Real estate

Rising luxury property

While Spain is trying to survive a big financial crisis caused in large part by real estate, the luxury property market has increased in recent years. The country has become a source of attraction for a lot of foreigners who want to buy or rent luxurious houses. Specifically, Barcelona is an attractive city because of the good weather and the optimum safe conditions, as Guillermo Salvat, a BCN Premium’s partner, explained in an interview for Economia Ciutadana. Moreover, the capital of Catalonia has one of the most wanted things for tourists and foreigners: the sea. That is why people choose Barcelona to settle in. Between Madrid and Barcelona, Salvat said that most of the incomers prefer the second one.

Miguel Ángel Solá, Luxury Dreams Group’s manager, notes that there are two exclusive zones in Barcelona. Pedralbes is the luxury neighbourhood par excellence. But it is only a residential zone, so some people look for a district with more services. L’Eixample and Passeig de Gràcia offer many business and accommodations that suit their needs. Solá also underlines the substantial relevance of schools and sports clubs: “Some foreign families choose their children’s school first and look for a house later and others come to Barcelona to play tennis”.

BCN Premium and Luxury Properties are examples of how the luxury sector is more alive than ever. Both companies are established in Barcelona and try to captivate rich foreigners who want to either rent or buy a house. In the words of Salvat, the main task of BCN Premium is “the purchase and rental of luxurious houses in Barcelona, Costa Brava, Mallorca, Ibiza and other Spanish cities”. His enterprise also provides any service related such as assistance in documentation processing or legal management for the purchase or sale. As regards Luxury Properties, it is a third of Luxury Dreams Group which is responsible for high standing houses. Solá points out that all the lofts, apartments, flats, buildings and mansions sold enhance “for its quality, design, historical particularities and privileged surroundings”.

Russia and Saudi Arabia, the new black

Rich property buyers coming to Barcelona nowadays are mainly from Russia and Saudi Arabia. Foreign consumers represent up to 80 per cent of total investors and over 70 per cent of them are Russian. “They used to come from European countries such as United Kingdom, France or Holland, but the global financial crisis has affected them as well”, says Salvat. In fact, the very rich from Northern and Central Europe goes to luxurious resorts in Switzerland, the Côete Bleue in France and selected Italian coastal zones. Miren Etxezarreta, Professor emerita of Applied Economics at Universitat Autònoma de Barcelona (UAB), also identifies the arrival of Chinese consumers. Nevertheless, Solá insists “there is much talk about a Chinese demand, but I think Chinese customers go shopping rather than buy a house in Barcelona to live in”.

Furthermore, the major difference between the European and the Russian clientele is that whereas the former usually rents a house for a certain period of time, the latter wants to buy. “We cannot forget local clients”, adverts Salvat. In fact, even though Spanish clients do not buy high-profile houses, they are the owners of properties foreign consumers buy or rent. Be that as it may, Solá determines the reason why buyers from outside Catalonia choose Barcelona: “El Prat Airport’s new terminal was inaugurated in 2009 and it has connected the city with the rest of the world since then. It is easier for rich people to come and establish their residence here”.

In regards to real estate, “Russian clients obviously come here because they have the money, they don’t have to get a mortgage and they can make offers to which owners listen”, affirms Solá. Etxezarreta expresses herself in the same vein: “I guess, unlike other countries, Spanish authorities do not require much from them”. On the other hand, Salvat believes foreign consumers have difficulties when buying a house here because financial institutions put up all types of barriers. Stipulated by Entrepreneurs Law, Spanish government, though, will give residence permits to foreign citizens who buy either a €500,000 house or national bonds estimated at a minimum of €2 million.

Price and must-have features

As mentioned, Passeig de Gràcia, which is the main artery for luxury consumers, and L’Eixample are two of the most demanded areas for purchasing luxurious houses, lofts and apartments. Consequently, luxury businesses are concerned about decorating properties accurately because, as Salvat states, “Russian and Arabian buyers are extremely impeccable and refined”. “It is essential to show properties to the liking of foreigners” and according to their fancy, Salvat details while “Russian people are enthralled with high ceilings and need the property to have soul itself”, the Arabian prefer “sophisticated decor and striking furniture because they want the house to have a strong personality”. Anyway, Solá points out “a turnaround is arising, especially in Russian clients, who are younger each time and look for more fashionable and modern properties than they used to, a trend that responds to their europeanization”.

Therefore, how much are they willing to pay? Houses sold to Russian and Arabian come up to cost, at least, €2 or €3 million, not less. Indeed, Salvat highlights the price is not a worrying issue: “Paying one more euro for coffee is not a problem for us so if they really like the property, they do not mind paying one more million and a half or two to buy it”. Russian and Arabian have an extremely high purchasing power, unlike the European luxury clients, who are now renting properties, or Spanish past buyers, who are wise according to their country delicate economic situation.

Barcelona, not the next most luxurious city in the world

“London is the smartest and most luxurious city in the world” as Salvat affirms. But, he feels it is reasonable to analyze how “Barcelona is becoming fashionable because of the city’s high life quality”. Although Barcelona is far from getting the status of cities such as Paris or Milan, “its reputation is growing because luxury clients move away from stress and so, they love the sea, the climate and the quietness”, Salvat specifies. However, “Barcelona should not become a luxury capital because it would lose its appeal”, he adds. If this happens, luxury services will turn out to be more expensive and it will involve losing the balance between price and quality, which now makes Barcelona attractive.