Alexander Vaughan and Stijn Teeuwen founded the Lucas Fox real estate agency 18 years ago, focusing on foreigners looking for housing in Barcelona and since then they have become a benchmark for luxury real estate in Spain. In this interview, in which they respond indifferently, they highlight how Spain has become a fashion destination, both in Europe and in the United States, and predict that the pressure from international buyers, with high purchasing power, will skyrocket the prices of the housing until doubling them in a period of 10 to 20 years.
Last year, home sales fell but the luxury market, in which you operate, has held up very well.
Last year we brokered 965 transactions, 12% less than the previous year, with an average price of 1.03 million euros, which rose 7%. We invoiced 29.7 million, 9% less than in 2022, which was our record because we still had the positive impact of the end of the pandemic. But we didn’t sell more because we don’t have more product.
Doesn’t the demand for expensive properties, like the ones you sell, have a ceiling?
It is true that there are national buyers who would like to buy and do not have the money to do so and the rise in interest rates makes it more difficult for them. But Spain is a very interesting country and is now being looked at by buyers from all over the world, from Latin America, from Europe, from the United States, who want to live here.
For this reason, we believe that in prime areas and large cities prices will continue to rise. What has happened in cities like London, New York or Paris will happen. Perhaps one year prices will not rise but over a longer period, 10 to 20 years, they may even double. It is true that this is bad for national citizens, because they do not have as much money as international citizens, but it has happened in every major city in the world.
The authorities should intervene to prevent that, don’t you think?
The regulation that Barcelona approved, requiring 30% of new developments to be allocated to social housing, has achieved that nothing is built, neither to sell at a free nor social price. The price of existing homes has risen and it is even more difficult for Spanish buyers to access the market.
Clearly there is a need for affordable housing but we must look for formulas that have worked in other cities. For example, to build in the center it is necessary to build affordable housing in other areas. But it is important for the city to have affordable housing, to avoid what happens in some areas of London, which are almost empty because the houses have been bought by people from outside who barely live there. And that’s bad for everyone.
Is it because of this product limitation in Barcelona that you want to focus your growth in Madrid?
There are no quality properties in the center of Madrid either. In Spain, most properties are horizontally owned, with many owners, while in other countries there is more vertical property and the owner can demolish old properties to build new quality ones.
How is Lucas Fox’s business distributed geographically?
Now 60% is in Catalonia, but we are also very strong in Menorca, Ibiza, the Costa del Sol and Valencia. We have opened in San Sebastián and we are going to open in Mallorca. In Madrid we already have four offices, but although it is the largest luxury real estate market, it has been difficult for us to grow. To promote our office in Madrid, I myself (Alex Vaughan) have gone to live there. Because having a delegate is not the same as having the owner himself running the business.
You two are the founders and owners of Lucas Fox. Have you not thought about opening the capital to an investor, to accelerate the growth of the company, or even an IPO?
We generate net cash, with an EBITDA margin that exceeds 20%, although last year it dropped to 17%, meaning we do not need more capital. If in the future we opt for international expansion, we will study it. To go public, we are still too small.
Lucas Fox already has agencies outside of Spain.
Yes, we have been in Andorra for years, and we are doing very well, and we have offices in Montpellier (France) and Porto (Portugal), but they are more than anything to test the markets of those countries. We have had requests from other countries, such as those in the Adriatic, for us to establish ourselves. Our goal however is Portugal, but not for this year. We will surely opt for a mixed system there, as in Spain, with our own offices in the big cities and more tourist areas and franchises in other locations.
You have opted to have your staff on staff, compared to other luxury real estate agencies that have opted for a network in which self-employed agents predominate.
We employ 250 people, half of them foreigners, and to gain their loyalty we need to have them on staff. And it’s important for us not to have a lot of turnover because we give them a lot of training. We sell very expensive properties to high-level people, more than 70% foreigners, who are used to having quality service. Our fees are justified by the advice we give them and by the confidence it gives them to speak with experts who know how the real estate market works in their country of origin and the peculiarities of ours.
Is Barcelona’s luxury real estate market different from that of other areas, such as Madrid, for example?
The difference is the origin of the buyers: there they are mostly Latin Americans, although those from other countries are growing, and here our first clients are now Americans but people come from all over the world. Furthermore, they have grown a lot since the pandemic, because they lifted the restrictions more quickly, and because of the tax incentives, but Barcelona is growing very strongly.
Do events like the Copa América influence this?
Not for now, because only the teams have come, but in recent years the international perception of Barcelona has improved a lot, which at times was penalized by political instability and the perception of insecurity. Now the Cup, the arrival of the AstraZeneca hub and the implementation of many technology companies make the city’s prospects very good.
Why is the international interest in buying in Spain so great?
Spain is fashionable and is now the most desired country to settle in. We talk to rich Americans or people from northern Europe and they all want to live here. Because of the quality of life, the food and because living in their countries is three times more expensive for them. They are not the buyers of a few years ago, retirees with low pensions who came to settle on the coast, but businessmen, investors, digital nomads or wealthy retirees who do not come to benefit from the public health we have here or from social aid, and that will boost economic growth. We believe that we must see this as a great opportunity for the country, and congratulate ourselves, because sometimes we are not aware but Spain has done very well in this.
