13/09/21

Barcelona's 2021 New Developments' sector remains strong and forecasts a promising year-end

The new FORCADELL 2021 New Development Report highlights key factors like the optimal sales rate, demand increase, price stability and a renewed interest in residential assets which mark the good performance of the sector.

Regarding sales, this first half-year has been a relatively successful period, as the Forcadell New Developments Report reflects. The Barcelona region shows signs of a continued positive performance, just as it did at the closing of 2020, expecting this will predict a promising 2021 closing. Although part of the population has had their purchasing power compromised due to the current health crisis, there is a considerable portion of the population that has significantly increased their savings rates.

The New Developments sector has also been able to capture demand from second-hand homes. This is due to the price differential between the prices of the two products, taking into account the quality/price factor. In addition, buyers show a preference towards larger properties, with exterior common areas, Energy Efficiency certificates, the best finishes and the possibility to have a parking space and a store room in the building. These are the reasons the New Development sector is gaining a larger share of the buyer/seller residential market.

“The current market has experienced a boost due to different factors, some as a direct consequence of the pandemic: a demand increase from buyers who were not able to enter last year’s market; an increase in New Development purchases due to the fact that the vast majority of the unfortunately deceased by Covid-19 owned their homes, therefore their heirs have usually bought a new construction home. And finally, the investors’ gradual comeback according to product and zone,” affirms Christian Gracia, Forcadell’s Investment, Land and New Developments director.

SUPPLY

In Q1 2020, Catalonia registered a slowdown in new construction developments. According to Forcadell, even if this indicator shows an uptrend, it is still under its usual average rates. Although in 2021 the forecast is to reach the same construction volumes as the production reached prior the pandemic, this figure will hardly fulfill the current demand. The main reasons are influenced by key factors that link the RE sector to Barcelona City specifically: the 30% land destined for subsidized housing mandatory for each new construction that is initiated, together with the context of the pandemic and the circumstances of the City, continue depriving the Catalan capital of an adequate progress of a New Construction Development Market.

The Forcadell Report highlights the zones of La Marina Del Prat Vermell in Barcelona and L’Hospitalet, as a municipality as a whole. Both areas have remarkable residential areas that have been welcomed by its residents. These areas will transform the economic and social reality of their immediate environments. 

On the other hand, “property developers will continue supporting Build to Rent (BtR), since rental demand continues active in considerable population segments that can’t afford to buy a property, or, for personal reasons, opt to rent. This market niche is also changing its preferences, looking for quality properties that offer more space, common areas and a higher energetic efficiency”.

PRICES

New Developments prices remain stable, as reflected in the Forcadell Report, registering still certain corrections, due to the sales slowdown pace, a direct consequence of the health crisis. However, these corrections do not exceed +/- 3% per half-year. In addition, they can also be temporary, resulting from commercial strategies conditioned from existing developments that were stuck during the confinement health crisis, waiting to be promoted in every zone. 

According to regions, Barcelona (with an average of 5,470 €/sqm) has once more doubled the price registered in the Vallès’ locations, while in the Catalan capital there is stability, and a wide price range: an example are the neighbourhoods of  Sarrià- Sant Gervasi (7,600 €/sqm) and Nou Barris (3,625 €/sqm).

“Although the New Development Market will maintain a stable market quota, the sector’s performance will undoubtedly continue linked to the pandemic’s evolution and its economic and social repercussions throughout the current fiscal year, and most predictably, next year's. A much more professionalized property promoter sector, adequate to a stable demand, forecasts a healthy New Development Market future,” concludes Forcadell’s Christian Gracia .

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