The real estate sector seems to leave behind the crisis in a gentle but sustained way.
Prices
The current real estate market situation is changing; prices have slowed their fall and are starting to increase again in areas of special interest, such as specific cities and neighbourhoods, a perfect situation for investors. Experts say it is an ideal moment for this type of operation. This is the case of Beatriz Toribio, Research responsible of Fotocasa, who noted that after the fall of real estate prices in a 45% the last 8 years, the sustained rise is set at a positive 0.3%.
Sales
This rise is explained by the increase of demand, which according to Fernando Encinar, Research director and co-founder of Idealista.com, exists more than a year ago is led by small and medium investors who have understood that the declines have finished, and that such operation is profitable now; the lowest price in years and low returns on financial packages.
In the same vein, there is an open war between banks that want to capture the attention of offering better terms on mortgages investors, and opening the flow of credit gradually.
The zones
Importantly, this uptrend runs unevenly. While in secondary cities and neighbourhoods the trend remains downward, in cities like Barcelona, we can see that in all districts, except one, prices rise, as we see in the Fotocasa Index data.
Buy to rent - turnaround
There is a change in society, and more markedly in young people not to hire mortgage and live as tenant. This trend makes the owned property investment even more interesting, as the bag of potential tenants is growing, and with it, the rental rates. In addition, the new laws protect the owners more clearly than years ago.
Rental prices are recovering their value before the property ones. According to Beatriz Toribio, to recover the initial investment is necessary to wait 19.4 years, at a rate of 5.2% of return on rentals. Catalonia has a yield above average, and with a 5.4%, the recovery time is less.
However, it should be clear what can be more interesting for an investor; type of property, expenses generated, demand in the area, communication, etc. By example, Fotocasa conducted a survey which found that the Spaniards live in flats of small size, between 60 and 100 square meters. So, this is the most attractive kind of apartments.
The alternative of classical real estate investment
There is a new investment model; Real Estate Investment Trust (REIT), companies which invest in real estate for rent, that are in the trade market, and that now are experiencing high growths, thing that makes them profitability and with a lower level of risk for the investor.
J. A. Hernando