Big investment funds have been shunning Barcelona for years, but boutique investors are finding profitable niches in the city.
Between 2013 and 2018 Barcelona was a hotspot with big and small international funds looking for residential investment opportunities after Spain’s monumental property crash, but by 2018 the party was over. Political conflict between Catalonia and Spain, and local regulations designed to raise the cost for big investors, made Barcelona a city to avoid for many institutional housing investors. I know one big fund with deep experience of Barcelona that came to the conclusion it would consider any Spanish city but Barcelona.
The price of property for sale in Barcelona also suffered from local politics, with prices today below where they were in 2018, unlike Madrid where prices have risen. House prices in Barcelona are down almost 10% since 2018, according to data from City Hall. Forces that have dragged down Barcelona’s house prices include the independence drive, rent controls, local regulations, and the pandemic shifting demand away from the city centre to the suburbs.
But whilst a collapse in big developments and institutional interest might have reduced overall investment in Barcelona’s residential real estate, it has also created opportunities for boutique investors looking for profitable niches like student accommodation. Reduced investment demand has kept a lid on wholesale / building prices, as have rent-controls and the town halls pre-emption rights, whilst the lack of investment is creating a shortage of new homes on the market, both for rent and sale. Boutique investors being more nimble than big funds can target smaller opportunities and find rich pickings in Barcelona with the right expertise.
An example of this was the recent purchase by a German investor of a period building in Calle Trafalgar to develop as a mid-term rental business in Barcelona’s Right Eixample district popular with visitors due to its excellent location walking distance to the centre of town, the city park, and the beach.
“Mid-term rentals with the right formula of location, decoration and services are one example of niches you can find in Barcelona that offer good returns if you know what you are doing, and get the purchase right,” says Katya Moshnikova of Urbane International Properties, a Barcelona-based agency that advised the German investor, and will manage the rental business on his behalf. “For all the reasons the city is off-limits for big investors, it’s an opportunity for boutique players who can exploit niches.”
Cities like Madrid are corporate and big, whilst cities like Barcelona are boutique and cool. Each to their own.