Barcelona: investing in a city tired of tourists
Tourism generates over 14%
How do Barcelona residents feel about living in a city where visitors exceed the population fourfold? Graffiti on the streets of Barcelona say “Tourists go home!” and “Tourist, respect or die!”. In a video shot by Spanish daily newspaper El País, locals do not hesitate to voice their dissatisfaction. “We feel like outcasts in our home city”, one of them said. Other locals have taken more radical action, such as activists from the Arran youth movement, who attacked a tourist bus in Barcelona this summer.
Growing residential property prices are adding fuel to the fire. Property owners do not hesitate to raise prices as tourists are prepared to spend more than local residents do on rent. Rental rates in touristy locations have increased by almost 40% in 5 years.
Chaos in the market worsens the situation. According to El País, around 7,000 of the 16,000 flats available for rent on weekends are leased illegally via online platforms. The Barcelona City Council has imposed a €600,000 penalty on Airbnb for featuring flats without a tourist licence in its ads, and the owners of such properties will have to pay a €60,000 fine. The online platform has deleted over 1,000 listings on request of the authorities.
As of now, the city has stopped issuing rental licences, and many existing ones will not be extended (mostly for properties in the city centre). Since the introduction of a new urbanisation plan in February 2017, the city has prohibited the construction of new hotels in certain districts.
Why Barcelona is ripe
for short-term investments
With such a turbulent property market, Barcelona is ripe
Low mortgage rates
One of the main reasons behind the growth in the local market, as well as in Spain on the whole, are low interest rates. Mortgage rates in Spain are based on Euribor, the Euro Interbank Offered Rate, which has been falling since June 2014. In October 2014, it reached a negative value for the first time, falling from above 4% at the onset of the 2008 crisis.
Price growth potential
Property prices in Barcelona, have still not reached
Demand exceeding supply
Since 2012, the pace
According to CBRE, Barcelona needs 7,900 new properties annually, while fewer than 2,000 are under construction. Moreover, there is a shortage of land to build on: the city cannot expand much further as it is limited by the sea in the south, by mountains in the north and
Growing local consumption
Between 2013 and 2016, the unemployment rate in Barcelona fell from 23.7% to 14.4%. Local household spending is also 14% higher than the national average.
In light of the current situation, the best strategy for property speculators who want to invest in Barcelona is to purchase residential, office or hotel properties in poor condition, and to renovate or change its function so as to increase its value. It can then be sold at a higher price after
Rental property investments are still a good option for those who plan to relocate or send their children to study in Barcelona. By obtaining incomes in the currency of their future expenses, these investors minimise inflation risks.
Alexandra Savina, Tranio
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