Spain: Barcelona Property, Worth The Money?

Kyero investigated the Barcelona property market late last year and found that although the average price of property is high - €625,000 compared to Spain’s national average property price of €243,800 - Barcelona was well worth investing in.

In 1992 Barcelona benefited from billions of Euros invested for the 1992 Olympic Games. This transformed the city and it became a cultural capital of Europe and a firm favourite for city breaks. Tourist numbers began to rise dramatically with 27 million people arriving at Barcelona airport in 2005, a 35% increase from 2000.

It’s easy to see why so many visitors are attracted to this vibrant and cosmopolitan city. Its Mediterranean location is a selling point, providing 4.2 km of clean beaches. There’s easy access to the Costa Dorada to the north and Costa Brava to the south as well as the Catalan Pyrenees 90 minutes drive north. Culture and style ooze from this compact city. At every turn, stunning architecture, art and design enrich the senses and the new wave Catalan cooking creates a foodies paradise. Getting there has never been easier with numerous budget airlines including EasyJet, Ryanair and Sky Europe, flying direct from the UK.

Visiting Barcelona is not a once in a lifetime event; most people get hooked and return time and time again. It can make sense therefore to consider buying a property in Barcelona and this has proved to be a shrewd investment. The last two years have seen price hikes of 25% to 30% and, since 2005, resale properties have appreciated by 15%. A growing Spanish economy, increasing employment, cheaper borrowing, a cultural preference for buying over renting and the impact of rising foreign demand for real estate in Barcelona, has pushed overall demand up whilst the supply of property has remained fairly constant. This trend shows no sign of slowing and considering that Barcelona is confined by the mountains and the sea leaving no option for expansion, property investments appear attractive.

Barcelona is split into 10 districts and each has its own distinctive property market. The most expensive areas such as the Maresme coast are to the north and west of the city where villas and townhouses can be found. In the city centre, you’ll generally only find apartments for sale, with loft conversions becoming increasingly popular. Areas experiencing the greatest demand from foreign buyers are the Ciutat Vella (Old Town) and L’Eixample. Ciutat Vella dates back to medieval times, and takes in the areas of Barri Gotico, El Bourne and El Raval. Most apartments here are unique and the area enjoys a fabulous ambience, with bars and restaurants and easy access to the beach and Port Vell. L’Eixample is one of Barcelona’s newest districts. Literally meaning ‘extension’ in Catalan, this lively area is an interesting mix of modernist and traditional. Consisting mostly of apartment blocks, the start of the district is marked by the Placa de Catalunya, making this a central and highly popular area.

The rental market in Barcelona is excellent; it is the only location in the Costa Brava where you can make a year round return on your investment. The yield for short term lets is currently 5% per annum and due to the ever increasing number of holiday makers seeking private accommodation demand is high. A buy-to-let property search should be focused around the Old Town, L’Eixample or the new developments at Diagonal Mar, where you can buy a newly built apartment with pool access for €500,000. A quality two bedroom apartment will generate €1,000 a week, but ensure that you can compete with the local hotels.

As well as a healthy short term market, long term tenants are also easy to secure. With Barcelona taking initiatives to attract foreign businesses, international conferences and links with academic institutions the number of expatriates, business executives and students has risen sharply. For example, according to the Barcelona Department of Statistics, in 1996 there were 1094 British living in Barcelona compared to 4721 in 2006. These communities are ideal candidates for longer lets and although the yields are not as high as with short term lets they are more secure and you can still expect to receive €1,500 a month for a two bedroom apartment in the right area.