Constanza Maya is a Head of Operations and Expansion of ENGEL & VÖLKERS España-Portugal-Andorra real estate agency. Her mission is to coordinate and standardize processes, methodology and all kinds of operations between the company business units, inside them, and also with franchises. She is responsible for improving company results and services as well as leading the search and incorporation of new franchisees. She spoke about the features of the real estate markets in Spain, Andorra and Portugal and shared her opinion which cities are optimal for investments.
What were the price dynamics on the Spanish real estate market in the last 10 years?
The real estate crisis lasted between 2008 and 2013. In that period, according to the INE, the price of housing decreased by 34%.
In 2014, while the economy recovered, so did the residential market. Between that date and the end of 2018, the price increase was 26.6%. In December 2018, the price of housing remained below the bar from the end of 2007, specifically, by 16.4%.
How much is 1 square meter of housing in Madrid and Barcelona? What about other big cities and resorts?
It depends a lot on each city and each district within it. In Madrid or Barcelona, you can find properties for up to € 10.000 per square meter, but it’s not common.
The average price in Madrid is € 3.000 per m2 and in Barcelona € 3.300.
San Sebastián has average prices of € 3.400 m2, making it one of the most expensive cities in Spain.
Palma de Mallorca, Marbella and Bilbao are other expensive cities that have seen their prices rise. Costa Blanca is also highly demanded.
Málaga and Sevilla are increasing their average prices and are starting to see a rise in demand.
What could you say about the maximum and minimum prices in the Spanish residential real estate market? What were the most expensive properties sold in 2019 so far?
The most expensive properties sold, so far this year, have been in Mallorca for more than 25 million euros. On the peninsula, the most expensive sale was for about 10 million, in Madrid. However, we can sell 4 to 5 properties like this a year, no more.
Regarding the lowest prices, I am afraid that we do not trade that kind of properties so I cannot answer accurately.
Which cities in Spain show the maximum return on investments?
Madrid and Barcelona have always been the best options for the short, medium and long term. Although in the last 3 years, Valencia and Málaga have also become very interesting options.
Can you please give us examples of the largest property investment projects in the Spanish real estate market in 2019? Who are the investors?
Large investment projects are those that involve large investment firms. The most relevant operation in 2019 has been the acquisition by the Marme fund in the city of Santander in Boadilla. More than 200 hectares and 400.000 m2 construction, including 5.000 parking spaces and 2 golf courses. An operation worth more than 3,200 million euros.
Another example is the acquisition of the Castellana 200, building with a surface area of more than 20.000 m2, sold by the Silvercode Socimi and acquired by Allianz RE for 250 million euros.
What are the largest plots of land for sale? What are the prices? Do you have any examples of recent transactions that have been made?
The prices of the plots vary a lot depending on the location and of course, depending on the sale price of the final product, the price of the land must not exceed 25% of the sale price of the final product, in order to make the eventual real estate development viable. In the case of urbanized land in the first belt of large cities, prices do not exceed € 400 / m2.
On the other hand, in the centre of large capitals, the prices of the land or buildings in need of a whole rehabilitation can be between € 2.000 and 3.000 / m2. The most important land sale operation in Spain, during this year, is the sale of 270 residential lands by Blackstone.
They add up to more than 2 million square meters, distributed across the country, mostly in Galicia, Levante, Costa del Sol, and the Canary Islands.
Another major investment operation is being carried out by Kronos, selling lands throughout Spain, for more than 250 million euros.
The citizens of what countries are the main investors into the Spanish real estate market?
British, French, Germans, Belgian, Arabs, etc.
What markets do you recommend to invest in? Commercial or residential real estate? And were?
The recommendation is to invest, either in residential homes in the centre of large cities such as Barcelona, Madrid and Valencia or in newly built offices and surfaces of more than 500 m2 in modern business centres, sometimes located in specific districts of the city, such as district [email protected] in Barcelona.
The best investments are logistics warehouses around the big cities and the coworking spaces in their centre. Both get a return on rent that exceeds that of the residential homes by at least two points and in both cases, it is quite easy to get stable tenants.
What do you think about Andorra real estate market? What are the features of the Andorran market, since it’s a small country compared with the rest of Europe. What are the advantages and disadvantages of investments into Andorran market compared with Spanish?
It is a modern market which is in a constant growth state.
Currently, in the business centres of Andorra la Vella and Escaldes there are 15-20 newly built blocks of flats for sale. The experts are waiting to see how will the market absorb this offer.
The characteristics of the Andorran real estate market: local customer, a foreign investor seeking tax residence and second residence clients (ski, nature, etc.). Typology of housing demand: 150 m2, 3 bedrooms, 2 parking spaces, views, tranquility…
Andorra is the second safest country in the world and one of the safest in Europe. 80% of the territory is a natural park.
As for climate: 300 sunny days per year…
What are the peculiarities of the Portuguese real estate market? What can you say about dynamics of the prices in the last 5 years. What are the best cities for investments.
It is a market that has seen exponential growth since 2014. Government policies with incentives, mainly fiscal ones, had a positive influence.
The strong investment in the country is noticeable, but mainly by French, Belgian and English clients. Also many African investors from former Portuguese colonies and of course, Brazilians.
The new construction or major building reforms, maintaining the facades, have been numerous and important.
At the moment the exit prices have increased excessively and it seems that they are stabilizing. However, price rises and continued sales are expected. Lisbon might be better compared to cities such as Porto, Braga or Leiria.
What is the likelihood of property prices increase in Spain?
It is very likely as we do not detect the possibility of a real estate recession. In the first place, the Spanish economy is growing, less than it did but GDP continues to rise. Second, the interest rate by ECB reference is at 0% and, most likely, until the first semester of 2023 it will be equal or less than 2%.
Therefore, sales will be stimulated by extraordinary, historically low-interest rates. Finally, there is no excess supply of new homes, rather shortages. In 2020, at most the number of finished homes will be 95,000. A much lower number than the potential demand.
The question about loans for real estate in Spain: what are the conditions for non-residents and residents? What are the conditions for mortgages? How many mortgage deals have gone through your agency (as a percentage of all deals)?
The banks have excess liquidity. Therefore, they are very eager to increase the mortgage portfolio. However, only if the applicant is solvent and can cope with the mortgage repayment.
Residents can easily obtain a loan for up to 80% of the property price. It is the so-called “standard loan”. However, if the client has a great relationship with the financial institution or if the bank wants to greatly increase the number of mortgages, the amount financed may exceed 80% and reach even 100%. In the latter case, the appraisal of the house must be significantly higher than its price.
In variable loans, the best conditions are equivalent to Euribor + 0,89%. In those of a fixed nature, at 30 years it is even possible to get a fixed rate of 1,10%. However, normally the rate is between 1,5% and 2%.
For non-residents, the conditions offered by banks are very different. There are some banks who are not willing to finance the purchase of a home. Others only finance 50% and the most daring 80%.
Which markets do you recommend to invest in – Spanish, Portuguese or Andorran?
It depends on the type of investment you are considering. If you want to invest for retirement, the most common option is the Mediterranean coast. It will vary according to nationalities and cultural interests. You can go from the Catalan Costa Brava, through Costa Blanca, to Costa del Sol. It may even be in the Portuguese Algarve.
In the case of large cities, the route of obtaining great yields is smaller but safer. It is also easier to obtain a return on rent.
For those who want a riskier but more profitable investment, I would bet on smaller cities where more travel and growth are expected, such as Zaragoza or Cadiz.