The bubble of luxury apartments

13/05/2016

 

casa-bures

 
2015 real estate investment rose tackles Barcelona and came close to 2,000 million euros, of which a tenth were the residential sector, ie housing, according to the consultancy Aguirre Newman . The residential segment has aroused the desire of investors, especially in the field of so-called high standing, luxury housing. There are voices that suggest that this sector is creating a new bubble, driven by attracting foreign investment, but the return of buyers interiors, which have begun to increase.

The fact is that investment in luxury housing can give very good returns. Recent industry reports indicate increases of around 15% in price over the past year in the segment of housing more than 950,000 euros. In addition, next year the cost could even be accelerated to 20% in the upper area of ​​Barcelona. A percentage that also could be given in the case of the best houses of the Eixample. Forecasts square with the Alexander Vaughan, founder of the agency Lucas Fox. The company says that between 2013 and 2015 there has been a significant increase in prices in the sector of luxury housing in Barcelona, ​​an increase of 26%.

Professor of Economics at the University Pompeu Fabra José García Montalvo said that foreign buyers who are still enhancing market prices. First, because the prices are still cheap and, above all, because the returns are high. For example, rents may gain up to 6.5%, something impossible to achieve with any other financial asset considering the reference rate are negative. García Montalvo admits that prices are growing, especially in the luxury housing, a sector quite privileged because it was one of the least affected by the bubble burst in 2008.

Montalvo insists clarify the effects that could have burst a bubble in the market of luxury apartments, because unlike the 2008 crisis, if there is a sudden drop in prices would drag the financial system since the most foreigners buy them luxury homes with no mortgage. Instead, the professor of the University of Barcelona and director of the Master in consulting and real estate consulting, Gonzalo Bernardos, disagree and identifies a return of buyers in this segment interiors. Bernardos warning of a "micro" in the luxury housing market, which could burst in early 2018, when they begin to raise interest rates.

Returning buyers interiors

So far the market for luxury housing in Barcelona have prompted foreign investors. According to the specialized agency Lucas Fox, only 17% of buyers are Spanish, but last year was 11%. In the last year there has been an increase of 86% of buyers of the state. In addition, the agency numbers show overall growth of the sector. 2015 Lucas Fox transactions increased by 50% and the first quarter of this year have made 15%.

The lure of luxury housing in Barcelona is demonstrated also in prices. According to Lucas Fox, Madrid represents 30% of the Spanish market of luxury housing and Barcelona 20%. But prices are higher in Barcelona, ​​where the average luxury apartments stands at more than 4,600 euros per square meter; Madrid, however, the most expensive neighborhood is less than 4,400 euros per square meter.