Rabassa Explains the Increased Foreign Investment in Spain’s Luxury Real Estate Market

Author: @pmartinez-almeida

Source: Idealista

Warren Buffett’s real estate firm in Spain has recently opened a new office in Málaga, joining the existing one in Marbella. This expansion aims to meet the growing demand for luxury properties in this Spanish region. However, interest is not limited to the Costa del Sol; there is increasing foreign interest in high-end properties across Spain.

Bruno Rabassa, CEO of Berkshire Hathaway Home Services, discusses the surge in foreign investment in Spain’s luxury real estate sector. Factors such as the climate, excellent infrastructure, property prices, and safety are drawing more foreign buyers. Additionally, there is a growing number of foreigners interested in purchasing second homes in Spain following positive experiences with their primary residences.

How Do You View the Real Estate and Economic Sectors?

Experts suggest that the market might shift at the end of this year and in early 2023. Rabassa highlights several uncertainties impacting the Spanish real estate sector, including the global macroeconomic environment. “We have just come out of a pandemic, face a significant crisis in raw materials, and are dealing with skyrocketing fuel, electricity, and gas prices. Inflation is close to double digits in Europe and slightly lower in the U.S. Moreover, constructing new homes remains challenging due to unclear service costs and delays in delivery.”

He also mentions the rising interest rates, which, while reasonable, pose challenges for families trying to buy homes. Rabassa emphasizes the need to resolve uncertainties in both the second-hand and new housing markets. He points out that the demand for housing remains high, but there is difficulty matching supply with demand due to challenges in finding second-hand homes and high construction costs.

What Is Berkshire Hathaway Home Services?

Berkshire Hathaway Home Services in Spain was established in July 2019, following discussions with the U.S. company, which sought a strategic partner to expand in Spain and across Europe. The company, already a leader in the U.S. market and having ventured into Germany, aimed to maximize its global network by establishing offices in key locations across Spain.

The company does not operate on a franchise model but instead looks for potential companies in the Mediterranean region, the Balearic Islands, and the Canary Islands, offering to buy a majority stake in them.

How Are You Expanding in Spain?

Rabassa explains that the expansion strategy involves partnering with companies that align with their values, such as integrity and trust, rather than franchising. He also notes that while the company does not plan to enter the property development sector, it continues to explore opportunities for acquisitions and expanding its range of services.

What Is the Profile of the Luxury Home Buyer in Spain?

Post-pandemic, there has been a significant shift in buyers’ preferences. People have become more aware of their housing needs and values, seeking larger homes with spaces for working from home and leisure facilities. International buyers, especially from the Americas, have found Spain significantly cheaper due to the euro-dollar parity, buying properties at an approximate 18% discount compared to a year ago.

How Does the Dollar-Euro Parity Affect the Luxury Housing Market in Spain?

The parity between the euro and the dollar means that foreign buyers are purchasing properties at an effective 18% discount. This, combined with higher savings from reduced spending during the pandemic, has spurred significant interest in Spanish properties. Additionally, Spain’s affordable property prices and low annual costs further attract buyers.

What About Russian and Ukrainian Buyers?

Russian buyers are selling their properties due to the current geopolitical situation, while Ukrainian buyers are looking to acquire new homes as a necessity.

What Defines a Luxury Property for You?

A property qualifies as part of the “Luxury Collection” if it is priced at least 15% above the average market price for that specific area. However, the definition of luxury can vary greatly depending on individual preferences and the specific characteristics of the property.

What Types of Properties Are Buyers Looking For?

Post-pandemic, there is high demand for spacious homes with common areas, large terraces, and spaces for work. In contrast, the international demand in major cities now focuses more on central locations with ample space for living and working. Coastal and island properties are sought for their location, space, and move-in readiness, with many buyers preferring furnished homes.

What Is the Average Budget for Foreign Buyers?

Foreign buyers are purchasing properties ranging from €500,000 to €15 million, with the average transaction value slightly above €1.5 million.