Here at Tranio our mission is to provide you with all of the options to make your search for property in Barcelona run as smoothly as possible. Below you can find listings to get your search underway right now. You can find more information about why investing in property is the right choice in the articles section of our website.
1. Why Barcelona is profitable in 2017
PwC rates the Catalonian capital fifteenth in a rating of the most promising real estate destinations for investment. The rich heritage and culture of the city is not the only draw for investors looking to purchase property in Barcelona, with there being much to keep young and old entertained, and let us not forget Catalonian cuisine. Aside from these subjective reasons, Barcelona shows much promise from a perspective of profitability this year and beyond.
This can be put down to interest rates EU-wide being low, potential for price growth after the market having bottomed out, an excess of demand in relation to supply, rising numbers of tourists coming to the city and rising yields, in addition to that of rents.
The low interest rates have done Barcelona well since the region’s market is stronger than any other in Spain and many believe Catalonia to be more developed than elsewhere in the country. With the EU base rate remaining at a negative value into 2017, there has never been a more attractive time to take advantage of low mortgage rates.
Such mortgage rates in Spain are on offer for as low as 1.5% for Spanish residents and 2.5% for non-residents. This allure is compounded by loan to value being offered in sums up to 70% and 80% for residents and non-residents respectively.
The promise that price growth is showing in the city is also one that experts have sat up and taken notice of. With the average property costing more in the Catalonian capital in comparison with the remainder of the country and the prices rising faster than elsewhere, the city’s real estate market has shown more resolve in riding out the economic crisis that dogged Spain from 2008 onwards. Property prices (in terms of price per square metre) Spain-wide fell 42% between the end of 2007 and the end of 2016, whilst in Barcelona the figure stood at 37% from the end of 2007 to quarter three 2013. After the third quarter of 2013, prices in the city rose 31% before the end of 2016 and during the first quarter of 2017 they rose another 19%.
As the rest of the Spanish market is only just beginning to catch up, Barcelona is shooting ahead and showing the nation how it is done. This is not to say, however, that the potential for further price rises has already been exhausted.
Figures from the city council in Barcelona demonstrate that only one tenth of real estate transactions involve new-build properties. Not only is the volume of residential properties being sold showing a year-on-year increase — with transactions between quarter one and three of 2016 showing a 16% rise on the year before — but there has been 4% side in new-build real estate transactions. Furthermore, before 2013, the construction of properties exceeded that of off-plan purchases, however, after this period we can see a reverse of the trend. Statistics from the CBRE show that Barcelona is in need of 7,900 new properties each year, although there are fewer than 2,000 being built at this very moment.
This fact is compounded by Barcelona’s inherent lack of territory on which to build: it is restricted by densely populated areas west and east of the city, the Mediterranean Sea to its south and by mountains north of the city.
Barcelona is one of Europe’s ten most visited cities, with eight to nine million tourists coming to experience the city every year. Moreover, statistics only show a growth in this trend over the past five years. Of the visitors that come to Barcelona, one fifth come from within Spain and the remainder comprises of foreigners. Whether business or leisure, the city beholds many delight in terms of entertainment and its metro system simplifies getting around. Let us not forget, Barcelona is a seaside city and with its many beaches and warm climate, it really does have the whole package as a tourist destination: over 150 museums and a myriad sports venues.
The increases in tourists over previous years just go to show the city’s popularity is on the rise, and this is another trend that is set to continue.
The prospects for Spain’s economic growth as a whole are looking better. Trading Economics’ forecasts that the country’s GDP will continue its rise, whilst unemployment will continue its fall. This is whilst, as mentioned above, the interest rates for the country will be at low values unseen before. Multiplying these factors together gives you the perfect recipe for a boom in property in Barcelona. We will observe several trends throughout 2017 in the city’s real estate market but let’s go through some of particular note. Number one for investors will be price and rent growths in the city, with PricewaterhouseCoopers forecasting a 3.7% rise in rental rates, fostered by a 3.6% rise in property prices. Increases in both demand for properties and the yield they produce will be facilitated by the interest rates for mortgages remaining low, whilst as rents rise faster than property prices, yields will increase.
Finally, the shortage looming over the market for newly built housing will mean demand will outrun supply and this in itself means investors will look to ad-value projects to boost returns.
