Global Demand For Real Estate in Barcelona

A recent report from the international property portal PropertyWire asked if Russians are the new Chinese or if the Chinese are the new Russians. The focus repeated a theme we have explored previously in the Lucas Fox blog and that has been highlighted in the most recent series of reports on real estate in Barcelona, Ibiza and Costa Brava.

Growing demand for real estate in Barcelona

How are emerging markets influencing demand for luxury property in Barcelona and Spain? What evidence is there that the growing economies of Russia, China, Brazil and the Middle East are increasingly turning to Spain and, in particular, Barcelona for real estate investment? We explore some of the data that makes it clear for property investors the world over that increasing demand from emerging markets is competing with more traditional areas that have sought out real estate in Barcelona.

Some analysts have reported that while Russian buyers look to demonstrate their wealth, Chinese buyers are more circumspect. However, a report on the growing middle class in China by Spanish finance institute La Caixa earlier this year noted that Chinese affluence is also keen to show their wealth, albeit in slightly more subtle ways. This is part of the reason Barcelona is so highly considered amongst this market, as the city is a symbol of European sophistication. La Caixa gave examples like a 10% piano ownership amongst the Chinese middle class to further demonstrate the desire of this market to demonstrate their wealth through the pursuit of cultural pastimes.

Together, these signals point to the growing competition from emerging markets in real estate in Barcelona and are suggestive of reasons why foreign property buyers need to carefully examine the market while property prices are at their most accessible in order not to be outbid by this new demand.

Searching the internet for real estate in Barcelona

We examined trends in online searches for real estate in Barcelona and Spain more generally. For comparison purposes, we looked at levels of interest from the Netherlands, which has traditionally held a strong regard for Spanish properties. The emerging markets are not yet matching European interest, however, waves of growing interest are apparent and this data helps predict the order in which waves of new investors will increasingly turn to Barcelona for property purchases.

We chose common search terms including “Spanish property” and “real estate Barcelona” to assess the level of interest from each of these markets. We were also interested in more general interest in Barcelona and in luxury property so have included search levels for “Barcelona Spain” and “luxury property”. We also found “Spanish villas” was a useful proxy for levels of interest in the luxury end of the market in Spain.

Real estate in Barcelona searches

Levels of monthly google searches for terms related to real estate in Barcelona

Analysis

  • There is strong interest in luxury properties amongst Brazilian investors, but this is yet to translate to specific interest in Spanish purchases, which is strange given that Spain is the most visited European country amongst Brazilian tourists.
  • It appears the waves of potential investment in real estate in Barcelona will be Russia (as is occurring now), followed by the Middle East (as represented by United Arab Emirates), then China and finally Brazil as these emerging economies continue to strengthen over the coming years.
  • UAE buyers don’t distinguish between properties and villas while in other markets, villas appears to be a proxy for searches for properties at the more exclusive end of the market.

Enquiries to Lucas Fox about real estate in Barcelona

At Lucas Fox, the growing interest in real estate in Barcelona and other areas of Spain has been obvious throughout 2011. “During Q1/Q2 2011, we have enjoyed a 96% increase in website visitors over Q3/Q4 2010. Most interestingly, we have recorded a rise of 300% with Russian clients in the last two quarters. As an agency, we have seen a 230% rise in qualified enquiries from Russian property investors and buyers,” Anthony Leaton, Lucas Fox Marketing Director, explained in the agency’s Barcelona real estate market report last month.

Real estate in Barcelona

Average level of monthly enquiries to Lucas Fox amongst emerging markets

Analysis

  • With Lucas Fox having a number of Russian speaking staff on board, the agency is able to make significant inroads with interested Russian buyers. Having the properties of interest to Russian investors is also playing a significant factor.
  • Demand from other emerging markets is still in its early stages, suggesting that many of those searching at present in these markets are at the contemplative end of the purchasing pathway.

Tourism by property buyers scouting real estate in Barcelona

Data on levels of tourism from selected emerging nations is difficult to acquire as it is often aggregated with other parts of the world by the Spanish Government department responsible for Industry and Tourism. We have located trend data for Russia and Brazil and compared this again with the Netherlands, however, it is much more expensive to fly from the emerging market economies to Spain than for the Dutch European member state.

Real estate in Barcelona by tourism levels

Tourism growth from selected emerging markets compared with the Netherlands

Analysis

  • Russian tourism growth across the first decade of this century matches the growing interest from searches of real estate in Barcelona from this market.
  • While Brazilian tourism dropped slightly in 2010 down from 2007, early indications are that 2011 will see a growth in tourism again from this market, with many expected to make initial enquiries into Spanish property while visiting. As shown in the graph on google monthly searches, Barcelona is a frequent search item which is expected to translate into a corresponding interest in real estate in Barcelona. Other search data shared previously in the Lucas Fox blog shows the growth in interest from this region of the world.

What this means for global demand for real estate in Barcelona

Over the next couple of years, there is expected to be continued growth amongst these emerging market economies seeking to purchase quality luxury properties in Spain, particularly while housing prices are at a more accessible price point. This could mean greater competitive demand amongst foreign investors looking to buy real estate in Barcelona. Share your thoughts with us in the comments below.

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