How Are You, Spain? Smart Opportunities of the Market

About the author: Andrey Karachun
Development Director
DECART PROPERTY INVESTMENTS

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Real Estate. Dumping. Offers

The most often concerns we receive from clients is the fall of prices on the Spanish realty market. But in spite of predictions, there is no decline yet. Although new project pop up with lowered costs, it is connected more to the need of fast sale due to general difficulties in the economy of the country. Owners have their own reasons for it, whether it is for saving the business or leveling the financial situation. But dumping is currently absent on the market. The price reduction is weightless for the market, within 5-15%.

Hot offers are not published online

The media nor the streets of Spanish cities have offers for urgent sale of premises with discounts. Usually hot properties are reserved by the agencies and sold in a short time among their own clients from the waiting list.

An open pharmacy and two closed commercial premises in the Eixample district of Barcelona. The reasons why a particular office did not resume work can be very different. It is clear that the business of pharmacies is not in danger, but whether the room on the right will open depends on the situation in a particular company.

The real estate market in Spain has woken up after almost two months of lethargy due to the coronavirus pandemic. There were different opinions of the market reaction to the crisis during the quarantine period, the expectancy of a fall was from 3% to 50%.

Various hypotheses appeared: that owners will seek to sell real estate to get cash; that the market recovery schedule will have a V or U shape; that real estate will turn into a safe haven asset against the background of an unstable situation on the stock exchanges, and much more. Now that the market has finally come to life, we can verify which of these forecasts came true.

Although it is too early for final conclusions, some data is already available to us. First of all, real estate prices will not change much right after the reactivation of the market. In support of this, in early May, Idealista published a report according to which real estate prices in Spain in April did not fall, but even slightly increased (0.5%) compared to March, and the average annual growth was 2.5%. Property values have risen in 52% of the provinces and 51% of municipalities. Among the provinces, the highest growth rate was observed in Barcelona (3.6%), Cuenca (2.9%) and Alicante (2.0%).

At the end of May, experts from the AIC Association (API Barcelona) reported a sharp increase in demand for properties that accumulated over two months of downtime. A record number of property views were registered, and prices remain at the same level as at the beginning of the year.

The official representative of the API Barcelona says that the market is back to work, buyers look for properties, and sellers have actively contacted agencies to put their property up for sale.

The reduction is yet to come

However, many experts are confident that individual advantageous offers will appear on the market. Potential investors are advised to keep eyes open to catch them fast. We are absolutely sure that the decline in prices is coming: too little time has passed since the economy stopped, and the real estate market has not yet had time to react. We think that similar to past crises investors will have about six months of excellent opportunities, but they will still have to fight for them.

Fernando Encinar, the Head of Research at Idealista, emphasizes that the degree of price reduction will vary depending on the type of housing and its location.

Commercial Real Estate. Lease. Purchase

There are no offers for the sale of space in the best locations. But there were ads for renting in places where there used to be a queue of tenants. But on Central streets like Paseo de Gracia, everything is still stable. We didn't see any ads. Many shops and cafes have already opened.

Property on the right is out for rent at the moment. Obviously, the owner didn't agree with the old tenant. Сlothing stores in the city center are usually small and non-branded, often complete their rentals. Even a discount is not a solution to their problems.

Owners negotiate with tenants

Owners who faced unpaid bills in March, April and May first tried to negotiate with their tenants. As a management company, we negotiate on behalf of our clients. It is in our best interest to maintain a long-term relationship. We used all possible ways to resolve this issue: we agreed on deferred payments, provided discounts for the period of quarantine and helped arrange state aid.

The rent discounts in question usually ranged from 20% to 50%. The discount amount depends on the location and the relationship with the owner. Our company, for example, received a 60% discount on renting an office located in the center of Barcelona, the initiator was the owner himself.

If the owners can't resolve the issue with the old tenant, they contact the agency to find a new one. The average time for a search and signing a contract with a new tenant takes from two weeks to one and a half months.

Closed office of the electricity supplier company. But the company  for sure will not move out of this room. For now they just work remotely.

A good time to enter the market is coming soon

We believe that the most favorable time for investing in foreign profitable real estate will come soon. This will open up opportunities that have not been available in the growing market for the past seven or eight years. But since we are dealing with a more conservative investment tool, and the real estate market is not as volatile as, for example, the stock exchange, we need to wait a little.

The response to economic events usually lasts three to six months. This is why we are preparing our clients for future transactions right now. After all, at the time when options will appear, you will have to work ahead of time: there are quite a lot of people who want to get a good asset profitably. You need to be ready to transfer funds quickly.

As for the cash, I want to clarify right away: we are not talking about cash in the mattress. This is money that professional investors have long started to withdraw from assets that have become illiquid, such as bank deposits that do not cover inflation with their rates, and "junk shares" of companies in distress. Absolutely all the clients we work with have moved from the ruble to the Euro, and some who managed to open accounts in Spanish banks have concentrated their savings there.

Do not count on total discounts in the best locations

It should be understood that in the central streets of Barcelona, which have been in demand among tenants for decades, you should not count on total discounts. 5-10%, but not more.

