Mark Stücklin
If you are fortunate enough to be able to afford property in the ‘super-prime’ category, what are your options in Spain, and what do you get for your money in Spanish cities compared to London, the super-prime capital of Europe?
To make comparison easier I’m going to focus on the serviced- apartment segment – what the Americans call condominiums, or condos for short – as the single family home segment is much bigger and more heterogeneous, making international comparison of that segment tricky.
What is super-prime?
The first job is to define ‘super-prime’.” It’s the very top end of the market in the best locations, where the quality of building materials, services offered, and prices paid are in a class of their own,” explains David Rolt, sales director of Francesc Macià 10 in Barcelona, the first super-prime serviced-apartment development in Spain. So it’s the combination of location, quality, service, and price that sets the super-prime segment apart, with prices in a different league to the rest of the market. Most cities in the world have nothing to offer in the super-prime apartment category.
On the other hand, super-prime demand is highly international. The product is so expensive that most local markets can’t support it. You need either a captive local market with enough very rich people like Shanghai, or both local and international demand at the very high end to play in this market.
In some respects super-prime developments offer a similar level of building-quality and service across markets, as their buyers are mega-rich globe-trotters with international comparisons who won’t settle for less. What really differentiates markets are locations and prices. London is very different to Madrid, and there is a big difference in price between London and Barcelona, even if the service and build-quality is on a par.
What’s on offer in the super-prime serviced-apartment category?
Every buyer has their own reasons for choosing their location, and one of those reasons will be what’s on offer. So what is on offer in European cities that appeal to super-prime buyers?
One rule of thumb is to look at where high-end hotel brands like Four Seasons and Mandarin Oriental offer what they call their ‘private residencies’. By that measure you find serviced-apartment developments for sale in London and Barcelona, sold out in Madrid and Florence, with projects in the pipeline for Tel Aviv and Vienna.
Though just a rule of thumb, it’s not a bad guide to the availability of super-prime serviced apartment new developments in Europe. London has long been the undisputed super-prime capital of Europe, if not the world, thanks to its global standing, international wealth, and peerless stock of prime buildings, especially in Mayfair. “Paris places more restrictions on building development, and doesn’t have the same international appeal as London, so the super-prime serviced-apartment market has never taken off there,” explains David Rolt, who has many years of experience in the super-prime market. “No other European city has the international pull and building stock to play in the same league as London.”
Super-prime in London
Arguably London created the super-prime serviced-apartment market with projects like One Hyde Park, completed in 2011 (a Mandarin Oriental residence), and offering 86 serviced-apartments selling for 7,000 £/sqft (75,350 €/sqm) where the previous price for London’s high-end had been 2,500 £/sqft (31,000 €/sqm). In 2021 the developer Nick Candy put his 18,000 sqft (1,672 sqm) penthouse on the market for £175m, or 9,720 £/sqft (120,350 €/sqm), but was still looking for a buyer at the same price in December 2022. There are dozens of super-prime serviced apartment developments on the market today in London, in districts like Mayfair, Knightsbridge and Belgravia, with list prices of between 40,000 €/sqm and 70,000 €/sqm.
What about Spain? In this league there are a small number of projects in Barcelona and Madrid, and that’s it.
Super-prime in Barcelona
The first super-prime serviced apartment project in Spain was Francesc Macià 10 in Barcelona, where just one full-floor 600 sqm apartment is still available for sale in shell and core condition with a price tag of €6,000,000, which works out at 10,000 €/sqm. However, you also have to factor in the fit-out, which could cost between €2m and €3m, so your all-in pre-tax cost is likely to be closer to €9m, which works out at 15,000 €/sqm. With the project almost sold out, two thirds of buyers have been local, and one third from abroad.
Another project in Barcelona that earns its place in the super-prime division is the Mandarin Oriental Residences Barcelona, where the penthouse recently sold for a price-shattering €43m, which works out at a pre-tax cost of just under 74,000 €/sqm, putting it on a par with London prices. Lower floor apartments are reportedly on the market for a minimum of 15,000 €/sqm.
The only other new development in Barcelona that could be considered for inclusion in the super-prime league is the Antares Barcelona project in the Diagonal Mar neighbourhood near the beach, where the cheapest available units start at 7,400 €/sqm but mostly range between 10,000 and 15,200 €/sqm.
Super-prime in Madrid
In Madrid there is even less on the market in the super-prime category than Barcelona, though that will change before long as new home building has collapsed in the Catalan capital due to a change in the planning regulations.
The Four Seasons Canalejas Residences projects of 22 apartments has sold out reportedly at a price of 12,000 €/sqm, as has the Lagasca 99 project from developer Lar España in the heart of Madrid’s tony Salamanca district, with 44 units selling (reportedly) for prices ranging from €3 and €17m and an average price of 12,000 €/sqm. Perhaps the only project still on the market that could be considered for the super-prime league is Marqués de Salamanca 11, also in the Salamanca district, with one unit left costing 5.9m euros (14,600 €/sqm).
Madrid has a big advantage in the super-prime market as the favoured European destination for high net worth buyers from Latin America, who have acquired the taste for this product in places like Miami, and might not flinch at super-prime prices in Madrid if the build and service quality cuts the mustard. So it’s reasonable to assume that more super-prime serviced-apartments projects will be planned in Madrid in the next few years, to meet the demand.
Barcelona has the demand, but the product will run out
The same cannot be said of Barcelona, where the local government has discouraged all new development with a 30% social housing quota that is particularly impractical in the super-prime category. As a result, new home building has collapsed across the board in Barcelona.
“The homes on the market today will be the only new stock for many years, so scarcity is inevitable,” says Rolt. “Barcelona has demonstrated there is demand for super-prime serviced apartments in the city, but it could be decades before we see a new project on the market to meet that demand, and that scarcity will protect today’s buyers.”
There is a good selection of villas in the super-prime category in places like Marbella, Ibiza and Mallorca, but serviced-apartments are limited to Barcelona and Madrid, not unlike London in the UK. Madrid has the demand, building-stock, and planning regime to expect more super-prime projects in future, whilst Barcelona has the demand but no chance of any new projects for the foreseeable future. Scarcity in Barcelona is guaranteed.
