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Spanish luxury housing blindes its prices

Spain is going through the greatest economic crisis in its recent history because of the pandemic.But in resounding contrast to the collapse of GDP and employment, the Spanish luxury real estate market remains patient, contemplative and solid.Almost immune to the bleeding of prices in other segments of the sector, luxury housing has been protected in a trench of owners who resist lowering their properties, knowing that this market plays in another division.

The tangibility of brick gives peace of mind.This is explained by Manuel Romera, director of the Financial Sector of IE Business School."Faced with the fact that inflation may occur due to excessive injection of money by the ECB and the Federal Reserve, tangible goods arise as a good way to put the capital to refuge," says Romera, who defines the real estate marketPremium as "the tangible good by antonomasia."

Así, el ladrillo en zona prime es el que menos se devalúa en tiempos de crisis y el que más se revaloriza cuando el mercado recupera su tendencia creciente, de acuerdo con Óscar Larrea, director de Fincas Exclusivas de Engel & Völkers. Mientras en España el mercado inmobiliario común registra caídas de hasta un 10% del precio de venta de viviendas de segunda mano —y prevé una rebaja de hasta el 30% en las zonas más desfavorecidas—, el mercado de lujo encajará este año descensos en el precio de apenas un 4% en zonas como Madrid, según la consultora inmobiliaria Knight Frank.

According to Larrea, in the capital a decrease in the number of foreign capital operations has been observed since the beginning of confinement, which would cause that slight reduction.60% of sales exceeding four million euros correspond to foreign investments, mainly from Latin America: Mexico, Venezuela and Colombia.However, the expert insists that if the crisis does not lengthen much in time, there will be no large declines in luxury properties.“Most owners of these homes do not have the imperative need to sell unless they are inheritance.In those cases, they do usually lower the price before.If not, they endure. ”

Es lo que ha sucedido en otras zonas representativas del mercado prime en España, como Mallorca, que además cuenta con la ventaja de recibir a un perfil de comprador extranjero más próximo, como los alemanes. Aquí, el descenso de transacciones se ha compensado con mayores inversiones. “Hemos cerrado propiedades bastante caras que antes no podíamos cerrar”, afirma Constanza Maya, directora de expansión de operaciones de Engel & Völkers, quien destaca la inflexibilidad de los vendedores para bajar los precios en las propiedades de alto standing.

La vivienda española de lujo blinda sus precios

Between January and July of this year, the real estate company reached a volume of transactions of 217 million euros only for the sale of premium properties in Mallorca.A quarter of the intermediations were recorded in July, after the reopening of the borders, with average amounts between 300,000 euros and 12.9 million.The luxury market therefore raffles the storm of the economic crisis and insists despite the pandemic in the Spanish capital.

Pandemia does not seem to lift the ghosts of previous real estate crises."There is not a lotIt is going well, ”says María Gordo, consultant of CBRE Spain.

Madrid, Epicenter of Luxury

The Spanish capital is in the sixth world position in the revaluation list of the luxury housing market, according to the real estate market trends report for 2020 Knight Frank.For Constanza Maya, the city brings together customers with the greatest purchasing power of the firm.“Of the average prices, Madrid has the highest price of our sales throughout the Peninsula.Round the 900,000 euros, ”she says.

In fact, Manuel Romera, of the IE Business School, warns that the imbalance between supply and demand of the luxury real estate sector in the city has contributed to the firmness of real estate prices in the crisis.“In the premium area in Madrid there is a limited offer.In O'Donnell, Velázquez and Serrano there are the floors there are no more.Only the international demand of these properties covers the offer much. ”

The capital has welcomed the sale of real estate with prices of six and more digit, promising enviable climatic conditions in the European environment, good communications and more competitive prices in the luxury sector in front of the closest countries, such as France and Germany.

The square meter in Luxury Residential in Madrid is around 7,000 euros, according to the annual report on the high standing residential market of the Barnes Spain real estate, while in cities like Monaco an average of 56,100 euros is paid;In Paris, it exceeds 20,000 euros;In Berlin, the 17,000 and in Rome, the 15,000.In Hong Kong, the Prime market asks for about 40,700 euros per square meter and in New York, 27,000, according to Barnes's report.

This has caught the attention of great Latin American fortunes to step on strong in the construction of luxury homes in Madrid.This is the case of the Capriles - Venezuelan capital invested through the Gran Roque Capital company - who already add three promotions in Chueca with properties that are around 11,000 euros per square meter.

Thus, the Terralpa Mexican capital group that has invested 80 million euros has been highlighted in four luxury housing projects already launched in Madrid and which plans to add up to 170 million euros in the next two years.The commercialization of one of its promotions, Martínez Campos, already exceeds 40% of the homes sold despite having initiated the commercialization in full confinement.

Tendencia a nivel planetario

Between March and July, up to 153 housing operations of more than 8 million euros were recorded worldwide, together in about 2.7 billion euros, according to Knight Frank.The data reflects that the worldwide housing market did not stop in the worst months of the pandemic, although the number of operations has fallen by 47% with respect to the same period of 2019.

Although the number of global operations has been reduced, the average sales values have experienced an increase, according to Knight Frank, being London the city where this increase has most been noticed.The average value of operations between March and June of this year reached an average value of 32 million euros, compared to 14 million a year ago.

"People do not leave their homes and, with the decrease in interest rates, it is cheaper to buy than to rent a property," says Lisett di Donato, Senior Vice President of UBS.With pandemic, billionaires in cities like New York (USA), according to Donato, have preferred to move to broader and private environments such as Hamptons.