API experts agreed that a favorable moment for purchases is still ahead. The task is to monitor the market and track when there are offers that are profitable for our investors. These will be occasional offers and quick deals. Therefore, there is no need to hurry when choosing a property, but you need to compare the risks and make a purchase decision if you have a good property without delay. We often have a situation when the client postpones making a decision and as a result does not have time to sign the pledge agreement because the property is reserved by another buyer.

Examples of commercial real estate in Spain:

5 995 000 €

Hotel on Costa del Maresme, Spain

2732 sq.m

Spain Costa del Maresme New 3*** hotel 200m from the beach Magnificent new 3*** hotel in a tourist town just 200m from the beach. Distance: Barcelona is 43 km away, Barcelona International Airport is 55 km away, Girona Airport is 46 km away, La Roca Village shopping complex, popular among tourists, is 25 km away, near the...

INDOM

1 450 000 €

Commercial property on Costa Brava, Spain

360 sq.m

Spain Costa Brava Restaurant on the first line Sale of real estate and successful business! An operating restaurant on the first line from the seashore in a popular tourist town on the Costa Brava. The area is 260m2 + 2 terraces with sea views. Terrace area: 60m2 +40m2 Main hall with 60 seats, bar, pizza oven,...

INDOM

1 300 000 €

Shop in Barcelona, Spain

527 sq.m

The commercial premises are located in Barcelona on Diagonal Avenue.The room with an area of 527 sq. m. is divided into 3 floors. The room includes a large commercial facade.The premises have been leased to the restaurant since 2003. The rental amount is €5,600/month. Profitability - 5.4%

NF Group

503 000 €

Shop in Barcelona, Spain

122 sq.m

The commercial premises are located in one of the most popular tourist areas - Born, in the heart of Barcelona.The total area of the facility is divided into 3 rooms. All premises are currently leased, two of them with a contract until 2023, and one with a contract until 2019. Yield: €24,000/year.Profitability: 4.8%

NF Group

25 000 000 €

Hotel in Madrid, Spain

Spain Madrid 4* hotel near the airport Hotel 4**** 6 km from the center of Madrid, near Barajas International Airport and a popular venue for fairs and exhibitions. Due to this location, the hotel has a high level of occupancy. 200 rooms, a large restaurant. The hotel is managed by the owner. Price: 25 000 000€

INDOM

5 000 000 €

Shop in Roses, Spain

5800 sq.m

A new supermarket of a well-known chain is located in the city of Rosas, in the province of Girona. The sale concept involves the purchase of a 7,500 sq. m land plot, on which the network operator will build a supermarket that will comply with all the latest technologies. The building will include a commercial area, an area for employees, a...

NF Group

820 000 €

Shop in Barcelona, Spain

383 sq.m

The commercial premises are located in the center of Barcelona, in the area of the famous Sagrada Familia. The room is leased to a medical clinic. At the moment, the room is undergoing a complete overhaul, ready for December 2019. Room size: 383 sq. m.Number of floors: 3.The term of the lease agreement: 15 years (3 years of mandatory...

NF Group

1 500 000 €

Commercial property on Costa Daurada, Spain

1753 sq.m

Spain Tarragona Province Cheese factory (business and real estate) Offer for investors: quick return on investment. An operating cheese factory in a small town 65 km from Barcelona. Currently, the plant specializes in the production of goat cheeses using local traditional technologies. The plant's products include a wide range...

INDOM

750 000 €

Commercial property on Costa Brava, Spain

The current sports complex in Playa de Haro, Girona province, Catalonia. It is located in the center of Playa de haro, a popular resort town for local and foreign tourists with an above-average income. Caval Bernar/Playa Daro Beach is 700 m away. The restaurant is located inside a residential complex of 864 apartments (2,500 residents) - the...

ESTATE BARCELONA

550 000 €

Commercial property on Costa del Maresme, Spain

150 sq.m

Restaurant in the first line of the sea in the beautiful town of Santa Susanna on the Costa Maresme. The only restaurant in the area by the sea!!! The total area of the restaurant is 150 sq.m. plus a large outdoor terrace with sea views. 2 bathrooms. The facade is more than 12 meters. Range hood. Sold with equipment. Conditioner.

ESTATE BARCELONA

18 500 000 €

Commercial property on Costa Brava, Spain

8000 sq.m

5 star hotel in Lloret de Mar, 80 meters from Fenals Beach. It offers spacious suites with Bang & Olufsen speakers and a flat-screen TV, as well as a luxurious spa and an outdoor pool. The hotel's rooms feature a seating area decorated with oriental-style ornaments and a hot tub. The hotel has a gourmet restaurant and a Japanese restaurant...

ESTATE BARCELONA

1 200 000 €

Commercial property in Barcelona, Spain

133 sq.m

Commercial premises in the Ciutat Beya area of Barcelona. Corner room with large storefronts. One of the most tourist streets of the city. The total area is 133 sq.m. The first floor is 78 sq.m. plus a basement of 55 sq.m. The quota for communidad is 1080 euros per year. The property tax is 804 euros per year. The rental amount is 5000 euros per...

