 2023 (which occurs when GDP declines for two consecutive quarters), but also one of the fastest-growing economies in the Eurozone, with forecasters projecting an increase in output of 1.2% compared to 0.3% for the UK, 0.7% for France, and – 0.3% for Germany. Due to the fact that household income determines how much people can spend on real estate, this modest but significant economic growth will allow more people to purchase homes, which will lead to higher demand and prices.
Strategically advantageous setting with unmatched quality of life
Barcelona, sometimes referred to as Europe’s top “Urban Resort,” pretty much checks all the boxes in terms of geography and climate. With very little room for expansion, the Catalan capital is tucked between hills and the Mediterranean. Building upwards is difficult due to restrictions, so Barcelona real estate will always be expensive due to the lack of logistically feasible options that should appreciate in value over time. Long, warm summers and mild winters characterize its almost ideal climate, and the Pyrenees ski resorts are only a couple of hours’ drive from the city center.
Barcelona’s international airport, which is only 16 kilometers from the city center, provides inexpensive flights to all of Europe’s major cities in about three hours. Long-haul flights are also available to places like the US and Latin America. The quick AVE can get you to Madrid in under 2.5 hours and Paris in under 6 hours thanks to the effective rail system. In addition to the air-conditioned, air-conditioned metro and bus system that connects you to every part of the city, there is also the BCN Bicing initiative, which now includes electric bikes, for those who want to exercise while they travel. One of the biggest free internet networks in Europe is Barcelona WiFi.
A thriving center for Fintech and startups
Barcelona has recently emerged as a major Fintech and startup hub in Europe, offering a wide range of alluring business and investment opportunities. It is also one of the top Smart Cities in the world, utilizing technology to increase the advantages of urbanization for its citizens. With nearly 2000 new businesses currently based there, Barcelona has been producing creative startups for a number of years, from early-stage to unicorn levels. Many other now-established brands, including Glovo, Wallbox, and Typeform, have their headquarters here thanks to millions of euros in investment from venture capitalists. Even Barcelona has its own innovation district, 22@, in Poblenou. It was built on 200 hectares of reclaimed industrial land and is home to hundreds of tech and creative businesses, including Meta and Amazon.