SPAIN OVERVIEW

BARCELONA MARESME

BARCELONA SITGES MADRID

VALENCIA COSTA BRAVA

MARBELLA- COSTA DEL SOL IBIZA

MARKET OVERVIEW AND FORECAST FOR 2017 LUCAS FOX / REAL ESTATE MARKET 2016 / BARCELONA 13

BARCELONA: MARKET OVERVIEW projects, which are renovations of classic buildings in the AND FORECAST FOR 2017 Eixample and Old Town areas, that will continue to feed the demand from international lifestyle investors.” The property market in Barcelona continued to grow significantly during 2016 and is widely promoted as a The area of Eixample Right has been the district that has seen the most growth in demand and price increase, European property investment ‘hotspot’. New and newly “IN 2016 ALMOST 50% OF THE mainly due to a limited amount of exclusive high-end renovated homes continue to be demand, particularly PROPERTIES SOLD BY LUCAS renovation projects available. These properties include among international buyers, who have continued to unique Modernista buildings with high quality fixtures and drive sales during 2016. The local market has also seen FOX BARCELONA WERE NEW fittings, located close to good services and amenities. increased activity as the local economy continues to DEVELOPMENT PROJECTS AND There has also been increased demand for the Gothic and grow and financing becomes readily available. 2016 saw Born districts, where there has been substantial investment WE EXPECT THIS PERCENTAGE TO in urban renewal in recent years. There is strong demand a steady increase in property prices and in some highly MAINTAIN OR MOST PROBABLY for renovated historic buildings housing stylish apartments. sought-after districts saw double-digit growth. In the last INCREASE THROUGH 2017.” The beachside district of Diagonal Mar is once again quarter Lucas Fox experienced a sharp increase in sales becoming very popular and boasts some large residential transactions to cap off an all-round very positive year. projects. Properties here are being bought for investment purposes as potential rental yields are higher than average. “THE MAIN CHALLENGE These types of investment properties are in demand by Middle Eastern and Asian investors interested in obtaining DURING 2016 HAS BEEN the residency visa. HAVING ENOUGH QUALITY “In 2015 residential New Development projects started “The main challenge during 2016 has been having enough coming onto the market in Barcelona for the first time since PRODUCT AVAILABLE TO MEET quality product available to meet the demand of our the property market crash,” explains Lucas Fox Head of THE DEMAND OF OUR CLIENTS.” clients,” explains Mr Jamieson. “Although the increased Operations Rod Jamieson. “Through 2016 the release New Development activity is satisfying a part of this of projects accelerated, increasing the supply of much demand, there is still a shortage of reasonably priced high needed New Development property. In 2016 almost 50% quality product in central locations of the city.” of the properties sold by Lucas Fox Barcelona were New Development projects and we expect this percentage to Rod Jamieson The most sought-after type of properties are apartments in maintain or most probably increase through 2017. 2017 Head of Operations, attractive renovated buildings, with 2 to 3 bedrooms and Lucas Fox Barcelona will see the release of some large residential condominium 2 bathrooms, measuring from 80m² to 150m², situated in projects in the city centre and the Diagonal Mar area of the prime locations and priced between €700,000 and €1.5 city. We expect these projects to be particularly interesting million. Also, smaller apartments of around 50m² to 60m² to investor clients and also clients looking to take advantage with 1 to 2 bedrooms and priced around €500,000 are of the Golden Visa scheme. As well as these larger projects increasingly in demand by Golden Visa seekers and as a there are a good number of smaller New Development rental income investment property.

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BARCELONA PROPERTY SALES TRANSACTIONS TRANSACTION VALUE OF PURCHASES BY FOREIGNERS Property sales transactions in Barcelona city have shown a steady increase year-on-year during the last 4 years. In Amongst foreign buyers the total transaction value of 2016 Barcelona saw a significant increase in the number of purchases of second-hand properties was higher in the first property sales with the total transaction volume showing three quarters of 2016 (for which the latest data is available) an annual growth rate of 21.56%. Barcelona averaged than in the same period in 2015 (€894,925,200 in Q1-Q3 3,827 transactions per month in 2016, up from an average 2016 compared with €773,251,500 in Q1-Q3 2015), of 3,148 in 2015. showing an annual growth rate of 15.74%. The number of new builds and newly renovated properties continues to Similarly, Lucas Fox data shows a substantial increase in the increase, with foreigners spending €77,221,100 on new total number of property sales in Barcelona with an annual build and reformed properties in the first three quarters of growth rate of 68.57%. 2016, an increase of 9.89% over the same period in 2015. Total transaction value of Barcelona property purchases by foreigners in the first three quarters of 2016 grew by 15.25% over the amount of trading for the same period in 2015 (€972,146,200 in Q1-Q3 2016 compared with €843,525,700 in Q1-Q3 2015).