ESTATE BARCELONA

5 100 000 €

Commercial property on Costa Brava, Spain

6515 sq.m

3 star hotel in Empuriabrava on the Costa Brava. The total area is 6515 sq.m. The hotel has 60 rooms. The hotel is fully operational at the moment. It has a swimming pool, restaurant, recreation area and mini golf.

ESTATE BARCELONA

1 000 000 €

Commercial property in Barcelona, Spain

740 sq.m

Public parking for sale in the Sants district of Barcelona. 39 parking spaces for cars and 15 for motorcycles. It has an automatic door and is located on the minus ground floor

ESTATE BARCELONA

1 900 000 €

Hotel in Castelldefels, Spain

761 sq.m

APARTMENT HOUSE - HOTEL. The building is in excellent condition in the nearby suburb of Barcelona, Castelldefels. 300 meters to the beach! Sea view and pine grove. Near the Olympic Canal. A building with 14 apartments in the elite suburb of Barcelona, Castelldefels. The building area is 761m2, the plot area is 551m2. 14 apartments, the...

EuropaHome

1 600 000 €

Commercial property in Barcelona, Spain

347 sq.m

Commercial premises with a license 2.3.2.2, very conveniently located between the San Pau Clinic and the School. The area is surrounded by restaurants, shops, hotels, offices, clinics, institutes. There is a terrace for 3 tables and a hood. The total area of 347 sq.m.: 156 sq.m. ground floor and 191 sq.m. second floor. The tenant is a...

ESTATE BARCELONA

515 000 €

Commercial property in Pilar de la Horadada, Spain

1290 sq.m

Residence Online Viewing Remote Transaction Credit 3-6%

Storage room with air conditioning and underfloor heating in Pilar de la Horadada. It has a total area of 1311 m2, a usable area of 1290 m2. There are three toilets. The office premises are located on the second floor. Ideal for offices or any business. The facility has a beautiful view and is located in a transit area. Pilar de la Horadada is a...

EspanaTour

2 400 000 €

Commercial property in Barcelona, Spain

989 sq.m

Commercial premises in the Eixample Dreta area of Barcelona. The tenant is an important call center that serves the city of Barcelona. The specified tenant won this service in a competition. Even if after a few years he loses the competition and wins it, for example: Attention (Telefónica), you can sign a lease agreement in the same place and...

ESTATE BARCELONA

1 600 000 €

Commercial property in Barcelona, Spain

80 sq.m

Commercial premises in the Les Courts area on a famous street in Barcelona. The total area is 80 sq.m. There is a potential tenant - a bar. License C2. The contract is signed at the time of purchase and sale of the premises for a period of 10 years. The term of compulsory execution is 2 years. Fiance is 2 months old. Rental holidays are 4...

ESTATE BARCELONA

1 100 000 €

Commercial property in Zona Alta, Spain

298 sq.m 5.48% per year

Residence Credit Business on sale

Commercial real estate with a tenant - the most popular supermarket chain in Catalonia specializing in the sale of frozen products, La Sirena. La Sirena is a leading company in the frozen food sector, specializing primarily in high-quality marine products. TOTAL AREA - 298 sq.m. Ground floor - 228 sq.m. Attic space - 70 sq.m. THE PRICE...

Retail Experts Factory SL

See more 545 similar properties

Street retail is in stable demand

As usual, street retail is in stable demand in major Spanish cities. In Barcelona, this position has been trending among investors for the past three or four years, and the number of interested tenants is much higher than the number of properties being rented out.

Taking into account our recent realities, the requirements of investors for realty have changed in some way. Now many people want to buy a room in which the tenant can work during any quarantine: a grocery store, a bank, a pharmacy, or a production room that sells online.

The demand for hotels and shopping centers has significantly decreased. According to the latest CBRE data for the month of June, the percentage of decline in hotels was 68%, and in shopping centers it reached 76%.

Conclusion: the more opportunities a room has (licenses, permits, space for reconstruction), the more expensive and valuable the property is. In Barcelona, for example, at the intersection of Gran Via and Paseo de Gracia, a slender row of branded boutiques tore up a grocery store. People changed shop windows and thus handled the situation.

A store that has been converted into a grocery store on the corner of Paseo de Gracia and Gran Via in Barcelona. Even on the shopping street stores with everyday goods,or points of elite brands feel the most comfortable.

When it comes to central streets, the demand for premises still exceeds the supply. It takes from two weeks to a month and a half to find a tenant in such places.

Like any professional agency that works with investors, we always select only liquid locations for our clients. We are tied to the result, because we need to effectively manage this property after the transaction. Therefore, we recommend that owners seek help from professional market participants. This will reduce the time and eliminate or minimize the risks of lease agreements.

As before, street retail properties are in high demand in Barcelona. Confirmation of the reliability of the local rental market is the active use of Traspaso, when owners sell their tenants the right to rent. This is only possible, if demand significantly exceeds supply.

Photos provided by the author

Quoting conditions of Prian.info materials