From Gesvalt and together a Casavo, the real estate platform that connects the needs of those who want to sell their homes with those of potential buyers, we have published a report on Home Renovation in Madrid and Barcelona. The study, conducted using data from both companies, reflects an average difference of €958/m².2 between a completely renovated property and an unrenovated property in the capital, and €1,161/m2 in Barcelona[1].
This means that, on average, homes that have undergone comprehensive renovation are worth 35% more than homes that have not undergone any renovation since their construction in Madrid and 42% more in Barcelona. As an example, an average home with a surface area of 90 m²2, could increase its value in the Catalan city by more than €100,000 after undergoing a complete renovation, while in the Spanish capital it would increase by more than €85,000.
In the case of partial renovations, those that do not involve structural modifications to the property, the difference can reach €438/m².2 in Madrid and €528/m²2 in the Catalan city. This implies an increase in value of 16% and 19%, respectively, and that an average home of 90 m²2 increase its value by €39,420 and €47,520.
The study also provides an estimate of the cost of carrying out renovations. According to the data provided, the average price for a partial renovation in both locations for a 90 m² home with standard finishes would be between €300 and €350 per m². The equivalent price for a comprehensive renovation could rise to €600-650/m² plus VAT in the case of comprehensive renovations. Based on this data, we can deduce that the average return on investment for a comprehensive renovation process is €511/m².2 in the case of Barcelona, and €308/m2 in Madrid, equivalent to 47% and 79% of the investment, respectively.
In the case of partial renovations, this percentage is somewhat lower, as investors in the Catalan town would obtain a return of €178/m².2 (51%) whereas in Madrid it would be €88/m².2 (25 %).
Comparison with new construction
On the other hand, our report also specifies that a completely renovated home continues to have a lower value than a new build, with an average percentage of 4% in Madrid and 7% in Barcelona. This figure rises to 18% in the case of a partially renovated property in the capital and to 22% in the case of Barcelona. In the case of unrenovated properties, the difference is even more significant, at 41% and 35% respectively.
However, the study reveals how in some districts of Madrid, the value of completely renovated homes can exceed that of new builds. This is the case in La Latina, Chamartín, Centro, Moratalaz, and Hortaleza. On the contrary, the neighbourhoods with the greatest price differences are Puente de Vallecas, San Blas, and Carabanchel. This phenomenon, however, does not occur in Barcelona. In this regard, our report shows that the districts with the best performance are Gracia, Les Corts, and Nou Barris, with contractions of less than 2.5 %. Conversely, the areas with the greatest difference between new and fully renovated homes are Sant Andreu (-17 %) and Sants Montjuic (-13 %).
If we analyse the differences with regard to partially renovated homes, we can see that, in Madrid, both Centro and Barajas maintain values similar to those of new builds, which indicates that demand in these areas favours location over condition. Homes that have only been partially renovated are more out of step with new builds in the districts of Puente de Vallecas (-37%) and Chamberí (-30 %). In Barcelona, the range of value reductions in partially renovated homes varies between -10 % and -33 %, with the smallest variations in the districts of Gracia, Les Corts and Eixample, compared to the largest falls in value detected in Sants-Montjuic, Nou Barris and Hota-Guinardó.
Energy efficiency, a distinguishing feature of the property
The sustainable renovation of Spanish real estate is a growing trend in the Madrid and Barcelona markets. According to our report, the sustainability of a home is becoming the determining factor in its value. For this reason, and bearing in mind that approximately 75% of the European Union's housing stock is energy inefficient, the study reveals that companies specialising in building renovation can increase the energy efficiency of the properties they renovate by up to 60%.
Taking the following example, a home initially rated G on its Energy Efficiency Certificate, with an energy consumption of 477 kWh/m² per year and annual emissions of 100 kg of CO₂/m², can achieve a D rating after a comprehensive renovation, reducing its energy consumption by more than 70% (% to around 135 kWh/m² per year) and its emissions by 70% (from 100 kg to 30 kg of CO₂/m² per year). m², can achieve a D rating after a comprehensive renovation, reducing its energy consumption by more than 70% to around 135 kWh/m² per year and its emissions by 65% to 34 kg CO₂/m² per year.
It should be noted that the letters A, B or C are usually reserved for new buildings and that the improvement in energy efficiency will depend on the type of improvements made to the home in terms of thermal insulation in the walls, replacement of window frames, and replacement of equipment in the domestic hot water, heating and cooling systems.
[1] Estimated value based on data from both companies and according to the average for both cities. This price may vary depending on the characteristics of each property and its location.