Catalonia, the new El Dorado?

The property market has always been cyclical, a rollercoaster ride of ups and downs. Spain is proof positive of this. After a mad explosion of prices, the market suddenly collapsed in 2008/2009, following a crash of unprecedented intensity. The president of the Spanish subsidiary of the Coldwell Banker real estate network, François Carrière Pastor, acknowledged, ‘We’re still in the doldrums in Barcelona, but stocks have shrunk to a point where a well-placed bid is becoming less easy to find.’ The source of the business revival is the return of international demand. Northern Europeans, but also Russians, Asians and people from the Gulf States are landing in droves on Catalan soil to lay their hands on high-end properties, luxuries sold at rock-bottom prices compared to previous years.

Prices have collapsed 

In five to six years, the Spanish property market has lost 50% of its value, varying from down 35% to 75% depending on the region. The plunge has been less severe in Catalonia, but prices on the Costa Brava have still decreased by 40% and by 30 to 35%, depending on the district, in Barcelona. In the Catalan capital, sellers and buyers wage merciless battles against each other, particularly in the luxury sector, where the ‘warmongers’ are attuned to the ferocious duels in their business. Buyers stake their all and offer prices 30 to 40% less than the asking price. François Carrière Pastor laments this state of affairs: ‘The market has shrunk considerably. We can hardly hope for better than 5 to 10% of negotiations to succeed.’ At the other end of the spectrum, more fortunate owners who are not in a hurry to sell intend to keep their prices high irrespective of the cost. For an offer which cannot find a buyer, can you count on the market recovering? For the first time in a long time, the price per square metre has stabilised in Barcelona and witnessed an improvement of several cents. ‘Under pressure from foreign demand, high-end values are not going to decrease, but rather increase slowly and surely’, forecasts Jesús González Mas, director of Sotheby’s International Realty. On a broader scale, Spain has fared a little better since the end of the year. According to BNP Paribas, which is forecasting a national growth of 0.8% in 2014 and 1% in 2015, ‘the recovery is minimal, but it should last’. In spite of this, bankers are finding themselves with thousands of properties on their hands to sell. Spain’s very high unemployment rate borders on 26%. So there are still no Spanish clients in the estate agencies.

Legendary Barcelona 

Barcelona’s ‘Golden Triangle’ is in the Eixample district, around Passeig de Gràcia, the avenue which the industrial haute bourgeoisie chose as their home in the 19th century. Around twenty classified heritage buildings line the avenue, including Casa Batlló, Gaudi’s modernist masterpiece. Luxury chains and major hotels battle over the locations, much as they do on Avenue Montaigne in Paris. The old modernist architecture is the most sought after by foreigners. Their prices border on 12,000 to 13,000 euros/m2 on ‘Gràcia’ and drop to 5,000 euros/m2 in the small neighbouring streets. Three weeks ago, for example, a Singaporean bid on a three bedroom apartment near Passeig de Gràcia at 5,000 euros/m2. His aim? To get a residence permit, the coveted ‘golden visa’ which enables a family to travel within the Schengen area (see interview with Ángel Baena). As a bonus, he has the opportunity to secure a return on the purchase with short-term lets at 500 or 600 euros per night. Even in off-peak season, such an activity turns out to be profitable, at 200 euros a night. In Barcelona, the stream of tourists never ends, drawn in by the fairs, exhibitions and the lifestyle there which is impervious to the crisis. New apartments, which are also sought after but quite rare, have dropped from 10,000 - 12,000 euros/m2 to 7,000-8,000 euros/m2. Buyers can therefore treat themselves to luxury accommodation from 650,000 euros. Terraces are also highly prized, the local preference being for small balconies. Just as rare are parking spaces in the apartment complex, which are few and far between in the Catalan city. In Pedralbes, the other district in vogue, the landscapes lean towards modernity: big, beautiful parks, wide avenues, large, grand properties with impeccably tended gardens. This is where most of the players from Barça, the elite football club, live. The French lycée, international business schools and commanding views from the hills are real “plus” points. Despite an average decrease of 20%, the high-end here still sees values of five to six million euros. A 600 m2 property on a 1,300 m2 plot with five bedrooms – including a staff bedroom – is priced at 4.9 million euros. As befits a gilt-edged paradise, it also sports its own private pool.

The Russian-French ‘costa’ 

On the Costa Brava, which means ‘wild coast’, the soul of Gaudí floating in the atmosphere has long since been replaced by that of Chagall and Dali. The former lived in a house-museum in Tossa and the latter offered his wife the medieval castle of Pubol. Lloret de Mar, San Felíu de Guixols, Begur… These former fishing villages offer a welcome change of scenery for nature-deprived city-dwellers. Begur is seen as the pearl of the coast with its rocky inlets and its beach, often dubbed one of the most beautiful on the Costa Brava. The old houses have lost none of their cachet. Take this colonial mansion from historic Begur, dating from 1860 and fully restored to its original state. ‘It’s a monument, whose period frescos evoke the emigration of the Catalans to Central America,’ notes Xavier Attal, director of the agent Immo Best International. ‘I expect a couple to snap up this romantic place.’ According to Jesús González Mas, the Costa Brava is divided into two: the north with its tranquil villages loved by the French, and the south, which is more festive, and is sought after by the Russians. While the French community appreciates the white or brick Mediterranean houses, the Russians prefer the bolder contemporary properties. Being on the water front, with private access to the beach, remains a special asset. Sotheby’s International has only two for sale at the moment, at prices ranging from 7 to 8 million. Private and closed estates with 24-hour guards such as those in Sperone, in Corsica, are not common yet on the Catalan Coast, but are starting to appear, for example in Aiguablava, near Begur. Or close to Girona, in a resort dedicated to golf and developed by PGA Catalunya. The owner, Irish entrepreneur Denis O’Brien, a golf fanatic, puts plots on the market with prices starting at 365,000 euros. A luxury villa, which boasts very modern architecture, with a model house, goes for 695,000 to 2.3 million euros. The golf course is highly rated, “the best in Spain and third in Europe”, comments its developer. The course hosts the Spanish Open every year in May. The crisis has not been all bad news in Catalonia. For a start, prices have become more realistic again. The market also seems healthier, but for how much longer?