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Housing investors made to feel unwelcome in Barcelona

Speculators get out of the neighbourhood

Ugly scenes in Barcelona as housing activists from the radical left protest a trade fair for housing investors, begging the question ‘who, then, do you expect to pay for home building in Barcelona?’

What happened? A new trade fair for housing investors called The District was launched in Barcelona between the 19th to the 21st of October, and local housing activists made it their business to rain on The District’s parade, invade the pitch, throw paint at attendees, and disrupt the prize-giving gala evening event.

Who or what is The District (Show)?

According to the show’s website:

The District is the new international professional event where the future strategy of the Real Estate sector in Europe is defined and where to discover the projects with purpose according to ESG. The District brings together Real Estate capital specialists (equity and debt) to take the pulse, anticipate the megatrends of the different asset classes (traditional and alternative) and their yields, the risk versus return profile of core, core plus, value add and opportunistic investments.

Who were the protesters disrupting The District?

Judging by social media, lots of different groups of housing activists from the radical-left took part or boosted the protest on social media using hashtags like #NoATheDistrict (click the link to see the fun on Twitter or watch the video below). Reuters reports they managed to delay the opening event.

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Naturally, the activists couldn’t miss the prize-giving gala event and produced a special flyer to organise protests describing it as an event where ‘the main people responsible for our misery celebrate a gala to award prizes to the best speculators of the year.

They also produced a promotional video to motivate protesters saying “some rich people toy with our lives and we are going to stand up to them…this 19th of October those people who do business with our homes want to meet up in Barcelona. Come and clock them.”

You can tell from their language the activists come from the far-left of the political spectrum, which is also where the current Mayoress of Barcelona Ada Colau and her Barcelona en Comú party come from. For them housing is simply a moral question, and ‘big’ investors and landlords are just immoral people for seeking to profit from housing. The centre-left PSOE socialists also have a position on the housing problem, but they don’t use hate-filled language. They recognise that private capital invested for profit has to be part of the mix to improve housing access. Indeed, the leader of the Socialist party in Barcelona, Jaume Collboni, who is also the Deputy Mayor under Ada Colau, attended the show, but as a speaker not a protester.

Well organised and well funded

I would wager that Barcelona has some of the best organised and funded housing activists in the world. They stage protests, stop evictions, help squatters, and pressurise politicians to impose rent controls and curtail private property rights. They seem to have plenty of free time for protesting.

Barcelona’s Mayoress since 2015, Ada Colau, came to prominence after Spain’s catastrophic property boom and bust as a housing activist who successfully harnessed local grievances against austerity, corruption, housing costs, and mass tourism, to take over City Hall. Ever since then she has supported her friends on the radical left, which helps explain why they are so well organised and funded in Barcelona, with the full backing and support of City Hall.

Real problem

Like many cities, Barcelona has a serious problem on the housing front with demand far higher than supply, so this is not an imaginary problem invented by the radical Left like other issues. But the situation is particularly bad in Barcelona for a number of reasons.

  • The city has a small footprint hemmed in by a steep hill behind, and the sea in front – there is no more land to build, unlike Madrid
  • Planning regulations restrict the production of new dwellings
  • The planning department is slow and inefficient
  • Mass tourism places pressure on the stock of accommodation in a relatively small city
  • Local politicians and activists discourage housing investment that might help
  • Barcelona’s risk premium is higher than it should be

Vultures and speculators

Barcelona’s housing activists see all residential-property investors (for profit) as nothing but vultures and speculators sucking the life out of the city and fuelling gentrificación, which is a very dirty word in Spanish. So an event on home turf for ‘real estate capital specialists’ was like a red rag to a bull, ESG talk notwithstanding. You might think twice before organising a get-together for housing investors in Barcelona in the light of this.

Barcelona’s housing activists and political overlords seem to think that rent controls and squatting will help, along with public housing (almost zero). But if you don’t increase the supply or quality of housing in the city, how do you improve access to housing? Rent controls do not incentivise landords to produce more housing. So who will pay to build or renovate housing in sufficient numbers to make a difference?

Whether you agree with the housing activists or not, it’s a fact that housing is capital intensive, so you need a lot of money to build or renovate homes, especially in a city where land is scarce (expensive) and the planning system and taxes makes it even more costly. The State can’t afford to provide all the housing that Barcelona needs, so private capital is essential unless you assume, as some do, that quality housing for all appears as if by magic.

Demonising all for-profit housing investors as speculators, even the ones looking for low risk and reasonable returns over the long term (like pension funds), and throwing paint on them, means you end up with just the speculators prepared to take high risks for high returns, and who don’t mind a bit of paint and argy-bargy from time to time. Like a Greek tragedy, Barcelona’s housing activists are doing their best to ensure the city gets the type of housing investor they hate the most.

I should add that Barcelona’s housing activists don’t seem to have private investors in their sights, just the kind of ‘big’ investors who attend a show like The District. Paradoxically, the activists might help drive up the price of property in Barcelona by chasing away big investors who can move the needle on the supply side. So if you are thinking of buying a home in Barcelona for personal use don’t let the housing activists and their friends in City Hall put you off. They might boost your capital gains.

Whilst housing activists were protesting against investors and gentrification at The District, across town in the Raval locals were protesting about the decline of their neighbourhood now overrun by criminals, junkies and squatters. The activists might hate gentrification, but they don’t seem to have a problem with urban decay.