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Barcelona and Palma grapple with tourism and ‘gentrification’

CaixaForum building, Palma de Mallorca
Palma de Mallorca

Property development, and holiday rentals, are pushing long-time residents out of some areas of Palma de Mallorca, argues a recent report. It’s a similar story in Barcelona, where the authorities are drawing up plans to stop “gentrification”, and discourage real estate investors.

Rising house prices and rental costs in the centre of the Balearic capital Palma de Mallorca are driving out long-time residents who can no longer afford to live there, argues a recent report from an outfit called the Palma Gentrification Observatory (I read in the Spanish press). I get the impression from press reports the Observatory sees gentrification as a menace to be stamped out.

Apparently, investors looking to “speculate and book big profits” are one of the main drivers behind the gentrification of areas of Palma like the historic centre, Santa Catalina, the Paseo Marítimo, and El Terreno. Waterfront districts like El Molinar, Can Pastilla, and Cala Major are also under threat from people with money buying in.

The report from the Observatory keeping its beady eye on the gentrification of Palma also points the finger at tourists and foreign buyers. 35% of buyers in the Balearics in 2015 came from abroad, the highest level in all Spain, and some of them might be “gentrifying” districts of Palma.

Barcelona’s Anti-gentrification Plan

Barcelona is also at risk, it seems. City Hall recently announced it’s working on plans to head off the gentrification of the Ciutat Vella Old Town and discourage real estate investors in that area, with a view to rolling out the same measures citywide in due course.

What is gentrification? It’s typically when an inner-city area starts to rise in price primarily because of its location, which may or may not trigger speculation. It brings in money and investment, and can lead to positive transformation. But as people with money move in, people without money move out, so there are losers. It’s not always gentrification though: Take London’s Mayfair, where money moved in, and the gentry moved out.

Just some questions come to mind: Can you stop gentrification? Can you stop the market pricing location? Is gentrification always a bad or good thing? Are gentrification and speculation inseparable? Should the demand for tourist accommodation and gentrification be treated the same? Should politicians be trying to suppress the price of private property? I guess it depends on your political persuasions. But I do know this: 1) It’s hard to renovate in historic districts like the Barcelona Old Town and offer ‘affordable’ housing because renovation in those areas is so costly, in part due to local building regulations. And 2) property purchases taxes are so regressive (high for everyone) in Barcelona and Palma they encourage gentrification, because only the well-off can afford to buy, but you never hear politicians talking about that.

SPI Member Comments

2 thoughts on “Barcelona and Palma grapple with tourism and ‘gentrification’

  • “Are gentrification and speculation inseparable?”

    They should be easy to separate. In the case of Vancouver Canada, foreign ‘investors’ were buying flats, evicting residents and leaving the flat empty mostly as a means of parking money in a safe investment. This resulted in a a lot of vacant units, a housing crisis with rapidly rising prices, and an exodus of long-time residents.

    So Vancouver implemented a 15% tax on foreign real estate investment. And magically, foreign investment has dropped.

    While the tax seems extreme, it is also extreme to purchase flats and keep them empty. Cities rely upon having robust populations and a lot of vacant units leads to blight. And then there is the dynamic when large blocks of units are converted from residential use to tourism, which leads to nearby stores and services converting to souvenir shops and overpriced restaurants serving lousy food, further driving out residents as they have to travel farther just to find a dry cleaning store or groceries.

    I don’t know what the answer is but I think cities exist for their citizens and policies should reflect citizens as a priority. And cities need to grow, and policies need to reflect that too. I’m not saying that foreign investment needs to be locked out, but if it comes down to the well-being of citizens or the well-being of foreign investors, I think policies should favor citizens.

    Not everyone can live in Barcelona. Do we want a city of investors or a city of people who love the city?

    • Mark StĂŒcklin says:

      I agree with that Gary, but gentrification itself isn’t necessarily a bad thing, if it means locals move into a district and upgrade the housing stock. The investment you describe isn’t gentrification.

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