According to data published by Idealista magazine, Spain’s leading real estate portal, the first quarter of 2024 saw a 6.25% increase in real estate prices in Barcelona (compared to the first quarter of the previous year), with the average price per square meter reaching 4,317 euros. Another statistic reviewed showed that nine out of ten districts in Barcelona recorded an annual increase approaching 9% in apartment and house prices.
Barcelona, the capital of Catalonia and Spain’s second-largest city, is one of the strongest countries in the European Union.
Barcelona is a stronghold of leading sports teams, a tourism powerhouse, European and international fashion hub, a center of architecture, and one of the most economically stable cities with one of the highest growth rates in Europe.
The attractive prices that can still be found in the local real estate market raise the question of why foreign investors are flocking to invest in real estate in Barcelona and why prices have not yet reached their peak.
Real Estate Investments in Barcelona – Major Influences on Barcelona Real Estate Prices
The attractiveness that drew foreign capital holders to seek real estate investments in Barcelona emerged after the COVID-19 pandemic, which created a global economic crisis and severely impacted tourism. The effects of this crisis were particularly evident in Barcelona, one of the world’s leading tourist cities.
As a city whose economic growth is based on tourism, Barcelona experienced a significant decline in business activity, which, in turn, impacted the real estate market. This was due both to the rise in unemployment among local residents and the severe impact on real estate properties used for tourism purposes.
The recovery of Barcelona’s real estate market began in 2021 with the implementation of government regulations, bureaucratic easing, and tax incentives aimed at attracting foreign capital into the country through investments in the local real estate market. The gradual but consistent rise in Barcelona’s real estate prices, continuing to this day, has created a promising window of opportunity for investors.
Potential investors have several investment avenues in the city’s real estate, such as buying an apartment for rental purposes or purchasing an apartment for resale. Investing in apartment purchases in Barcelona is suited for investors with substantial capital who are interested in long-term, illiquid investments.
Investing in Development Projects – Construction and/or Property Enhancement
One of the attractive and promising investment avenues in Barcelona allows investors to invest in development projects that are in advanced planning or construction stages, with developers seeking the remaining capital needed to complete the project.
These projects may focus on constructing high-standard residential buildings on land acquired by the developer, demolishing an existing structure and building a new one, or enhancing, expanding, and renovating an existing building acquired by the developer.
In development projects, the investor does not purchase an apartment but rather invests in rights and receives returns proportional to the investment scope and project success.
This investment platform offers several prominent advantages to those interested in real estate investments in Barcelona:
-A low entry threshold, enabling investors to participate with as little as tens of thousands of euros, a much lower amount than required for purchasing an apartment.
-A convenient investment platform without the need for bureaucratic handling with authorities.
-The option for capital diversification, multiple investments, leverage, and investment hedging to create security and maximize returns.
-A relatively short investment time frame, typically ranging from 18 to 36 months for project completion and return realization.
-High return forecasts derived from the enhancement process, relative to expected returns from appreciation and the construction index as reflected in existing apartment prices.
How to Choose a Development Project for Real Estate Investment in Barcelona
Real estate and investment experts from the SDB Group share a number of rules and guidelines for planning and implementing real estate investments in Barcelona, and foreign real estate investments in general:
1. Choosing the Investment Area – When selecting an investment area, rely on high-demand zones, bustling urban metropolises, and commercial and tourist areas. A development project in a high-demand area is expected to retain and increase its value, regardless of future development processes, creating a protective mechanism and higher return potential.
2. Selecting the Developer – In the real estate world, many developers specialize in planning and construction, with attractive portfolios and promises. A safe investment is one with a well-known, reputable, and experienced developer who has led similar projects in Barcelona and provides investors with guarantees for project completion and occupancy within the expected time frame.
3. Data Examination and Analysis – Conduct comprehensive checks on all characteristics of the land, project, and developer. Analyze the data using advanced analytical tools to assess potential, feasibility, and risk.
4. Engagement Agreement – An investment based on an engagement agreement that secures investment features and protects the investor, detailing schedules, profit-sharing methods, and determining each investor’s relative share, exit points, and other important protections. Such an agreement is crucial to create with professional legal support from experienced lawyers familiar with all the risks, exceptions, and scenarios that may arise in the project investment and skilled in protecting the investor from any scenario.
5. Professional Support – It is recommended to use comprehensive professional support that includes both property sourcing under rigorous standards with familiarity with the city, building and real estate industry characteristics, bureaucracy, and demand, as well as selecting developers and managing engagements with them through a broad professional team and legal service framework to protect investors.
