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02nd May 2020

How will new development prices behave after coronavirus?


Source: EXPANSIÓN - 02nd May 2020 - L. Benedito

Developers have already sold an average of 85% new developments units that they had in stock for sale for 2020. They also do not complaint about cancellations, as their level of benefits will allow them to hold if difficult times may come.

This is the statement by several large developers in Spain: the prices in second-hand properties may decrease, however these days in new construction it is not necessary to adjust prices.

"If on January 31st we already have 85% of our sales achieved, there is little to be concerned" explain sources in the sector. According to data from the Association of Promoters and Construction Companies of Spain (APCE), an average of between 85% and 90% of the product is already sold.

"New development prices will tend to remain stable throughout the year due to the high number of reservations completed," agrees Borja García-Egotxeaga, CEO of Neinor Homes.

Supply does not yet respond the current demand. The number of properties delivered is considerably lower than the requested. "According to INE data, 2019 closed with 92,844 transactions, while demand requests 120,000, a 25% below the demand" says García-Egotxeaga.

Developers also believe in the “build to rent” plan as an alternative route in case the situation aggravates. By dedicating the construction of new development units to the rental market, the excess of units for sale is reduced.

In addition, the sector trusts that government will aid with some measures to facilitate the purchase of properties: the flexibility or reduction in the VAT payment, tax incentives or benefits for purchasing the first home. The issue will depend on goverment´s available funds.

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