What impact will the COVID-19 vaccine have on the Spanish property market?

What impact will the COVID-19 vaccine have on the Spanish property market?

The Spanish government has announced that it plans to vaccinate 70% of the population by the summer. Much depends on the availability of the vaccines and the ability of Spain’s regional governments to administer them, however. The vaccination rollout has not been the smoothest of rides so far, but there is at least a glimmer on the horizon.

Via the EU, Spain currently has signed contracts for seven different vaccines, amounting to 140 million doses. With a population of almost 47 million this means that there is enough to vaccinate the entire country. What is currently unclear are the timeframes to do this. Three vaccines – Pfizer, Moderna and AstraZeneca – have already been approved and it is hoped that during the second quarter of the year, the vaccines will arrive at greater speed. The Janssen vaccine is expected to be available then too.

After a challenging year for the property market we ask, how will the rollout of the vaccine impact the sector in the rest of 2021?

Greater confidence

The quicker the population get vaccinated, the faster the Spanish economy will recover and with it, renewed confidence in the property market, which has always been at the mercy of the mood of the nation. The IMF has predicted that Spain’s GDP will have fallen by just over 11% during 2020, but has forecasted positive growth of 5.9% to return this year. People who had been waiting for the pandemic to start subsiding will consider making moves. “The arrival of spring, combined with the rollout of the vaccine across Spain will bring back some much-needed positivity and re-assert Spanish property as an inflation-proof investment,” comments Francisco Nathurmal, founder and CEO of Bcn Advisors.

Outside space will be at a premium

Most real estate agents concur that there has been a surge in interest for homes that offer outside space, whether it be an apartment with a terrace or a house with a garden in the suburbs. Even when the vaccine has been rolled out across the whole of the country, the trend for outside space is set to continue. “We expect city dwellers looking to upsize to look for homes on the city outskirts rather than leave the city altogether,” adds Nathurmal.

A renewed interest in urban living

Although this lifestyle change means less demand for homes in the cities, a resurgence for homes in urban hubs post-Covid is expected. As increasing numbers of people are vaccinated, young professionals in particular are expected to return to the big cities such as Barcelona. “The country was a welcome escape from the pandemic for many but it can never compete with a vibrant urban hub when it comes to gastronomy, art, culture and, most importantly, work opportunities. Once the hospitality and entertainment industries can operate at a greater capacity, the appeal of larger cities will return, boosting both the buyer and rental markets once again,” says Nathurmal.

Suburbs and space will still appeal

While many will revert to buying property in the cities, others may realise just how much more you can get for your money a short drive or train journey away. Some companies may decide to keep some of their employees working from home or introduce flexible working, meaning that properties with home offices, home gyms and gardens or terraces will remain highly sought-after. There may also be interest from buyers with higher incomes who can afford a second home near the city as a refuge, should there be any future lockdowns. “People will choose to move more for lifestyle reasons due to the pandemic, a trend that I expect to see continuing for many years to come. Those who had thought of retiring in the city may well think again and join some of the upsizers in the suburbs or beyond.”

Hope for the future

Spring and summer vaccinations will bring back a sense of optimism and hope which has been lacking over the past 12 months or so. When people are feeling positive about the future, they tend to make bolder decisions such as deciding to move house. “There are still major challenges for everyone, including those of us working in the property sector. However, we are ready to take those challenges on and, overall, we feel optimistic about the year ahead,” concludes Nathurmal.