Exploring Valencia: affordable living and real estate opportunities
Valencia has become a popular destination for those seeking to experience the classic Spanish lifestyle, thanks to its stunning architecture, clean beaches, and delicious cuisine. The city is the third largest in Spain and is located on the Mediterranean coast, offering a relaxed lifestyle and plenty of cultural, economic, and professional opportunities. As a result, it has become an attractive place to invest.
The cost of living in Valencia is a crucial factor to consider for foreigners and potential residents. Valencia offers a comparatively affordable lifestyle, with an estimated cost of living of €657 per month, not including rent, making it a more economical option compared to Madrid and Barcelona. Food prices in Valencia generally fall below the European average, and recreational activities such as dining out and going to the cinema are reasonably priced at €12 and €8, respectively. Public transportation is also cost-effective, with a one-way trip costing €1.50 and a monthly subscription available for €30.
An average 200m2 house in Valencia sells for c. €355,200 or €1,776 per m2 according to Idealista. The Valencia Spain Real Estate Report by My Dolce Casa states that property prices in Comunitat Valenciana have increased by 11.3% compared to the previous year. Among the analyzed locations, Moraira has the most expensive properties in Valencia, selling for an average of €733,600 or €3,668 perm2. Meanwhile, the most affordable house prices in Valencia are in Albaida, where an average-sized home costs €115,600, based on an average of €578 per m2.
Analyzing Valencia's rental market: exploring price surges and regional disparities
Valencia's rental market is experiencing a surge in rental prices, as the city's popularity grows and rental properties become more in demand. As of August 2023, the average rental price in Valencia has increased significantly to €14.14 per m2, a 35.31% increase from the previous year. This rise reflects Valencia's growing status as a preferred destination for living and investment.
When looking at rental prices by area, the most expensive area to rent in Valencia is Ciutat Vella, where prices have soared to €17.08 per m2. In contrast, Pobles del Nord offers more affordable options, with rental prices averaging at €9.18M2. Ciutat Vella, known for its historical charm, commands a premium, with rental prices averaging at €14.6 per m2, a 21.9% increase year on year.
Patraix represents the more affordable end of the spectrum, with prices of around €9.5M2. However, rental prices in this area have increased substantially year on year, with a rise of 20%.
Valencia's office market dynamics
BNP Paribas Real Estate's latest report on Valencia's office market reveals that the high dynamism recorded in 2023 has resulted in historic lows of availability in 2024, with total take-up increasing by 6.2% compared to the previous year.
In 2023, Valencia saw 51,024m2 of offices being contracted, which is a 6.2% increase compared to 2022, making it the second-best year after 2019. Insufficient supply and growing demand for spaces larger than 1,000 and 2,000m2, especially from technology companies, are the main reasons behind this.
According to the report, 40% of the contracting and 43% of the transactions took place in the centre of Valencia, with an average contracted area of 380m2. The decentralised area accounted for 34% of the total take-up, with an average contracted area of 411m2, mainly due to the scarcity of options above 1,000m2.
Rental prices in Valencia are becoming comparable to those in Madrid and Barcelona, with rents in Valencia's Zona Descentralizada being as high as €16 per m2 per month, which is similar to that of Madrid's Arturo Soria area. The prime area of Valencia shows a range of rents peaking at €17 per m2 per month, approaching the average rent of €17.29 per m2 per month in central Barcelona.
The report suggests that 8,000m2 of office space will be added to the outskirts of Valencia in the second quarter of 2024. However, this new supply is not expected to ease the pressure on current availability, as the unmet demand in 2023 is expected to occupy this space during the third quarter rapidly.
In the second quarter of 2024, a unique project in Valencia Centre will deliver approximately 2,000m2 of leasable space following a complete refurbishment of a 1976 building, achieving Leed, Well, and AIS certifications. Although no further significant deliveries are scheduled for 2024, a major development is expected in 2025 that will meet the highest quality standards.
A look at hotel investment trends and future developments in Valencia
During H1 2023, Spain remained one of the most active markets for hotel investment in Europe, with €1.7Bn transacted, marking a 4.8% increase compared to H1 2022, according to a report by Cushman & Wakefield. The Spanish hospitality industry has demonstrated exceptional resilience to the pandemic, making it one of the most robust sectors. In H1 2022, while occupancy remained 2.2 percentage points below H1 2019, ADR increased by 20%, resulting in a 17% RevPAR growth relative to pre-pandemic levels, compensating for inflation. Valencia saw the highest RevPAR growth in H1 2023 compared to H1 2019, which peaked at 38%.
The hotel room supply in Spain experienced a moderate 2% growth between June 2022 and June 2023. It is expected to grow more substantially in markets where the hotel performance is robust, and there are no moratoriums on hotel development, particularly in Valencia.
In the second half of 2024, Novotel is entering Valencia with a new flagship hotel located in the Turia Garden, a strategic area of the city between the historic centre and the Palacio de Congresos. The Pictet Group, alongside the Hesperia Group and Accor Group's Novotel brand, will open an iconic property boasting 370 rooms.
Valencia logistics market: growth trends and future projections
The Valencia logistics market has reported positive results for 2022, having contracted 362,000M2 by the end of 2023. The fourth quarter of 2023 was particularly noteworthy, with a record 168,000m2 being signed, surpassing the combined annual totals for 2017 and 2018 as per Savills' report.
The average transaction size witnessed an increase of 8% year-on-year, with the size being 7,112m2, particularly in the last quarter of the year, when the biggest transactions were completed.
The Valencia logistics market saw the addition of 254,000m2 of new space in 2023, taking the total stock to 4.2m m2.
In 2024, it is expected that 384,000m2 of new floor space will be added to the market, with half of it already committed upon completion. As a result of the scarcity of supply in recent years, certain occupiers have opted to buy land for self-development or the construction of a turnkey product. This year, almost half of the new area already committed corresponds to this option.
This situation will likely lead to an increase in prices due to the scarcity of products, with less than 200,000m2 expected to reach the leasing market, maintaining a low availability rate like in recent years.
For more information please see:
BNP Paribas Real Estate At a Glance: Valencia Offices Report Q4 2023
