RISING OF LUXURY: KEYS TO THE PREMIUM REAL ESTATE MARKET IN SPAIN

The high-value housing market in Spain has experienced a significant increase, marking a growth of 4.2% in the last quarter of 2023. This progress is a reflection of the current dynamics of the real estate sector, demonstrating the continued appreciation in the property value. The aProperties firm, echoing recent data provided by the National Institute of Statistics (INE), evidences this upward trend, highlighting the strength and potential of the luxury real estate market.

Moderation in the price outlook

Despite the growth observed, the Spanish real estate market shows signs of moderation. The Housing Price Index (IPV) for the last quarter reveals a slight decrease of three tenths, placing growth at 4.2%. This figure, although positive, indicates a stabilization in prices, providing a more detailed view of the fluctuations and behavior of the market during this period. This adjustment could be interpreted as an opportunity for those looking to invest, offering a window for entry before possible future increases.

Differences according to the type and age of the homes

The INE report also reveals significant differences in the evolution of prices, depending on the type and age of the properties. While new homes saw a decrease in their annual rate of 3.5 points, settling at a robust 7.5%, second-hand homes saw an increase of 0.4 points, reaching 3.6%. This data suggests a growing preference for new or newly built properties, although the resale market continues to show signs of vitality and appeal to a segment of buyers.

The variability in price growth is also reflected in the different autonomous communities of Spain. With a lead in Andalusia, which saw an impressive increase of 5.3%, followed by Navarra and, in equal measure, the Canary Islands and Madrid with 4.5%, the regional panorama shows a diversity in the appreciation of properties. Although some areas grew below the national average, such as the Valencian Community and the Basque Country, the widespread increase across the country is a testament to the dynamism and resilience of the high-value housing market. This environment offers multiple opportunities for investors and buyers seeking to capitalize in different regions, adapting to market trends and demands.

Expert opinion

Ugo Bagration, Director of Business Development at Berkshire Hathaway HomeServices Marbella, believes that: “Marbella consolidates its position as a real estate benchmark, remaining competitive both nationally and internationally. It ranks ninth in Spain and sixteenth worldwide in terms of housing prices per square meter. The real estate market has experienced notable changes, marking milestones in 2022 that seem difficult to maintain in the long term. The pandemic has triggered a migration from northern to southern Europe, especially benefiting Mediterranean regions. While demand remained stable in 2023, domestic real estate transactions saw an 8% drop, with the luxury segment a key player. Marbella faces challenges marked by a shortage of inventory, especially in beach areas. Despite this, the new construction market shows promising data, with hopes of an improvement in the availability of supply. Average prices per square meter stand at €4,237, 15% more than in 2022, which highlights the city's competitiveness. The outlook for 2024 appears calm and stable, with a price adjustment in the second-hand market and a limited supply of new construction. The stabilization of construction costs and a moderate adjustment of interest rates are aspects contemplated in Marbella's real estate horizon from the second half of 2024. In the luxury market segment, buyers appreciate and demand higher quality. They are willing to pay much more for it and some developers already take it into account in their projects. Cheaper prices motivated by more affordable quality no longer serve as an attraction. Experts have agreed on the critical importance of improving infrastructure as a fundamental element to support the planned scenario. Public support in terms of connectivity, transport and services is considered essential for the sustainable and attractive development of urban areas.”

David Rosel, Commercial Director at Berkshire Hathaway HomeServices Barcelona, states that: “the real estate market in Barcelona has experienced various fluctuations since the pandemic and during 2023 we have perceived a general contraction of operations due to political and economic uncertainty.

This contraction has been more evident in mid-range properties, while the most exclusive product due to characteristics, quality of finishes, location... has practically maintained stable activity driven by both the national client and the client of foreign origin who wants to reside in Barcelona as a habitual residence or as a 2nd residence.

2024 has begun with an increase in activity in the demand of buyers for exclusive mid- and high-range products thanks to the fact that Barcelona continues to establish itself as a cosmopolitan city with a wide range of leisure, culture and gastronomy, which is accompanied by a excellent weather and architecture highly appreciated worldwide.

Given this market situation, we see how, with the help of premium property developers, the offer of exclusive products is increasing from renovations in premium areas of Barcelona and new construction promotions in uptown areas.”