In recent years we have experienced how the Spanish real estate sector has attracted the look and arrival of important foreign investment groups and funds, with the consequent reactivation of the market.
In these years we have been experiencing a significant increase in the volume of sales in Spain, almost generalized. It has been accentuated in some areas such as Madrid, Barcelona, Valencia, and other large coastal cities in Spain, and maintained in some places on the periphery, or smaller cities.
However, during the first semester of the year 2019, we have experienced a slowdown in the number of purchases both in large cities, where this fall has been accentuated, as in other places in Spain. Many of the chroniclers identify this decrease in the volume of purchase sales as a cycle change. They even predict a turning point towards a bearish evolution.
The problem of the Spanish real estate sector is that it cannot be generalized. As we can see, the evolution of the real estate sector depends very much on the type of housing, new or resale, as well as on the area we are talking about; as well as the type of product, whether industrial, commercial, residential, or rental; and, finally, of interest, whether business, residential, tourist or investor.
Therefore, and unfortunately, at the end of the year 2019, and before flooding with thousands of (sometimes contradictory) data that come from different sectors and sources, it is necessary to analyze in this report what the projection of the Spanish real estate sector is for 2020, in a activity as special as buying properties for rent.
After the spectacular boom that occurred a few years ago with the purchase of properties for rent for tourist use, we have experienced, instead, a drastic reduction in the number of authorizations and licenses for tourist rentals in the main cities of Spain. As a result, the number of licenses for these types of rentals in the main urban centers of Spain have plummeted, and it can be said that this activity has been regulated and controlled, warning of a necessary professionalism of the actors who develop it.
This, from the point of view of the international investor could translate into a decrease in interest in the Spanish real estate sector.
However, the Spanish real estate market continues to be subject to large international investments. The reason for this is because there are simply no other investment alternatives when interest rates are at a minimum.
Therefore, Spain continues to arouse interest in the acquisition of rental housing.
Regardless of the differences in returns to be obtained throughout Spain, it is not risky to confirm that these can reach more than 5, or 6% per year, in a prudent scenario.
Large investment funds are locating these transactions in the surroundings of the large provincial capitals, where final home buyers do not have sufficient capacity to access a property home. This type of client, unable to access to buy, is engaged in the rental market. In addition, we have the idiosyncrasy of this type of client, which is made up of the new generations of “Millennials”, who flees from the bonds that the purchase entails, and prefers the freedom to move and pay exclusively for the use.
Therefore, it seems that at this point, this year can move in figures very similar to the previous one.
Finally, there is a very interesting market in development that is “coliving“. The demand for this type of establishments is enormous, and in Spain there is everything to do.
Therefore, we can say that by safeguarding different areas and different types of housing, it seems that the market for the purchase for rent in Spain for the year 2020 will be positive, especially taking into account the confirmed policy of low interests , as well as the interval of development that in Spain still remains to be covered with respect to properties both new and second hand.