The COVID-19 pandemic has affected just about every industry and aspect of our personal and professional lives. The Barcelona property market has been no exception. During 2020 the market slowed significantly. Despite the drop in sales, there is room for optimism as we enter a new era for the sector.
We take a look at how buyers’ needs will have changed, how the sector needs to adapt and what the future holds for the market. This is Barcelona in the post-Covid era.
The current state of the Barcelona property market
Barcelona’s property market is one of the most valuable in Spain. According to the Spanish Land Registry, prior to the pandemic, Barcelona Province had seen the number of transactions grow from 31,362 in 2014, when prices had bottomed out, to 43,318 in 2019, a rise of 38%. The number of sales transactions during 2020 plummeted by over 21% compared to 2019 (43.318 v 55.269) however.
Barcelona – like Spain’s coastal resorts (particularly along the Costa del Sol and Costa Blanca) – is one of the zones that relies most on foreign buyers. Properties bought by foreigners in Barcelona dropped from 9.45% in 2019 to 8.96% in 2020, with many of those buyers completing on agreed sales prior to the restrictions last March.
Areas such as Barcelona Old Town in particular have seen the number of transactions fall dramatically. According to the Generalitat de Catalunya, sales fell by 46% year-on-year in the third quarter of 2020, from 277 to 150 transactions, in this highly sought-after district among foreign buyers. Eixample saw less of a marked decrease in sales transactions but Francisco Nathurmal CEO of Bcn Advisors, believes that sales are likely to continue to decline until travel restrictions are lifted.
“In Eixample, properties with a price tag over €800,000 attract almost exclusively international buyers. Renovated apartments in classic buildings worth over a million are not really on the radar for local buyers.”
Property prices in Barcelona city have fallen in the year to the end of February 2021, by 3% to €3,983 per square metre. It is a different story in Barcelona Province, which has seen property prices rise by 1.7% to €2,723 per square metre, most likely due to city dwellers looking for more space outside the city. Barcelona city property prices are 33% higher than they were in February 2014 and are now almost on a par with prices during the peak in 2008.
What is evident is that Barcelona, like the rest of Spain, is currently a buyer’s market, presenting clear opportunities for investors. What lies ahead with regards to prices varies depending on the source – from a fall of 16% according to consulting firm Forcadell to a 1.8% rise if you ask Standard & Poor. Once international clients return, Nathurmal is optimistic that the sector will spring back to life fairly quickly.
“After a year of going nowhere and doing nothing, many households have managed to save money. With such low interest rates, it does not make sense to leave cash sitting in a bank.”
New trends in the Barcelona market
Nathurmal also expects that once the pandemic has eased, demand for homes in Barcelona with outside space, for smaller developments and for houses will continue to increase.
“Before the pandemic around 20% of buyer interest was for apartments with a terrace or for penthouses. That has now increased to 50%. Demand for villas has also increased from around 10% to 20%.”
Real estate agencies in Barcelona are also having to adapt their businesses as a result of the pandemic. Prior to COVID-19, Bcn Advisors had already been conducting viewings remotely but as most international buyers still cannot travel, they are having to find new ways of meeting a lot of pent up demand from buyers by conducting virtual tours, making property videos and making videocalls direct from the desired property.
Barcelona property market in 2021
It is difficult to predict how Barcelona’s property market will evolve during 2021 given the slowish pace of the vaccine rollout in Spain and the ongoing restrictions. The Bank of Spain has forecast that the domestic housing market will remain fragile in the short to mid-term but international investment will gain momentum.
“Our concern during 2020 was that the health crisis would dent property demand but I believe that we will look back at this period and see that the pandemic will have temporarily disrupted Barcelona property market growth rather than derailed it,” concludes Nathurmal.