Spain suffered a seismic shock in October last year when Catalans voted for independence. Much like Brexit, it was a bitter and divisive referendum, with added violence on the streets. The repercussions were swift. Madrid, which had declared the referendum illegal, dismissed the Catalan government and imposed central rule.
“The real-estate consequences were immediate,” said Emmanuel Virgoulay, managing partner of estate agency Barnes Barcelona. With big banks moving their headquarters from the city and some pro-independence politicians fleeing in self-imposed exile, non-Catalan Spanish owners rushed to sell their properties. Many sales completed with discounts of up to 30 per cent late last year.
Up until then, things were going swimmingly in the luxury property market; in the 12 months to September 2017, the average price of homes sold by high-end estate agent Lucas Fox rose by 14 per cent to £730,000 (€830,000). Understandably, there is now unease.
“Some international buyers who were once considering Barcelona for a prime property investment are now more wary, and have chosen Madrid as an alternative,” says Rod Jamieson of Lucas Fox. Property prices in the Spanish capital grew by 7.2 per cent in the 12 months to September last year, according to Knight Frank.
Beyond the Catalonia crisis, demand for property among investors in Madrid has been growing progressively over the past three years since recovering from the crash. “Buyers interested in Madrid are attracted by the fact it is the third-largest European capital with an important business centre,” adds Jamieson.
“It also has a vast historical and cultural offering with world-renowned museums, architecture, theatres and they are usually real city lovers.” Latin Americans in particular favour Madrid and account for 18 per cent of buyers.
But can it compete with Barcelona? Due to its tourist industry and a growing hi-tech sector, Catalonia remains the richest region in Spain. For retired or semi-retired expats looking for an easy lifestyle, Barcelona probably beats Madrid hands down.
The checklist includes the Mediterranean shoreline, several marinas, a vibrant cultural scene, fashionable beach resorts such as the Bay of Roses, and five easily accessible ski resorts.
“Barcelona has a pull for lifestyle investors who are looking for a city on the beach. It attracts mainly northern Europeans and local Catalan investors,” says Jamieson.
Another group somewhat unscathed by the referendum and eager to keep buying in Barcelona are the ultra-high net worth individuals: those with assets over £30 million. Estate agency John Taylor thinks that as well as Asia, the Iberian Peninsula will be one of the areas that this class will target for property investment, and opened new branches in Spain last year.
One company exploring this sector is Squircle Capital. Not to be confused with a Pokémon character, it is the investment firm behind Barcelona’s Mandarin Oriental hotel. It has just unveiled its first residential project: the conversion of a landmark building known as Francesc Macià 10, in one of Barcelona’s best residential areas. The Sixties Bauhaus-style former office is one of Barcelona’s few modern listed buildings.
The challenge of converting this round property has been met by Brazilian architect Marcio Kogan of Studio MK27.
There’s just one apartment on each floor and each has 180ft of windows. There is also a spectacular pool and spa, designed by BassamFellows. “We come from the hotel industry so we are already obsessed with service,” says José Caireta, co-founder of Squircle.
The company set the bar high for the project at the ouset, so it made a 10-fold increase in the amount of communal area you would normally get in an apartment complex. BassamFellows furnished it with elegant materials throughout: American walnut, brass, basaltina stone, and Tunisian marble.
Squircle sold three of the apartments very quickly to local families who had seen the project unfold. Only one apartment is finished, and the rest are shell and core. Buyers can put in their own designs and choose the number of bedrooms they want by adding in walls. The flats are €8 million with Knight Frank, plus an estimated fit-out cost of €2 million.
“We were very worried initially by the referendum, but at our product level it makes less impact,” says Caireta. His latest project with Squircle is redeveloping OneOcean Port Vell, one of only two marinas in Barcelona with berths for superyachts – perhaps a sign of growing optimism.