Urban land sales jumped 18.5 per cent in the first quarter compared to a year earlier, providing evidence that investors may be ready to start signing deals on heavily discounted land in big cities.
There were 3,318 sales in the quarter, which was actually down 24 per cent from the last quarter of 2013, when sales were boosted by an end-of-the-year rush, according to the report from the Ministry of Public Works, based on data from the Property Register. Prices were also down 10 per cent from a year earlier, the study found, which won’t please land owners. And the numbers are still far below normal activity, given planning approvals for new construction remain at record lows.
But it’s interesting to note where the activity is taking place. One of the biggest increases was cities over 50,000 people, where there was a jump of 37 per cent. Prices in the provinces of Barcelona and Madrid were the strongest in the country — €355 a square metre and €523.6 a square metre, respectively – compared to an average of €220.80 a square metre overall for cities larger than 50,000 people.
While the volume in the big cities was still low–only 604 sales — the data follows a series of consistent recent reports which illustrate the growing investor interest in Spain’s big cities.
In many ways, Spain is a story of divergent markets. While overall prices and volumes continue to fall, and many markets continue to struggle, the big cities, along with prime coastal areas, are starting to see increased buying and rising prices as investors start to move on the perceived bottom of the market.
The urban land sales data shows that the trend is tracking across all sectors, including land, residential sales and commercial property.
Earlier this month Knight Frank reported that the Madrid luxury property market, along with Dublin, posted the biggest jump in prices in Europe, with a 5 per cent gain. Barcelona also recorded the third highest proportion of foreign buyers, with almost 70 percent, one of the three cities tracked that reported more foreign than domestic buyers in the luxury market, along with Monaco and Venice. Barcelona should join Madrid as a “growth market” in 2014, Knight Frank concludes.
And while searches are not indicative of sales, Madrid and Barcelona did record the largest increase in prime property searches in the Knight Frank study.
Beyond the luxury apartments, the investor interest extends into commercial property. According to a recent report from Real Capital Analytics, which primarily tracks commercial property, the number of property transactions in Spain was up 183 per cent in the first quarter, a €1.4 billion increase. RCA listed Spain among Europe’s top five investment destinations for Europe for the first time since 2010.
In 2013, investment in Spain from funds and private equity firms more than doubled to 13.9 per cent with 37 per cent going into real estate, RCA reported.
“The foreign market shows continued signs of a revived appetite for Spanish property and as confidence in European property returns, it is likely to remain the investment of choice for the long term,” RCA reported.
All this activity suggests that investors are spotting deals in the prime cities, and they are longer waiting for any possible drops in prices. The new data on urban land sales is a small part of that equation, but it’s part of the consistent trend. The report shows that buyers were finding good prices available. While the volume of buildable land purchased in the first quarter – 4.8 million square metres – was a 22.7 per cent higher than a year earlier, the reported value was actually down 0.7 per cent.