What has changed the coronavirus in the Spanish property market?

Everyone remembers how the virus actively gained its strength in early spring in many European countries, where security measures began to be introduced, which also limited local real estate markets. Especially when it comes to the purchase of objects by foreigners, on whom, as you know, this area largely depends. Therefore, in Spain, real estate agencies had to quickly switch to the format of remote purchase and sale of objects, which, in turn, found a wide response among buyers from other countries.

Pandemic as a reason for development

As you know, the Spaniards are famous for their southern approach to solving many issues, and it is worth noting that the pandemic stimulated them well - local real estate agencies tried to maximize the description of objects on their websites, which were generously accompanied by videos and many relevant photos. Thanks to this, a potential buyer could get the most complete picture of the object in the online format and make the right choice, even if he was at the same time in a completely different part of the world. Remotely, you can not only search for real estate in Spain, but also sign a real estate reservation agreement, complete the transaction itself and open bank accounts - even those issued remotely have full legal force in Spain. This option of buying in this country was practiced earlier, but not all buyers liked this option, so this service gained popularity this year.

Of course, this format was not suitable for everyone, even in the conditions of closed borders, besides, not all companies were able to quickly establish all the necessary functionality, therefore, for example, some realtors started transactions in February were forced to postpone. Many buyers expected the quarantine to be short-term, and therefore postponed the purchase of real estate to a later date. There were also cases when during the period of strict quarantine (then the notaries worked and the deals could still be signed), the buyers refused due to various circumstances, taking advantage of the existing law on the return of paid deposits during the pandemic. From April to June this year, 41% fewer transactions were concluded in Spain than a year earlier, with foreign buyers accounting for about 10%.

Rent and change of interests of foreign investors

It is worth noting that the Spanish real estate market during the peak of the pandemic was not deprived of the attention of potential buyers - applications to companies selling real estate in this country continued to come with the usual frequency. In addition, those foreigners who had previously considered buying in a more premium segment began to turn to the local housing market: for example, a buyer was going to purchase an object on the Cote d'Azur, and then, due to the crisis, reoriented to a more affordable Spanish market. In addition, many were interested in the comfortable Spanish climate and the approach of the Spanish authorities to the adopted security measures, so many began to consider buying real estate in Spain and then moving here for permanent residence.

The first global change in the real estate market in this country affected short-term rentals. Homeowners, who previously practiced exclusively renting property for several days to tourists coming to Spain in large numbers, have now refocused on long-term renting. As a result, even apartments in the historical center of such popular cities as Barcelona and Madrid, which were previously almost impossible to rent for affordable money, can now be rented for reasonable funds. It is not surprising that after the decline in the cost of rental housing, many were expecting a fall in prices for the purchase of Spanish real estate. As a result, many buyers began to purchase real estate only for personal use, and investors who previously actively invested in housing for its subsequent lease hid, although earlier in the popular tourist areas of Spain, the volume of such transactions was 50%.

Today, there is a tendency in Spanish society to move to suburban real estate - not everyone can afford to buy a house on the coast, however, it is quite possible to reduce the risks associated with a threat to health if you move from a metropolis to the suburbs, and sometimes to the countryside. Moreover, most companies have already established a remote version of the work of employees. Thus, the most popular apartments in the Spanish housing market are now apartments with balconies, terraces, patios and a good view from the windows; houses on the outskirts of big cities. Some investors prefer not to wait for the end of the epidemic and are increasingly turning their attention to small apartments in promising areas that can be rented out after the end of the pandemic.

The pandemic did not lead to a significant change in prices

Someone expected a decline in prices for the purchase of real estate in this country, linking this with the fact that during the crisis, people need money to fulfill their obligations, so some of them will promptly put up their property for sale. But it cannot be said that this forecast came true - yes, there were such cases, but they met before, especially when it came to the division of the spouses' property after a divorce or inheritance. Moreover, usually the case concerned the old housing stock. As a result, real estate prices were adjusted, but there was no talk of any 15-20% (as some dreamed), the cost decreased by no more than 5-10%.

Sometimes this happened under pressure from buyers, who at the time of completion of the transaction decided to take advantage of the situation and began to bargain a little. In such cases, realtors helped to convince the seller that it is better to reduce the price by 5% and close the deal than to completely lose the buyer during this unstable period. There were also recorded cases of price reductions by 10-20% in resort areas, but this happened only with those objects, the cost of which was significantly inflated earlier by the owners themselves, who do not always listen to the recommendations of professionals. Therefore, experts in the real estate market do not take such cases into account when speaking about pricing trends.

In general, it can be noted that six months after the height of the pandemic, high-quality real estate has not yet been sold at low prices, especially when it comes to a resort property, for which there is always demand against the background of megacities, where the incidence is especially rapidly growing. Especially when you consider that Spain is again actively introducing bans on moving between cities for no good reason. Speaking of urban life, according to the National Institute of Statistics, 80% of the Spanish population lives in 10% of the settlements, while the remaining 20% are scattered in small towns. And according to Eurostat, Spain ranks second in the European Union in terms of the percentage of people living in apartments (about 60%), slightly inferior in this indicator only to Latvia (65%). Therefore, it is in small towns and resorts that it is now possible to safely wait out the pandemic with maximum comfort.

Tinsa analysts have calculated that since March this year, that is, since the start of the pandemic in Europe, property prices in Spain on the Mediterranean coast, the Balearic and Canary Islands have fallen by about 4%. At the same time, housing in general across the country fell in price over the same period by only 1.8%. Spanish properties on the shores of the Mediterranean have decreased in price by 4.6%, and in the Canary Balearic Islands - by 4.3%. However, if we compare the data for the same period last year, then we can state an increase in the value of real estate throughout Spain in the amount of 5%. Thus, despite the media panic, prices in this country continue to remain stable during the pandemic.

Thank you for your help in preparing the material:

Marina Shevchenko, Director of DAM Tenerife SLU

Alexander Dashevsky, director of Espana Tour

Yulia Efimenko, Head of Benimarestates