Barcelona’s real estate market has shrugged off the political upheaval that followed Catalonia’s independence referendum, which was declared illegal by the Spanish government two years ago. “If the political instability comes back, it is going to have an effect on the market as it had on 1 October 2017 and the following months,” says the CEO of one Spanish REIT. “Now rental growth is very strong, even stronger than in Madrid.” A partner of a Spanish real estate private equity rm agrees and says headquarter relocations turned out to be “a legal event rather than an actual movement away of businesses and workers”, while the city’s investments are again “as liquid or even more liquid than Madrid’s”. Office leasing was the strongest-ever in the rst half of 2019; at 250,000 square metres it was almost a typical year’s figures. The lack of available space in the CBD and city centre has boosted periphery submarkets such as Sant Cugat del Vallès as well as the 22@ district close to the city centre, driving up average rents by 11 percent. “The same rental tension applies across stock which is one-third the size of Madrid,” points out the CEO. Occupational demand has squeezed vacancy levels in the centre to 2 percent and below 5 percent in 22@.
With its cosmopolitan, community feel, Barcelona is a big centre for co-working. The city is on the buy list for many respondents who are hunting for of ces they can refurbish and re-let. “It is always easier to get deals done in Munich or London than Barcelona because of the scale, but you have to adjust to that,” says one private equity player. While the city authority’s hands-on approach to residential development, with minimum social housing quotas, is disliked by some, Barcelona Town Hall is recognised for being proactive and efficient. The city is focusing its urban expansion agenda on three areas: the next phase at 22@; the ‘Hill and Harbour’ by the marina south of 22@; and the area north of the main centre around La Sagrera station. A group of Catalonian public bodies are working together to acquire ve large plots of land around the region’s capital to develop logistics and boost the tight supply. Meanwhile, as in Madrid, hotels are a strong draw for investors; both daily rates and growth in revenue per available room have risen in 2019. ASG and Hard Rock International are to invest €200 million developing a 504-bed Hard Rock hotel on the city’s downtown Fòrum beach. (Content from PWC emerging trends in real estate Europe 2020)