The price of luxury housing triples: buyers manage budgets of up to 20 million
By Mas Property
on Fri Dec 15 2023
The luxury home in Spain is a refuge value for the investor, since it is free of crisis and has a long way to go in price. According to experts, luxury homes in Spain are cheap if we compare them with other European countries, despite the fact that the price, in some locations, has tripled in recent years. “The investor with high purchasing power looks for a home where the price will not drop. I’m not saying it will go up, but it will never go down, because the homes where they invest are exclusive homes and there are very few of those on the market. Prices in Palma de Mallorca have doubled and tripled. you can no longer find luxury houses worth three million, now we are talking about houses worth 10, 12 and 15 million and if we go to the Port area Andratx, the houses cost up to 20 or 22 million euros” says Fernando Catalán, commercial director of Construye Capital.
Another place where the luxury elite in Spain takes refuge is Sotogrande. Roberto Roca, director of Sotogrande, highlights the added value and revaluation that homes receive when they are renovated to adapt them to the new needs of today’s clients. “Luxury housing is a refuge value in all cities and markets in the world and we have been able to confirm this in recent years in properties in Madrid and Barcelona that have acquired added value after being renovated. 10 or 15 years ago it was unimaginable to have houses worth 3 or 4 million and now they are sold every day because investments have been made in those homes to modernize them. For example in Sotogrande, some houses are from the 60s or 70s and are being renovated to provide added value to those properties.
It is clear that luxury properties are a refuge value within residential areas due to their exclusivity. “It is a market that has stopped being a second residence home and has started to be a first home or longer-term home thanks to teleworking as a result of the pandemic. In Spain the number of luxury home transactions has doubled. For example, in 2022 the sale of homes below 600,000 euros grew by 9% while the sale of homes above 1 million grew by 31%. If in 2021 we were around 3,800 homes out of more than one million throughout Spain, in 2022 there were almost 5,000 homes,” explains José Félix, director of Andalusia at Savills.
The luxury market in Spain has positioned itself as the fourth destination worldwide and the main European power for investments, according to data collected at the Premium Real Estate Summit event, which was held at Caixabank’s All in One in Madrid organized by Borbalán, Grupo Serra and Planner Exhibitions. “Spain is at the forefront for several reasons: Legal security, good climate, quality in healthcare and services, mobility with teleworking, culture, gastronomy and quality of life. Furthermore, there is confidence about the evolution of prices in this segment. Nowadays it has cheaper prices if we compare it with countries like London or Miami where the euro price per square meter is very different,” says Luis Díaz, director of the luxury area at Grupo Tecnitasa.
What challenges does this market face? Iván Picó, Real Estate Partner at Martínez Echevarria Abogados, declares that “we have to see what happens with the tax on large fortunes and whether the Golden Visa is maintained, a permit aimed at those foreigners who are interested in entering Spanish territory in order to make a significant capital investment. If this is the case, they may apply for a stay visa or, where appropriate, a residence visa for investors. The Golden Visa is a focus of attraction for the investor. There is also the challenge of the lack of land to launch new developments where the public administration has a relevant role to streamline the processes. The last challenge is the integration of all these exclusive neighborhoods so that they do not become ghettos.
The investor, in addition to demanding exclusivity and services in this type of housing, prioritizes sustainability. One of the trends is the integration of sustainability criteria in projects, responding to the preferences of the new generations, who play a key role in the market and show special concern for this aspect. Some investors are also increasing their demands for ESG-related certifications. The possibility of customizing the home in all its aspects, from the distribution to the materials, and the incorporation of amenities emerge as essential elements in the luxury residential sector.
Who buys luxury?
The profile of the luxury home buyer is mainly foreign. The Germans, British and Russians have always led this market, but now we must highlight the arrival of the American investor. “The investor in luxury housing has a very high purchasing power. “The Balearic Government has had the ability to establish, in addition to traditional flights with Europe, flights to the United States and American buyers have begun to enter Mallorca,” says Fernando Catalán. The most requested destinations for luxury homes are: Madrid, mainly by Latin Americans, Barcelona, the Costa del Sol and the Balearic Islands.
“We are seeing a new trend in the luxury market: Branded Residences, which allow us to attract new customer profiles who seek exclusivity understood as rare goods associated with high-end brands,” says Luis Díaz.