Spanish City Centres House Property Gems
April 5th, 2010
Until three years ago in Barcelona’s old town, the ciutat vella, the British mania for buying up properties in conditions ranging from tired to totally ruinous at exorbitant prices, mystified the local population.
Barcelona’s wealthier residents have always preferred the city’s airier, more modern districts nearer the hills, considering historic areas such as the Born rather dirty and noisy.
“The Born was white-hot during the boom because of its great location near Barcelona’s only real park, the beach, port and touristic old town,” says Mark Stucklin from Barcelona-based Spanish Property Insight.
“Foreign buyers helped drive up prices to unrealistic levels, giving the impression that all foreigners were loaded fools, and local vendors took advantage of this.”
The crash, of course, put the brakes on all of that. Prices in central Barcelona have fallen by up to 30 per cent since their 2007 peak, with British buyers backing out altogether last year due to the fall in the pound and lack of mortgages. But, spurred on by discounts, we are starting to return.
“Areas such as the Born will always be in demand which is why property there will be last into, and first out of, the recession,” Stucklin says.
Andrew Snape, an estate agent from Bramhall in Cheshire, has just dipped back into the Barcelona market, having bought his first Barcelona property, a two-bedroom flat in Gracia, in 2004 for £250,000 and, after some basic improvements, sold it “quickly, luckily” in 2008 for £320,000. He has now bought a modernised two-bedroom duplex in the Born overlooking Ciutadella park for around £340,000 — previously it was on the market for £450,000.
“It was the show flat in a grand old building that has been beautifully restored and we are a 15-minute walk from the beach in one direction and the Ramblas in the other,” says Snape, 53, who uses his flat for holidays each time a long-term rental tenant (these pay £1,300 a month) leaves.
“We had no difficulty renting out the last flat for six to nine months a year. This time, although this is in one of the best locations, it is proving more difficult as there are a lot of apartments on the rental market,” he says.
“It’s easier to find a bargain now. Six years ago, everything was selling fast and prices were rising quickly. Now nothing will sell if it’s overpriced.”
Estate agent Francesc Claraso from Engel & Volkers says prices may continue to fall until autumn. “Now is a good time to find good value old-town apartments, near the park and beach, which is what everyone wants. And there are numerous developers who are being hounded by their banks, so they have reduced prices,” Claraso says.
Local estate agency Lucas Fox has a range of discounted old-town properties on their books, starting from £245,000 for a 57 sq m studio flat in the Gothic Quarter. In one of the most sought-after locations, next to the Santa Maria del Mar cathedral, a bright three-bedroom apartment with five-metre high vaulted ceilings has been reduced from £670,000 to £525,000.
“The Spanish press and agents are saying prices have reached the bottom in Barcelona and the large number of local buyers re-entering the market would seem to suggest the Spanish agree,” says Alex Vaughan, director of Lucas Fox, who adds that it is a particularly good time to find a bargain if you are happy to renovate.
“Local families needing liquidity have had to let go of some of their property portfolio and the first to go are the older properties that need further investment to realise their potential,” he says.
In Majorca’s capital city of Palma, often called the “mini Barcelona” because of its combination of beach and beautiful old town, it is a similar story for bargain hunters and Majorca property.
“The slowdown has meant there are some great opportunities for buyers. One developer is offering a 20 per cent discount on his original price in a converted 17th-century palace to shift sales,” says Terence Panton from Engel & Volkers in Palma, who is now selling the two-bedroom, high-ceilinged apartments for £767,000.
On the seafront in Palma’s old town, a two-storey, four-bedroom penthouse with a rooftop pool has been reduced by £900,000 to £2.6m.
Making the most of falling prices in Palma are Howard and Helen Seymour, who run an IT business in Manchester and have just bought a striking, three-bedroom triplex in a converted palace for £1.34m through Engel & Volkers, a 25 per cent discount from when it first went on the market in 2007.
“We bought a small apartment on the Paseo del Born, in the old town, five years ago for £310,000, but we now spend half of our time in Palma and wanted somewhere bigger,” says Howard, 63.
“We had been looking for two years and felt it would be too difficult to do our own renovation from a distance, so this place is ideal,” he adds. “We don’t overlook the sea, but it’s more important to us to have nice accommodation than views. It’s a healthier quality of life, with a 15km boardwalk that we cycle along.”
Demand for Palma’s old town properties dropped as rapidly as prices last year, with values falling by 20 per cent since their 2008 peak, when they were on a par with prime Madrid. “But,” says Jan Westwood from The Property Finders in Majorca, “interest is returning as economies claw back. You can now find one-bedroom flats for between £160,000 and £220,000.
“Most of my clients don’t want to renovate, don’t need a parking space and want to be within 10 minutes’ taxi ride of the airport. They want a two-bedroom apartment with traditional features such as wooden beams and terracotta floors, so the old town suits them,” she adds.
“If you are seeking good rental returns,” she says, “buy in Santa Catalina, near the market, or Calatrava, around the cathedral, and offer winter lets to the yachting community who are based in Palma city.”
Paul Edwards, 41, who moved from Cardiff to Majorca five years ago, has built up a good business by buying discounted properties in Palma’s old town, which he rents out to tourists.
“You can get year-round rentals with the right property, in a good building with a lift, in the old town,” says Edwards, who recently bought a two-bedroom flat near Palma’s cathedral for £295,000 (it was originally valued at £375,000) and rents it for £130 a night.
“We are seeing a lot of English people putting their old-town properties on the market as they can afford to discount the price if they are converting their money back to pounds. But the Germans are the clever ones,” says Edwards. “They are snapping them up again.”
Story from The Telegraph
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