Detail News & Updates

Crisis in Catalonia Has a Limited Impact on the Spanish Property Market 29-Nov-2017

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 Are you planning to sell your property in Spain fast? Then you must be anxious about the situation in Catalonia as that threatens to really affect the Spanish property market.

Barcelona is one of the hottest overseas property destinations in Spain, especially for wealthy, international investors, and there is no question that the interest from buyers has dropped by at least 50% since the recent political crisis in Catalonia.

It has been two months since Catalonia held a referendum for independence, and a month since the Catalan administration declared independence. The Spanish government has since dissolved the Catalan administration and sacked all ministers and top officials.

Many ministers have been arrested, and the former Catalan President Carles Puigdemont, the man responsible for the crisis, is in exile in Belgium, waiting to be extradited to Spain. Prime Minister Mariano Rajoy has emerged stronger because of this and has full control of the situation.

 There have been consequences for the property market though, at least in Barcelona. Most people are staying away from Barcelona and tourism has dropped to a considerable extent. Experts say that property prices in Catalonia have dropped by 20% over the last few months.

It is understandable why – most international investors are wary of getting into a politically unstable environment. They would rather wait and watch for things to get calmer or look elsewhere.

 

Indeed, other regions in Spain have benefited from the political crisis in Catalonia. Valencia, for example, is suddenly the most prized destination for overseas investors.

Valencia has often been called a poor man’s version of Barcelona. It is similar to the Catalan capital in a number of ways but without the political issues or separatism.

It has now emerged as an appealing alternative for foreign investors looking to buy property in Spain online. Francisco Ballester of Rimontgo says, “It’s an authentic Spanish city with a rich cultural offering and fine local cuisine.”

Sonia Fabra of Engel & Völkers adds that Valencia is just as good as Barcelona, but a lot more affordable: “Here you can get a villa with pool 15 minutes from the old town for €200,000.” Such a property would cost around €500,000 in Barcelona.

Juan Luis Herrero of Lucas Fox elaborates on the Valencia/Barcelona comparison: “Before, we had a number of clients who didn’t know which to choose [from] between Barcelona and Valencia. Before, 80 per cent of those went with Barcelona, which is better connected and three times the size. Now it’s the other way around. Between 70-80 per cent are choosing Valencia.”

Other regions in Spain such as Murcia, Alicante, Canary Islands, Costa del Sol are doing pretty well and it does seem at the moment that the Catalan crisis is restricted to Barcelona and a few surrounding areas.

Spain continues to do very well, and it does seem that the Spanish economy today is one of the strongest in Europe. This holiday season will be closely watched as we expect a record number of tourists to visit Spain over the next month or so, which should certainly boost property prices.