“2022 will be an auspicious year for residential development” Diego Bestard, CEO of Urbanitae.
It is known that Ignatius of Loyola recommended “never to move in times of desolation”. Leaving aside its value as a spiritual exercise, the truth is that 2022 may in fact be a good time to explore the real estate market. The sector offers good prospects for this year and stands out as a safe haven in the face of high inflation and the onslaught of the omicron.
The economic outlook for the new year is positive. However, factors such as the speed of the new wave of Covid-19, the persistence of problems in global supply chains and rising energy prices have lowered forecasts. Thus, it is estimated that Spain will have grown by around 4.5% this year and that in 2022 GDP will increase by around 5.5%.
Furthermore, according to the Bank of Spain, average inflation will close 2021 at 3% and this year it will stand at 3.7%. In this context, investors favor assets that are considered safe, either because they move in the opposite direction to the market or because they are not subject to large variations. We are convinced that the real estate sector is one of the best opportunities in 2022. And we are, for several reasons.
The first is that tangible assets such as housing have intrinsic value: people want and need them. As a result, they tend to withstand periods of crisis better. Thus, in 2020, the most difficult year of the pandemic, the Spanish economy contracted by 10.8%; however, housing prices remained positive and closed with an average rebound of 2.1%. Last year, second-hand homes rose by 1.7%, while the price of new homes rose by an average of 3%.
Another reason to invest is profitability, especially in the rental market: when prices rise, so do rents. In this regard, it should be noted that the gross return on the purchase of a home to put it up for rent was 6.9% in 2021. Although it was 7.5% in the last quarter of 2020, it is 15 times the 10-year government bond yield.
These arguments are in line with the position of many specialists in the real estate sector, who predict that 2022 will be a favorable year for residential development. According to BBVA Research, the residential stock in Spain could increase by 120,000 homes per year until 2035. Meanwhile, housing prices will grow by 4% this year, according to CaixaBank Research, and new housing prices could rise by up to 10% this year, according to the Spanish Association of Real Estate Personal Shoppers (Aepsi), due to the scarcity of raw materials and higher production costs.
Source: pisos.com
