A new report from the international real estate consultants CBRE argues that an acute land shortage in the Catalan capital sets the scene for rising house prices.
House prices in Barcelona will rise 10% on average this year, forecast CBRE, as land scarcity starves the market of new homes. Prices in Catalonia as a whole are forecast to rise by 7%.
Other factors driving up house prices in Barcelona include a bounce after the crisis pushed prices down dramatically (in many cases below replacement costs), historically low mortgage interest rates, and a big increase in mortgage lending now underway.
What new development activity there is in the city tends to focus on the refurbishment of existing buildings, in many cases financed by investment funds.
Many of these projects involve a change of use from offices to residential, as fast rising house prices make residential real estate more lucrative than office space. Change of use developments are full on in the Old Town (Ciutat Vella) with 5 projects underway, the Eixample with 12, and Gracia with 8.
The districts with the most new residential developments underway are the Eixample and Sant Martí / Poble Nou, with foreign demand a key driver in both districts.
CBRE recommend that planning authorities do more to increase the supply of building land and facilitate redevelopment to avoid a cycle of escalating house prices in Barcelona.