After five years of a rather bullish cycle, the housing sector in Spain is cooling down. Apartment buying and selling agencies are prepared for a moderation in both the price of housing and demand.
Now, however, large real estate brokerage agencies like Tecnocasa and Engel & Völkers plan to boost their franchise network and offices with new openings and extend their presence to other markets with travel, while proptech firm Housfy aspires to almost double its sales supported by a fixed fee model.
In preparation of the market slowdown, in the third quarter of last year the real estate agencies registered an average decrease of 15% in home buying and selling operations compared to the same period of 2018, according to data from the Quarterly Balance of Operations of Sale of the National Federation of Real Estate Associations (FAI), composed of 27 associations and 950 real estate agencies throughout the country.
Experts predict that this moderation in the market will cause the closure of some of the offices that real estate agencies opened to the heat of the bullish cycle.
"In the sector it is quite probable that some real estate agencies, opened in recent years in a bull market, close or have problems, especially those that focus heavily on investors. In our case, we expect growth next year. Traditionally, in times In the most demanding real estate market, the Tecnocasa Group has gained market share," explains Lázaro Cubero, Director of Analysis at Tecnocasa Group.
Specifically, Tecnocasa, which closed 2019 with 615 franchised offices in Spain, expects to exceed 700 in 2020.
"In addition, the global objective of the Tecnocasa Group, which is composed of two brokerage brands in real estate services (Tecnocasa and Tecnorete) and one intermediation brand in financial services (Kìron), is to close the year 2020 with 800 active outlets in Spain," explains Cubero.
For the director of Analysis of the Tecnocasa Group, 2020 will be similar to last year in terms of sales volume.
"In 2019 the market has been more demanding than a year earlier, and has been marked by a lower volume of sales. In 2020 this dynamic will continue," he adds.
The manager also recalls that the 3,000 Tecnocasa agents "have an employment contract and have complete training."
"In times of more demanding market there is always a natural selection of the best professionals. This circumstance is good for both the real estate sector and the end customer," he warns.
For Constanza Maya, Director of Operations and Expansion for Spain, Portugal and Andorra of Engel & Völkers, the probability that the housing market price will continue to increase is very high, although it is also quite likely that those that have been the main engines of the housing market, in the previous years, see their prices fall slightly. "Market stabilization and moderation is expected," Maya adds.
Experts predict the closing of offices open to the heat of the bull market
In this context, Engel & Völkers, which has 85 offices between franchises and own centers, expects to reach 90 this year as well as entering new markets with growth potential.
"Our standardized processes and solid brand will allow us to face the different economic cycles. The client prefers to have the professional services of an experienced company, especially when the market situation is complex," he says.
To cope with the cycle changes and adjust to the needs of customers, Housfy broke into the intermediation market in 2017 and has since closed three rounds of financing.
"By 2020 the market is not going to be as hot as in recent years and many agencies are going to suffer. The closing of agencies is already taking place and some agents lose their contract and continue as a freelance," explains the CEO of Housfy, Albert Bosch.
Housfy, which sold 2,000 homes in 2019 and reached a turnover of close to 5 million, expects sales of between 3,000 and 4,000 units this year. "When there is no growth in prices the owner is more sensitive to the commission that an agency is going to charge, so we can be more useful," he adds.
The platform also wants to grow geographically— both in Spain and beyond our borders— and add new verticals. Currently, in addition to housing brokerage, Housfy offers mortgage brokerage and renovation services and, in the future, wants to break into the rental market.
Edited by V. Haviland