Luxury housing in Madrid comes out robust from the economic bump caused by the pandemic and foresees a recovery of a 3% of its price in 2021. This is what the Prime Global Forecast report points out 2021, published this Thursday by the consulting firm Knight Frank, which includes a ranking of growth in the price of homes in 22 cities, led by Shanghai and Cape Town, both with spikes of 5%.
With the economic crisis, the real estate sector in Spain has suffered this year annual setbacks of up to 15% in the sale price. However, the prime brick is the one with the least impact, with drops of up to 4%. “The key is the demand profile for these assets, properties that are always considered a very safe haven value over time ", affirms Carlos Zamora, partner and director of the residential area of Knight Frank. In this context, for Zamora, the recovery of luxury housing in 2021 it will also be more noticeable than in the rest of the real estate market.
The consulting firm explains that Madrid is among the cities that will register an increase in their sales price due to the low interest rates in their markets, a pent-up lawsuit and tax holidays, a whole cocktail that will promote the rebound in prices. In this group, Knight Frank also includes London, Sydney, Paris and berlin.
"From health to the economy, 2020 Has upset the whole world. Nonetheless, our latest data shows, that the prime property market has been especially resilient. Now that we look at 2021, it is clear that the challenges are there ", afirma Kate Everett-Allen, Head of international residential research de Knight Frank.
Even so, the report calls for caution, in the case of Spain, for the possible modifications proposed by the coalition Government in the wealth tax, a turnaround that could change the tax landscape that currently drives luxury property purchases. The warning has also been extended to other countries such as Canada, pointing out that taxes and fiscal policies will be one of the big issues to follow in 2021 to have a better evaluation of the prime sector, Considering that the stimuli implemented so far to counteract the effects of the pandemic will be adjusted at the beginning of next year.
However, the rebound may not have to wait until 2021. With the recent announcements that herald the arrival of the coronavirus vaccine, the search for properties in the prime sector has been reactivated. “Since Pfizer made its release last 9 of November, a very remarkable dynamism has been experienced, with an increase of up to 40% in the number of visits to properties”, Gonzalo Robles explained, CEO of Uxban, to the Idealista real estate portal.
Even with the good news, Knight Frank's report states that Madrid is among the 55% of the cities analyzed that have not yet recovered the levels of luxury real estate sales prior to the pandemic. About, explains that it is due to the economic impact of the mobility restrictions implemented in the country, as well as the magnitude of the pandemic evidenced in the cases of coronavirus registered in Spain.
[Source: Five days]