2. Added value projects
The historically low rate of economic growth in Spain bottomed out at -3.57% in 2009, but from 2012 onwards the economy has been on the up and up, with gross domestic product reaching 3.2% in 2016. Even though it occupies very little territory, Catalonia accounts for one fifth of all of Spain’s economy and, as such, its economic make-up differs massively from that of the rest of the country. This is demonstrated by the difference in unemployment figures between Catalonia and the remainder of the country sitting at 3.7%. However, with Spanish unemployment figures still frighteningly high, it may be difficult to remain optimistic about future Spanish economic growth. That is even without mentioning the massive wage disparity between Spanish nationals and their European counterparts; an average wage gap that still lags 86% behind that of Germany and almost 50% behind the French. However, such gaps mean that property prices remain low in Spain and here at Tranio we believe that now is the time to invest in a city with international significance: Barcelona.
We recommend investing in added value projects to boost returns from short-term investments. Added value (or ad-value, for short) entails purchasing a property and renovating it, or purchasing a property in a market that is set for growth, wait for the growth to occur over the short-term and sell to make a handsome profit. Barcelona is a perfect investment destination for both aspects of ad-value and this means that investors are able to receive 12-20% returns on their investment, as opposed to a maximum yield of 5-7% when renting out properties.
However, that is not to say that more returns don’t come with more risks for the investor when compared with buying properties to rent. Such risks can include the property price falling following the purchase due to both market and non-market factors.
However, Tranio has identified a number of reasons why real estate prices are set to only increase over the forthcoming years. These factors which will boost prices in the Catalonian capital’s housing market are:
- interest rates for mortgages remaining low;
- decent potential for price increases;
- rent and yield growth;
- demand for housing and purchasing property outstripping that of supply;
- the rise in the number of inhabitants living in the city,
- increased consumption from the city’s population;
- an increase in the amount of tourists coming to visit the city.
The low interest rates have facilitated growth throughout Spain, but such growth as a result of interest rates is most visible when we look at Barcelona. As Spain is a Eurozone country, the interest rates set for the country’s banks are based on the Euribor, which is offered as an interbank rate. The rates that Euribor has been offering began their fall in 2008 and they have, on the whole, continued this fall up to this very moment in time. Back in 2008 at the onset of the worldwide financial crisis, the rate on offer was 4.2%. However, since 2015, this rate has been negative; negative interest rates look to foster spending since it makes it unprofitable to place money in banks (you lose money by doing so).
The Euribor now sits at its lowest value: -0.37%. Such low interest rates mean that Spaniards are looking to put their money elsewhere, and where better than real estate?
This is sure to boost demand as the Spanish economy begins its revival, and nowhere else will prices increase faster than in Barcelona.
By the first quarter of 2017, prices for real estate (in terms of price per square metre) in Spain had fallen 42% when compared with their peak a decade earlier. Since 2015, however, prices within the country have risen by close to three per cent. Let’s compare this Barcelona, whose prices fell 37% between the peak in 2007 and their bottom in quarter three of 2013. Since 2013 the average price per square metre of real estate in the Catalonian capital has jumped 39%, to €4,123 in early 2017. This makes the average price per metre in Barcelona 2.5 times more expensive than the Spanish average in 2017. Moreover, prices for property are rising six times faster than that of the national average, with still more room for increases.
The monthly price of a square metre of Barcelona real estate stood at almost 18 euros at the end of 2016: 19% higher than pre-crisis levels (before 2008) and 57% higher than the bottom that was hit in 2013. Just to illustrate this point further, from the end of 2015 to a year later, prices in the Catalonian capital rose 14%, with rates for rent increasing by 17%.
Since rents are rising faster than property prices, the trend for yields from rent over the long term can only be one on the rise. If again we look back and compare the pre-crisis figures of 2017 with today, we see that average yields per year from properties back then were 3.9%, whereas in 2016 they had already hit 5.5%.
After a fall in inhabitants between 2012 and 2014, Barcelona’s population has been increasing over the past few years by 0.4%, with the number hitting slightly over 1.6 million in 2016. This is in stark contrast to the population of Spain which has stopped its growth since 2012. This indicates that Spanish nationals, in addition to foreign citizens are coming to the city.
Furthermore, personal consumption has been increasing in the Catalonian capital over the previous few years: the growth in consumption amounts to 5.4%, with it spending being 14% more than the average throughout Spain.
However, it should be noted that spending, nor the population or the unemployment rate has returned to previous levels when the Spanish economy as a whole was looking healthier.
Tourists are also heading to the city in increasing numbers, statistics show. The city’s status affords it a place in the top ten tourist destinations in Europe, with around eight to nine million tourists visiting per year. This number is already rising on account of the wealth of things to see and do in Barcelona. The amount of museums in the city exceeds 50, whilst the Catalonian capital has over twenty Michelin star restaurants and almost 30 beaches certified to the Blue Flag standard.
