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Berkshire Hathaway HomeServices, a real estate company owned by Warren Buffett, has opened a new office in Spain. This time — in the city of Malaga. The office will expand the company's presence in Spain and support the activities of another office in Marbella. Buffett's company focuses on luxury real estate in these Spanish regions.
Despite the fact that the Costa del Sol is one of the key areas for buying premium housing, the demand, especially foreign, is not limited to this region. It is actively spreading to the rest of Spain, away from the traditionally popular Mediterranean resort areas of the country.
Bruno Rabassa, CEO of Berkshire Hathaway HomeServices, gave an interview to the Idealista portal, in which he pointed out the observed increase in the appetite of foreign investors for luxury real estate in Spain. Climate, developed infrastructure, public safety, prices are just some of the factors that make the country particularly popular among foreigners.
Nevertheless, the general economic indicators of the market paint a more complex and not the most optimistic picture. Discussing the possible reversal of the Spanish real estate market in late 2022 and early 2023, Rabassa points out that uncertainty and indecision can be clearly seen in the economy, the construction sector and the real estate market itself.
The market is under pressure from a large number of both local and global factors — macroeconomic and political. As soon as the pandemic ended, the global economy entered a new crisis: inflation, rising interest rates, a crisis of raw materials, a food crisis, a crisis of building materials, a crisis on the stock exchange and in the cryptosphere. Of course, the first indicator of the severity of the situation is the rise in prices for fuel, electricity and gas, which are the basis of the life of society.
In Europe, inflation is close to double digits and in the US it is not much lower. Being in such a complex of general economic problems, the construction sector is in limbo, including on the construction of new housing, its volumes and categories. According to Rabassa, currently developers and other companies in the sector do not seem to have a clear idea of the cost of services they should provide and the prices their product should strive for. A separate problem for the market is the difficulties with the timely provision of certain services.
At the same time, it is difficult to even guess when the growth of interest rates will be stopped. Many actors of the real estate market, as well as the economy in general, in general question the adequacy of the actions of central banks and governments. Nevertheless, now raising rates is one of the most reasonable actions to save the global economy. However, this does not make the situation easier for households, ordinary families and ordinary citizens, whose incomes are declining and savings are rapidly declining. All this leads, in aggregate, to a significant drop in purchasing power. Especially within the real estate market.
Bruno Rabassa believes that the real estate sector in Spain should eliminate uncertainty factors for both housing on the secondary market and for the primary market, that is, new buildings and real estate from the developer. The situation with the secondary housing market in Spain is not much different from the situation in other world markets. Despite all the problems, the demand for buying a home is still huge, there are more than enough people with money and the desire to buy. When taking into account the deficit in primary markets, the main attention of the mass buyer is paid to the secondary real estate.
Here, however, there is a difficulty for brokers. According to Rabasse, it is quite difficult to balance supply and demand today. There is a lot of housing on the market, but it is still not easy to find good houses that can be sold. Especially when taking into account the fact that buyers' requests are changing rapidly, and the old real estate was built at other times and for another consumer.