By Omri Barzilay, published at FORBES Magazine.
With Foreigners Flooding The Market In Barcelona, Shouldn’t You?.
With concerns of Spain’s economy subsiding thanks to the strong pace it demonstrated in the fourth quarter of 2015 despite a rather inconclusive national election, eyes have now turned to the real estate market in the country. Because Spain has been enjoying a robust recovery from its double-dip recession, there is new foreign interest in the real estate market.
There are a number of reasons for the rise in interest in the real estate market, particularly around large cities like Barcelona. One reason is that loan defaults which had a major impact on Spanish banks in recent years dropped in 2015 which signals that consumers are earning more and helping in pushing back concerns about the economy as a whole. The Spanish government 10-Y bonds are now trading around a 1.5% rate, a dramatic decline compared with the 7.2% rate they were traded around the summer of 2012, a strong signal of confidence in the Spanish economy.
The housing index in Spain in the third quarter of 2015 was 1476 €/Sq.m. which was still more than 40% under the all time high set in the first quarter of 2008 which was 2101€/Sq.m. Although the market was dropping in 2013 and 2014, investors such as Azora and Goldman Sachs were keen on the potential it offered in the near future and started to make purchases even in 2013.