As for the development prospects for the city’s real estate market, based on research that Tranio has completed, we envisage the following trends throughout 2017:
- there will be a growth in rates for rent and in property prices for residential housing: such a statement is grounded upon forecasts from the worldwide audit company, Pricewaterhouse Coopers, which asserts in its forecast that property prices in residential buildings are set to appreciate by 3.6%, with rental rates heading upwards by 3.7%;
- in light of the previous point showing that rent will outpace property prices, we can assert that yields will also see an increase;
- there is set to be a shortage of housing since increases in demand are not being matched by the supply of new-build housing and this is likely to result in investors shifting their interest over to add-value projects.
Investment in real estate that will then be let out is a great investment for those envisaging sending their children to study in Barcelona, or for those looking to relocate there in the future. Such a strategy will pay dividends at a later stage since rental income in the local currency will offer a reserve of local currency which will in turn offset inflation risks.
As for Districts in the city, we here at Tranio recommend considering properties in the lesser-known regions of Barelona, such as L’Hospitalet and Badalona. Here you can find properties that are more affordable and under market value, whilst the city’s transport system will ensure a speedy route to wherever you need to get to from these areas.
Barcelona is split into ten different districts which can be categorised as follows: business, residential, seaside, luxury and tourist areas. The ten districts from north to south are:
- Horta Guinard
- Sarria-Sant Gervasi
- Nou Barris
- Les Corts
- Sant Andreu
- Sants Montjuic
- Sant Marti
- Ciutat Vella (the old town)
Horta Guinard is situated in the north west of Barcelona and is seen as a great district for families. Since there are relatively few sights in this area, the amount of tourists around is quite low, meaning tranquillity and less petty crime in the area. Thanks to Horta Guinard having 3 parks in its territory, the area is seen as one of the greenest in the Catalonian capital. The hilly nature of the area makes the views of the lower-lying city impressive and complements the area’s tranquil nature. The make up of Horta Guinard’s inhabitants consists mostly of families with young children and the are is also popular with the retired. The average quare metre price of real estate in the area is around 2,500 EUR.
Sarria-Sant Gervasi is the A-list area of Barcelona, with foreign millionaires, footballers and celebs owning properties here. As such, the majority of properties in this area are large and encompass spaces of over 500 square metres. Prices per square metre vary from 5,000-8,000 EUR per metre squared, but new-build apartments here come with terraces, in addition to parking underneath the building for two vehicles. The highest peak of the mountain range to the north of Barcelona can be found in this district, and from here there are jaw-dropping views of Barcelona. No wonder why the affluent prefer this region.
Nou Barris and Sant Andreu are the cheapest areas in Barcelona for property, with square metre prices averaging between 1,500 EUR and 2,000 EUR. However, there is a reason for the lower price. The infrastructure in these areas is way behind that of other areas of the city, with the poor transport links practically separating the area from the remainder of the city. However, the city authorities have been trying to do more for these two areas in recent years. With regard to real estate, they have implemented regeneration projects in several districts of the areas to make them more attractive.
As for development in the area, there is a chaotic mixture of high-rise buildings and their opposites, in addition to vacant land left completely abandoned. However, it is possible to find cottages with their own gardens to the south of Nou Barris. As for Sant Andreu, the throwbacks of its industrial past still loom large, with there being very little green areas, and where there are you will find it difficult to come across a reasonably priced property.
Les Corts is the home of the Camp Nou — the stadium for Football Club Barcelona — and is split into three different areas: La Maternitat y Sant Ramon, Les Corts and Pedralbes. With the football stadium located in La Maternitat y Sant Ramon, it makes it a promising place for real estate investors looking to buy to let over the short term, whilst the student population in the area means that you can also find long term tenants here too. Les Corts houses few foreigners, with the Spanish population in this area totalling 90%. The area is dense with wide roads and streets, bars and cafes; so it does not come across as a residential area. Pedralbes on the other hand, houses some of the most expensive property in Barcelona. In this area you can find larger houses with plots of land and swimming pools. As such, a square metre of floor space can set investors back from anywhere between 4,000 EUR — 9,000 EUR per square meter, depending on the level of luxury the property offers.