BARCELONA FREE HOUSING PROPERTY SALES TRANSACTIONS BARCELONA NEW AND SECOND-HAND PROPERTY TRADING: PEAK (Q1 2007) AND Q3 2012 - Q4 2016 TOTAL VALUE OF SALES TRANSACTIONS BY FOREIGNERS Source: National Institute of Statistics Q1 2013 - Q3 2016 Source: Spanish Department of Development

9000 400000

8000 350000 7000

300000 6000 €

5000 250000 Value in '000 '000 in Value 4000 200000

3000 150000 Value in ‘000 € Value 2000

Number of sales transactions 100000 1000 50000 0

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Jan 2007 Oct 2012Dec 2012Feb 2013Apr 2013Jun 2013Aug 2013Oct 2013Dec 2013Feb 2014Apr 2014Jun 2014Aug 2014Oct 2014Dec 2014Feb 2015Apr 2015Jun 2015Aug 2015Oct 2015Dec 2015Feb 2016Apr 2016Jun 2016Aug 2016Oct 2016Dec 2016 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 Spain Barcelona Vivienda Nueva Vivienda de Segunda Mano Spain (‘0s) Barcelona New properties Second-hand properties

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BARCELONA CITY AVERAGE PROPERTY SALES PRICES BARCELONA PROPERTY PRICES PEAK (Q1 2007) AND Q1 2011 - Q4 2016 Source: Idealista According to leading property portal Idealista (which bases its 7000 figures on asking prices), property prices for all of Barcelona averaged €3,879 per square metre by the end of 2016, up 6000 Ciutat Vella Eixample €487 over the average at the end of 2015, showing an annual 5000 Gràcia

2 Horta Guinardó

growth rate of 14.36% in average property prices. The more 2 4000 /m Les Corts € Nou Barris prestigious, luxury districts of Eixample and Zona Alta (Les € / m 3000 Sant Andreu Corts and Sarrià-Sant Gervasi) ended the year with the highest Sant Martí 2000 average prices, at €4,610 and €4,787 per square metre Sants - Montjuïc Sarrià - Sant Gervasi 1000 respectively, compared with €3,861 and €4,303 per square Barcelona City average metre at the end of 2015 (showing an increase of 19.40% 0 and 11.25% respectively). Every district of Barcelona saw an increase in average prices between the end of Q2 2016 and

the end of the year. Ciutat Vella Eixample Gràcia Horta Guinardó Les Corts Nou Barris Sant Andreu Sant Martí Sants-Montjuïc Sarrià-Sant Gervasi Barcelona City Average

13 out of 26 apartments of the Casa Burés New Development in Eixample were sold in the private launch phase

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BARCELONA MID-MARKET shows a reduction in UK buyers from the mid-level market, PROPERTY SALES TRANSACTIONS probably down to the prospect of Brexit following the UK’s referendum in June and the subsequent weakening pound, Barcelona trading of mid-market properties (valued at but a continued strong representation from the Middle East. between €450,000 and €900,000) has increased every quarter over the corresponding quarter in the previous year A noticeable change has been that buyers looking for a since the start of 2013. 1,086 mid-market properties were primary residence (frequently as part of a relocation to sold in Barcelona in the first half of 2016 (for which the latest Barcelona) have dominated the mid-level market in 2016, with data is available), representing 19.27% of the total Spanish 37.29% seeking a primary home. Those looking for properties mid-priced property market and an overall growth rate of as a secondary residence (30.51%) or investment property 30.84% over sales transactions for the corresponding period (20.34%) continue to make up a substantial proportion of in 2015. the market. The number of buyers seeking access to the Golden Visa has increased with 10.17% of buyers purchasing LUCAS FOX BUYER COUNTRY OF ORIGIN properties in order to take advantage of the scheme where AND MOTIVATION FOR MID-MARKET PROPERTIES non-European residents receive residency rights when purchasing property over €500,000. National buyers continue to make up a significant proportion of mid-market property buyers with almost a quarter of Lucas Fox buyers coming from Spain. Lucas Fox data from 2016

