The steady growth in demand for new buildings and their rising prices have made this type of property one of the most profitable investment options in the housing market. It provides one of the safest "havens" during rising inflation, taking into account the fact that the estimated value of new units is always higher compared to other property types,
Due to the high quality of modern housing units and the fact that they are suitable to modern buyers’ requests, investment in this market segment will continue to grow both for long-term rent and for future resale in the upcoming years.
Solvia’s experts, specializing in new developments, point out the main reasons why new building investments are a great option for making a profit now.
(I) Demand exceeds existing supply
According to the National Statistics Institute of Spain (INE), in 2021, the volume of sales transactions for this type of residential property increased by 38% compared to 2020. In March 2022, recorded new building sales increased by 15.7% in annual terms. A little more than 11,500 properties were sold.
(II) Steady real estate price increase
The house price index (IPV), published by INE, shows that new home prices rose by 6.1% in the fourth quarter of 2021 in annual terms. The quarterly growth was 2.5%. According to information by Sociedad de Tasación, the Spanish association of property appraisers, new home prices have grown by 5.6% on average every year since 1985.
(III) Extremely high liquidity
New housing is an attractive product with perfect market qualities. This real estate satisfies potential demand not only by its own qualities, but also by providing broad access to various social services and public amenities, such as swimming pools, gyms, playgrounds, spacious garages, etc.
The high attractiveness of new buildings creates good opportunities for a quick selling or renting this unit out. Therefore, there is an opportunity for instant income. This is especially true for elite properties in popular areas. Today, these areas are located far from large cities or economic center.
(IV) Sustaining housing investments
The state development programme "2030 National Plan" has become a major challenge and, at the same time, a roadmap for society and business. Two goals from the Sustainable Development Goals list are devoted to the development of the real estate market and the construction sector. In particular, it is about achieving the sector’s sustainable development, improving sustainability, reducing emissions and digitalization. These characteristics become very important for new home buyers and real estate investors.
(V) New investment opportunities such as Build-to-Rent
From the point of view of a professional investor, the Build-to-Rent (BTR) model becomes a more profitable investment option. This model is based on the construction of new housing units strictly for their subsequent renting. This type of real estate is a perfect profit-making opportunity.
The demand for good rental housing is increasing, including through a short supply on the market and lower costs compared to the purchase of real estate. Rental rates still have room to grow. So, today, investments have the greatest potential for a high return. In addition, rental housing has started to receive more and more subsidies from the state.
(VI) No need for repair and low maintenance costs
New houses are always ready to move in. They do not require major renovation. They are also more eco-friendly. It provides low maintenance costs. This leads to low general expenses for investors, for example, when the unit is rented out.