Gracia is seen as one of the best locations to live in Barcelona and, as such, homes here sell quickly, with demand outpacing supply of new homes. Gracia’s proximity to the city centre also makes it an attractive location since it is just 10 minutes away by public transport. The district is a bohemian one, with many events taking place. However, the area is not packed out with tourists, despite Gaudi’s Parc Guell being located here. Apartments in buildings that have been renovated in Gracia are hard to come across, but if you are in luck you can find homes with square metre prices of around 5,000 EUR.
Eixample is Barcelona’s largest district and so here the prices vary from 2,500 EUR — 10,000 per square metre. As the district is a densely populated one, there is a plethora of entertainment and retail outlets, in addition to tourist sights and schools. However, the area does lack green areas and parks. The older buildings in the area have high-roof ceilings but the lay-out of the apartments can sometimes leave much to be desired. La Sagrada Familia can be found in Eixample which makes it a big draw for short term rental prospects, in addition to La Rambla and other tourist areas.
Sants-Montjuic is situated on the seaside and houses the largest port in the Mediterranean Sea. Properties here offer panoramic views of the city and sea, in addition to the having museums and tourist sights in walking distance. The areas well-connected transport links also make this district very appealing, but the run-down appearance of many of the residential buildings leaves much to be desired. The city authorities have also expressed no desire to rejuvenate the area. Furthermore, this area is seen as quite dangerous due to its proximity to the port and streets that have been taken over by migrant populations.
Sant Marti’s proximity to the sea makes it a big draw, and the fact that the area housed the Olympic Village in 1992 means that the neighbourhood has undergone redevelopment and there is much to keep a person busy here. Although not brand new, the buildings here offer all the comforts that could be desired of a property, and with an average price of 3,500 EUR per square metre, the area is reasonably priced.
The area of Cuitat Vella (old town) encompasses the majority of Barcelona’s tourist attractions, and this doesn’t make the area an ideal place to live. However, for buy to let purposes aimed at the constant influx of tourists, the area is ideal since the average price per square metre is 3,400 EUR making finding a bargain possible. However, we should note here that spacious flats in buildings that have been renovated come with price tags that are much higher than the average.
4. Student property market
The popularity of studying in Barcelona has been rising over the past few years, with the city coming in sixth in a QS rating of the top ten European cities to receive an education. This fact has led to an influx of foreign and Spanish students into the city as they seek to broaden their minds, not just with education, but also with culture and a new way of living.
This influx of students has, in turn, led to a rise in demand for property within Barcelona and supply has not been risen to meet this demand. Investors with children are not the only ones looking to exploit the city’s potential in terms of education, but there are investors who see the city as prime for investment in student housing.
From 2010 to 2015, the student population of Barcelona shrank by around 10%, in line with a trend that was observed throughout Spain. Many put this fall down to Barcelona’s population as a whole shrinking by 1% over the same period, to young Spaniards (aged 18–34) fleeing the country on account of high youth unemployment, and to the population in Europe ageing as a whole, with the young people as a percentage of Europe’s population falling from 28% in the year 2000, to 20% in 2014. In general, we can say that the youth population left Spain and Barcelona to find work elsewhere in more prosperous regions of Europe.
However, over the same period, the number of students from abroad coming to Spain increased by over two-fold over a decade (between 2005 and 2015), whereas for Catalonia this increase was even more than the nationwide average. Although foreign students only make up less than 5% of the population in Barcelona (a meagre 8,000 in a city of over 1.6 million as of 2016). This is much lower than international student populations in some of the Netherland’s, Germany’s, the UK’s and France’s biggest cities where the share can be as high as 20%. That is not to say, though, that such a small number of international students has not had its effect on the property market in Barcelona, with approximately one quarter of Barcelona’s 33,000 students applying to live in student halls of residence.
Although forecasts show that the native Spanish student population is to dwindle due to a multitude of socio-economic changes, the inflow of international students is set to rise, in part, down to the government initiative to “internationalise” Spanish universities, by attracting students from all over the world.
To facilitate such an internationalisation, the government has introduced a scheme which eases the visa regime for non-European Union students, in addition to introducing courses in English or making courses bilingual. The government’s target for this “bilingualisation” is to increase the amount of such courses from 20% to 100% throughout many different universities.
Another draw of Barcelona in comparison to other education destinations throughout Europe is the affordability of the programs on offer. Studying in the Catalonian capital is 20% less expensive than in the Spanish capital of Madrid, whilst it is on average 20-30% less expensive than in Paris or Amsterdam and two or three times cheaper than studying in cities in the UK. A decline in the rate of unemployment and the revival of the Spanish economy will make studying in Barcelona an education destination for many parents to send their children, and for the would-be students themselves.