BARCELONA MID-MARKET PROPERTY SALES TRANSACTIONS MID-MARKET PROPERTY BUYERS IN BARCELONA CITY: MID-MARKET PROPERTY BUYERS IN BARCELONA CITY: (BETWEEN €450,000 AND €900,000), Q1 2012 - Q2 2016 COUNTRY OF ORIGIN, 2016 MOTIVATION FOR PURCHASE, 2016 Source: Lucas Fox sales data Source: Lucas Fox sales data Source: Spanish Department of Development

4000 Spain Primary Residence 3500 20% SpainUK 20% 24% UKFrance 3000 France Secondary USA 37% 2500 USA Primary Residence 2% Residence PolandPoland Secondary Residence 2000 2% Golden Visa 10% SwitzerlandSwitzerland Golden Visa 10% Investment 1500 MiddleMiddle East (Egypt, Lebanon) Other 3% 14% Scandinavia Other 1000 Scandinavia (Norway) 2% South America OtherSouth EuropeAmerica (Argentina) Number of sales transactions 500 3% 14% Other Investment 5% Other Europe (Germany, Italy, Netherlands) 3% 31% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Other (Algeria, Australia, China, Indonesia, 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 Kazakhstan, Phillipines, Russia, Turkey) Barcelona Spain Barcelona Spain

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BARCELONA PRIME PROPERTY SALES TRANSACTIONS

Following a peak in the second half of 2014, sales of prime properties (valued at over €900,000) in Barcelona have shown a steady growth since the second quarter of 2015. In the first half of 2016 (for which the latest data is available) 204 prime properties were sold across the province of Barcelona, showing an increase of 26.71% over the same period in 2015 and representing 17.75% of the Spanish prime property market overall.

BARCELONA PRIME MARKET PROPERTY SALES TRANSACTIONS (OVER €900,000), Q1 2012 - Q2 2016 Source: Spanish Department of Development

900

800

700

600

500

400

300

200

100 Number of sales transactions 0

Barcelona Spain Barcelona Spain

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LUCAS FOX BUYER COUNTRY OF ORIGIN BARCELONA RENTAL MARKET clients), often as part of a relocation package. The biggest AND MOTIVATION FOR PRIME MARKET PROPERTIES proportion of foreign rental clients came from the UK The average rental prices for Barcelona city and for (12%), followed by the Netherlands (7%) and France Following on from 2015, national buyers continue to make each individual district have risen substantially in all (7%). Most rental clients are looking in central areas such up a significant proportion of Lucas Fox prime property neighbourhoods in the last three years. as Eixample or the Old Town. Families tend to look at (valued at over €900,000) buyers, with almost 30% of all locations near to international schools such as the Zona buyers coming from Spain, up from 17% in 2015. Lucas Fox The overall average rental price for Barcelona city ended Alta, Gavà or Castelldefels. The price ranges between data for 2016 shows a significant increase in buyers from the year on €17.90 per square metre, up €2.60 over the €1,800 (for an MBA student) and €6,000 (for expat the United States and Canada (12.50%) and a continued end of 2015 average, an increase of 16.99%. The city families). The average price of a Lucas Fox rental property strong presence from Scandinavia (16.67%), Western Europe centre neighbourhood of Cituat Vella and the inner city in 2016 was €4,571.58 and it took an average of 20 days (16.66%) and the Middle East (8.33%). Modernista neighbourhood of Eixample ended 2016 on to rent a property. 10% of rental clients go on to buy a the highest rental prices, with Ciutat Vella now averaging property in the city. In 2016 the motivation for high-end property purchases in €19.90 per square metre (up €2.30 from the end of 2015) Barcelona was dominated by those looking for a secondary and Eixample now averaging €18.90 per square metre (up residence (54.17%). Other buyers were split between those €3.20 from the end of 2015). purchasing property as a primary residence (20.83%) and a long-term investment (16.67%) or in order to obtain a Golden Lucas Fox Barcelona’s long-term rentals division continues Visa (4.17%). to grow with the vast majority of its clients during 2016 coming from abroad (88% foreign clients and 12% national

PRIME MARKET PROPERTY BUYERS IN BARCELONA CITY: PRIME MARKET PROPERTY BUYERS IN BARCELONA CITY: BARCELONA CITY AVERAGE RENTAL PRICES COUNTRY OF ORIGIN, 2016 MOTIVATION FOR PURCHASE, 2016 PEAK (Q2 2007) AND Q1 2011 - Q4 2016 Source: Lucas Fox sales data Source: Lucas Fox sales data Source: Idealista

