Artículo publicado en Financial Times

San Sebastián: the most expensive place in Spain to buy a home


Homes on the prestigious seafront avenue of Paseo de Miraconcha average €9,453 per sq metre


The Paseo de Miraconcha in the city of San Sebastián in northern Spain’s Basque Country is a special place. The seafront avenue looks out over the beautiful, horseshoe-shaped Playa de la Concha. In summer, yachts anchor in the calm waters of the bay and parasols dot the sand.

The Paseo de Miraconcha is the most expensive place to buy a home in Spain, according to data released in April by Spanish property website Idealista, with prices averaging €9,453 per sq metre, comfortably higher than the Passeig de Garcia Fària in Barcelona, another prestigious seafront address, which came second at €7,303 per sq metre.

Development at Playa de la Concha started in earnest in the late 19th century, spurred by its popularity with the Spanish royal family, who had a summer residence built here. The neo-gothic Palacio Miramar is now owned by the municipality and is used as a venue during the San Sebastián International Film Festival, held in September every year.

This city of just under 190,000 residents is now arguably as popular a foodie destination as it is a beach resort: of the seven three-Michelin star restaurants in Spain, three are in San Sebastián, and the city’s restaurants hold 16 Michelin stars in all.

A unit on the third floor of an apartment block on the Paseo de Miraconcha, with 155 sq metres of living space plus a terrace – and unobstructed views of the bay – is on sale for €1.85m. The home has four bedrooms and three bathrooms, but an underground parking space in the building will cost an extra €110,000 – a figure that would comfortably buy, for example, a new one-bedroom flat in a resort on Spain’s Costa Blanca.

Although Areizaga, the estate agency instructed to handle the sale of the apartment, advertises its services partly in Russian and English, San Sebastián’s property market is hardly cosmopolitan. Housebuyers in this relatively prosperous corner of the country are invariably Spanish, and a small number of French incomers complete the mix (the border with France at Hendaye is just over 20km away).

After visiting the city on a summer holiday, Jon Warren, a former banker from Kent, moved to San Sebastián in 2008 and later opened San Sebastián Food, a specialised tour operator helping people discover the Basque cuisine and in particular the city’s array of pintxo (or tapas) bars.

Warren says that the dense housing in the centre of the city has the same impact on local customs as it does in other Spanish urban centres: “Small apartments are very common, so getting out and about is vital. When I first arrived in winter, elderly ladies in furs and pearls seemed to be everywhere. At first I thought that the place might be a sort of retirement town, but I soon realised that promenading is what everyone does, including the city’s top chefs, who can be spotted chatting with friends on the beachfront walkways.”

Warren lives in Gros, a trendy, up-and-coming neighbourhood across the river Urumea from the Old Town. Unlike the sheltered Playa de la Concha, the nearby beach at Playa de la Zurriola is exposed and popular with surfers.

In the semi-rural Aiete area of the city, a 315 sq metre, six-bedroom detached house is on sale with Valenciaga Inmobiliaria for €1.95m. The property is set in 3,000 sq metres of grounds, with an outdoor pool and ornamental pond.

There is also a basement txoko, a combined cooking and dining space. This is a traditional Basque feature where food is usually prepared by men (a txoko also refers to a type of closed gastronomical society in the Basque Country where men meet to cook and socialise).

Four-bedroom flat on the Paseo de Miraconcha, €1.85m In the hilly country outside the city the homes are solid-looking, with whitewashed walls, tiled roofs and doors and shutters painted dark green or maroon – an architectural indication of the separateness of this part of Spain.

Although widespread discounting by local sellers shows that San Sebastián is not immune to Spain’s housing crisis, the city was not a focus of rampant housebuilding in the boom years of the early and mid-2000s. According to the Spanish National Institute of Statistics, in 2011 there were 11 per cent more homes in Gipuzkoa, the province containing San Sebastián, compared with 2001 – the second-lowest increase in the country (the average for Spain as a whole was 20.3 per cent).

Excess supply of housing units is much less of a factor here than in other parts of the country, but the city’s wealthy reputation can still lead to unrealistic pricing: for instance, one local agent is advertising a pleasant if unremarkable 50 sq metre flat in the city centre for €450,000.

San Sebastián also has the advantage of being seen by many Basques as a secure place to invest in property. The city may have an “old-money” feel, but new money also streams into the local property market from industrial Bilbao, the Basque Country’s largest city, 100km to the west.

Still, the question many potential buyers have is: has the Spanish housing market hit rock bottom, or are there more drops to come?  “Generally speaking there is still room for house prices to fall further,” says Carlos Ferrer-Bonsoms, head of residential at CBRE Spain. “But you have to make a distinction between locations where there is a lot of stock and very few buyers – such as in dormitory towns distant from Madrid, and overbuilt parts of the Mediterranean coast – and places like the city centres of Madrid, Barcelona and San Sebastián where prices are starting, very gradually, to move up.

Even within San Sebastián, the Playa de la Concha is very much a niche market.” In April a report by Standard & Poor’s, a rating agency, said that despite a deceleration in the fall of Spanish house prices in 2013 (on the back of improving economic conditions and a rise in housing demand from overseas buyers), “we don’t think Spain’s property sector has turned the corner just yet”.

“Supply continues to significantly exceed demand, while credit conditions remain tight. What’s more, the Spanish real estate market still appears between 9 per cent and 18 per cent overvalued compared with incomes, rents, and long-term averages.”