QS reports that average fees for tuition that an international student from outside the European Union must pay amounts to around 2,350 euros per year and the fees in question depend on the university and the subject to be studied.
As for student accommodation, we can only say that there is a dearth of such. With most students aiming to live in halls of residence in Barcelona, a capacity of 11,000 places does not meet the above stated student population of 33,000. Another thing to be noted is that 85% of the places are for dormitory rooms and, with a tendency for students desiring more of a private life nowadays, there is a massive lack of private rooms in such residences.
Average prices stand at around 600 euros per month but depend on several factors. These include:
- the type of dormitory, with public being around a quarter cheaper than private dorms;
- the amount of students per room — single for one person are around 20% more expensive than sharing with another student;
- the specific policy of dormitories also affect prices — some dorms apply curfews;
- the rental term (short or long) affects the price by as much as 20%;
- if cleaning or meals are provided then prices rise.
As noted above, the amount of students in Barcelona stands at around 33,000, yet there is space only for 11,000 in student halls. Many students prefer to avoid renting from private landlords due to the additional costs — not to mention hassles — that this entails. As such, the lack of supply of student residential accommodation makes an attractive proposition for property developers and investors looking to increase their capital.
5. What is bringing students to Barcelona?
There are twelve universities in Catalonia and they can be divided into private (four), public (seven) and a university which has the status of both private and public. Around 233,000 students enrol at Catalonian universities, of which around one-tenth come from outside the autonomous region.
With over 500 different university programs to consider and the languages of which include Spanish, Catalan and even English in some institutions, Barcelona is a big draw for students inside and outside of Spain. To elucidate this point: the University of Barcelona offers two of its seventy three programs in English, whereas at Pompeu Fabra University offers as many courses in Spanish as it does in English. As you can see, what’s on offer varies widely.
However, for non-Catalan and non-Spanish speakers, universities such as the University of Barcelona offer courses in these languages over the summer to prepare students before the semester begins.
In a 2016 ranking of new institutes (i.e. those founded within the past 50 years ago) from around the world by the Times, Spain ranked fourth, with four of the universities ranked situated in Catalonia. Moreover, in the U-Ranking rating of universities of Spain, many of Catalonia’s universities make the top five across different categories, demonstrating Barcelona’s leading position as an educational destination.
As concerns tuition fees, for public universities — they are set by the governmental authorities in Catalonia; whereas private institutions set their own fees. As such, each year the state updates the amount required to pay and these amounts vary depending on the program and students (master’s, PhD, etc.).
EU nationals would on average be expected to pay around 2,500 euros per annum to study in Catalonia, whilst non-EU nationals will have to pay around three times this amount. As an example, non-European Union residents are required to pay somewhere between 7,000 and 10,000 euros per year to study at Pompeu Fabra University, depending on the level and the course.
For international applicants to enter Catalonian universities, they will need to prepare all of the requisite documents in a timely manner, with deadlines well in advance of the course start date. Certificates of education must have an apostille on them (a stamp from the government to verify the legality of the documents) and they must be then translated (along with the apostille) into Spanish to be verified by the country’s education ministry. Along with the translations, the original certificates and transcripts must be provided. Application forms in and copies of identity documents must also be submitted with their notarised translations. In some cases, a letter of motivation must also be submitted along with the application, in addition to a certificate stating the candidates proficiency in the language that is to be used on the course.
An entrance exam is also part of the requirements and this test is conducted in either Catalan or Spanish. The exam puts candidates’ language proficiency to the test, in addition to questions regarding the subject matter of the course applied for and a general aptitude test.
Barcelona is one of the most attractive cities in Europe for students based on price versus affordability and a QS ranking for the best student cities around the world demonstrates this fact. In comparison with London or Paris, Barcelona works out much cheaper in terms of rent, food, transport and other daily purchases. Rent, for example, for a one-bedroom flat in a good neighbourhood of Barcelona is around 600 euros per month, whilst a two-bedroomed apartment will see the price being closer to 1,200 euros per month.
Moreover, some institutions offer fully catered halls of residence, but it would be better to enquire about their availability in advance as the demand for such services often outstrips supply.
Lastly, one should bear in mind that a monthly budget, excluding rent, to live an average student life in Barcelona is around 1,100 euros per month. This amount would allow the student to eat well and pay for travel expenses, whilst not missing out on some of the exciting entertainment culture that the Catalonian capital has to offer.