25 Spain

20 4% 17% France 21% 17% Primary Residence 29% 15 2 Spain PrimarySecondary Residence Residence €/m 8% CanadaFrance / USA Secondary Residence 10 Canada / USA 4% Investment Middle East Golden Visa Golden Visa MiddleScandinavia East (Egypt) 5 Other Other Europe Investment 17% 8% Other Scandinavia (Finland, Other 0 13% Norway, Sweden) 8% 54% Other Europe (Germany) Ciutat Vella Les Corts Sants - Montjuïc Ciutat Vella Eixample Gràcia Horta Guinardó Eixample Nou Barris Sarrià - Sant Gervasi Les CortsGràcia Nou BarrisSant Andreu Sant AndreuBarcelona averageSant Martí Sants-HortaMontjuïc Guinardó Sarrià-SantSant Gervasi Martí Barcelona average

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SHORT-TERM RENTAL DEMAND Monthly passenger arrivals at Barcelona’s El Prat airport have been higher for every month of this year over 2015 Barcelona airport arrivals and the number of travellers figures, which in turn were higher than in 2014. 2016 saw staying in holiday apartments are good indicators of both an increase of 11.19% over passenger arrivals in 2015, with a the demand for short-term rental accommodations and for total of over 44 million passenger arrivals in 2016. the potential benefit of purchasing property for investment as tourist accommodation or for use as a holiday home with Foreign travellers with Catalonia as a primary destination some income generation during periods when the property – the majority coming to Barcelona – rose again in 2016, is not in personal use, although tourist licences are still not maintaining a consistent proportion of almost 25% of all available in Barcelona Old Town. international tourists visiting Spain, similar to the previous two years. Almost 18 million international tourists visited Holiday apartment accommodations again outperformed Catalonia in 2016, showing an annual growth rate of 5.27%. the previous year with 708,286 foreigners staying in holiday apartments in 2016, up from 641,766 in 2015, representing an annual growth rate of 10.37%.

FOREIGN TRAVELLERS STAYING IN HOLIDAY APARTMENT PASSENGER ARRIVALS AT BARCELONA AIRPORT FOREIGN TOURISTS WITH A PRIMARY TRAVEL DESTINATION IN ACCOMMODATION, Q1 2011 - Q4 2016 Q1 2011 - Q4 2016 CATALONIA (INCLUDING BARCELONA), Q1 2012 - Q4 2016 Source: National Institute of Statistics Source: Aena Source: National Institute of Statistics Título del gráfico 90 500090

80 45009080 3000 Millares Millares 70 40008070 Millares 2500 60 35007060 6050 50 3000 2000

25005040 Millares 40 1500 20004030 30 15003020 1000 20 10002010 International tourists (‘000s) tourists International Foreign travellers (‘000s) travellers Foreign Passenger arrivals (‘000s) Passenger 500 10 500100 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 0 00 0 2011 2012 2013 2014 2015 2016 Jan Feb Mar Apr May Jne Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec JanJan FebFeb MarMar AprApr MayMay Jun JunJul JulAug AugSept SeptOct NovOct DecNov Dec 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

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LUCAS FOX WEBSITE INTEREST

Almost a quarter of interest in Barcelona properties on the Lucas Fox website came from Spanish residents in 2016. Website visitors from the United Kingdom made up nearly 20% of the total number of visitors and just over 10% of visitors came from the United States. European buyers from France, Germany and the Netherlands also regularly review Barcelona properties on the website.

WEBSITE INTEREST IN BARCELONA PROPERTY: COUNTRY OF ORIGIN, 2016 Source: Lucas Fox website data

Spain UK

24% Spain USA 30% UK USA Greece Greece NetherlandsNetherlands France France Russia 2% 2% Australia 20% Russia 2% Ukraine 2% 3% Other Australia 4% 11% Ukraine Other

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LUCAS FOX PREDICTS

“The Barcelona property market continues to attract investors from all over the world, thanks to its exceptional lifestyle and investment potential. In 2017 we expect New Development sales to drive the residential property market in Barcelona. We expect prices in the city centre to continue to increase, by between 6% to 8%. Other larger New Development projects that should come onto the market in the second half of 2017 are located in the areas of Eixample Left, Diagonal Mar and Poble Nou. They are perfect rental investments and will also attract non-European buyers looking to take advantage of the Golden Visa residency scheme. Our prediction is that sales in these developments will make up a high percentage of the mid-market transactions by foreign buyers. We predict further growth in the national market, more specifically in the Zona Alta, as the economy recuperates and financing becomes more accessible. We believe that Barcelona will continue to be an investment hotspot for several years to come, and capital gains growth will be consistent throughout.”

Rod Jamieson Head of Operations, Lucas Fox Barcelona

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