Real estate investment rebounds in the first half
The first half of 2024 has been a crucial period for the real estate sector in Spain, marked by a notable recovery after the economic challenges of previous years. As the country adapts to a new context, with year-on-year GDP growth of 2.9% in the second quarter, the real estate market shows signs of growth, although it also faces significant challenges.
According to data from the National Statistics Institute (INE), housing transactions fell by 4.5% year-on-year between January and June 2024. These figures align with those of 2023 and are even positive, considering the interest rates that only began to decrease in June 2024. In this article, we break down the key factors that shaped the first half of the year.
Price and rent increases
This increase in demand has led to a rise in housing prices. In cities like Madrid, Barcelona, or Málaga, prices have risen between 5% and 7%, reaching record levels in some central areas. Currently, the price of housing in Spain is around 1,900 euros per square meter.
Similarly, rental prices have followed a similar trend, with a 7.3% increase across Spain, with major cities being the most affected. However, this trend has begun to spread to medium-sized cities and smaller towns.
Investments in the sector
During the first half of 2024, investment in the real estate sector maintained a positive pace. This interest has been primarily focused on logistics and residential assets, with a growing emphasis on rehabilitation and sustainability projects.
In Spain, according to data from the international consultancy firm Savills, by June, more than 5.5 billion euros in direct investment in real estate assets had been surpassed, compared to 4.8 billion in the same period last year. This growth has been driven by institutional investors, who represent 46% of the total volume and 25% of transactions. CG Capital Europe forecasts a “very dynamic” second half, following the 13% increase recorded by this investment bank in the first half, thanks to the boost from the hotel sector.
This figure includes investments in traditional sectors such as residential and offices, as well as in alternative assets that are gaining prominence, such as student residences, logistics centers, and build-to-rent (BTR). The latter, in particular, has caught the attention of major international funds that see residential rentals as a solution to growing demand and an opportunity to diversify their portfolios.
Outlook for the real estate market
The outlook for the rest of the year is optimistic. On one hand, analysts expect the real estate market to remain dynamic, albeit with some nuances. While housing prices and rents are expected to continue rising, some experts suggest that these increases could begin to moderate due to various factors, including government policies aimed at controlling rent inflation and the expected stabilization of interest rates.
On the other hand, in terms of sector trends, one common point is the growing digitalization of the real estate sector. The use of technology to improve the customer experience and optimize processes has been key to progress in recent months. From property searches to closing deals, digital tools are facilitating faster and more efficient transactions. Additionally, properties that meet energy efficiency standards are gaining popularity among investors, reflecting a shift toward more sustainable options.
Furthermore, real estate crowdfunding platforms, such as Urbanitae, allow small investors to participate in projects that were once reserved for large capital. This democratization of access to real estate investment is changing the way we can invest in properties while diversifying our portfolios.
In conclusion, the first half of 2024 has been a period of adjustment and transformation for the real estate sector in Spain. With price stabilization, an increase in rentals, and a growing focus on sustainability and digitalization, the market seems to be adapting to changes. Those in the sector who can adjust to these new dynamics and anticipate emerging trends will have the key to successfully navigating this evolving environment.