Barcelona is one of the safest cities in the world, according to the ‘Safe Cities Index 2015’ just published by The Economist’s Intelligence Unit (EIU), which also identifies Barcelona as one of the best cities in the world in which to live. With house prices bottoming out in Barcelona, these rankings help build the argument that Barcelona is also a safe property investment at this stage in the cycle.

Barcelona is the 15th safest city in the world says The Economist, the third safest city in the EU, and the fourth safest in Europe, after Stockholm, Amsterdam, and Zurich, and ahead of London (18), Frankfurt (19), and Madrid (21).

For “health security”, Barcelona is in seventh place, and fourth in Europe, based on factors such as the ratio of hospital beds to population size and life expectancy. Health security is a big driver of preferences for international property buyers.

The Index focuses on the top 50 cities selected by The Economist Intelligence Unit, using four thematic categories of digital security, health security, infrastructure safety, and personal safety, incorporating more than 40 quantitative and qualitative indicators.

The report points out that “cities are already home to a majority of people on the planet,” with urban populations ranging from 82% in North America to 40% in Africa. “All regions are expected to follow this trend towards greater urbanisation over the next three decades.”.

In future, city safety will be an increasingly important factor determining where people would like to live. “Urban safety is therefore a critical issue that is set to become even more important over time,” says the report.

In the EIU’s Index of Indexes, which helps to answer the question “which is the best city in the world to live?” Barcelona is in 17th place, and sixth in Europe behind Stockholm, Amsterdam, Zurich, Brussels, and Frankfurt. The answer to this question is, of course, highly subjective, as the report acknowledges.

“Deciding where to live is a personal choice for many city residents. For some, safety will be paramount. Others will prioritise culture and creativity,” explains the report. “Two neighbours may hold opposite views on democracy and the cost of living. But often choice will be based on a mixture of reasons: an entrepreneur looking for the best city to start a business may also intend to start a family.”

ANALYSIS BY MARK STÜCKLIN

A high ranking for safety from the EIU is another feather in Barcelona’s cap. It already has an international reputation for quality of life, architecture, style, culture, health care and schooling, and in recent years has been attracting an increasing number of foreigners buying property in Barcelona.

A top-ranking reputation for safety from such a prestigious publication will give people looking for a vibrant city on the Mediterranean yet another reason to put Barcelona at the top of their short-list. It’s hard to think of another Mediterranean city that can compete with Barcelona.

Safe As Houses?

What about safety from the point of view of property investment? Is Barcelona a safe investment with strong property rights, and house prices likely to hold their ground or rise? The Economist doesn’t rank cities specifically by property investment risk, but if it did, I would expect Barcelona to rank well on this measure too.

Why? Because the supply, demand, and price fundamentals look good at this stage in the cycle. Public data already shows that Barcelona’s house prices are bottoming out after seven years of declines, sales are increasing, mortgage lending is up, and the pipeline of new stock is basically bone dry in a city with acute geographical limitations on the supply of land and housing. And now, thanks to globalising property markets, international demand for real estate in Barcelona is growing at the same time as local demand, partly because Barcelona is one of the best and safest cities in the world, as The Economist points out.

Private property rights in Barcelona are also rock-solid, and there are no plans to to squeeze prime property owners with a “mansion tax” like London.

What are the risks? There are, of course, macro risks like Spain leaving the Euro, or slipping back into recession, or a unilateral declaration of Catalan independence plunging the region into crisis, all of which are easy to identify but difficult to evaluate.

Then there are specific housing market risks like rising supply and falling demand driving down prices, but at this stage in the cycle it looks like the opposite is happening. So what are the chances that house prices in Barcelona will fall further? Look at this chart of Barcelona asking prices since the start of the crisis and decide for yourself.

Eight years after the crash started, Barcelona’s asking prices are down 27% peak-to-present in nominal terms, which explains why prime property in Barcelona looks like a bargain by international standards. Which other high-profile city that scores so highly in global rankings can boast refurbished prime property prices as low as 5,000 €/m2? Not many, judging by the Knight Frank Prime International Residential Index (2014). Prime property in Barcelona is considerably cheaper than many other world cities with inferior rankings for safety and quality of life.

With the EIU report confirming the high quality of life and safety of Barcelona, and the local property market bottoming out, this might be the best time in the cycle for anyone planning to invest in property in Barcelona.

You can read the The Economist Intelligence Unit Safe Cities Index 2015 (pdf) here.