Housing Will Hit the Bottom in 2014

The Spanish real estate market has been observing some things changing since September. This is the favourite sentence that the professionals repeat on each occasion, not forgetting that “the market consists of many submarkets” which makes drawing general conclusions difficult.

To find them out, Expansion surveyed the main experts on the market now, at the end of the year. And the consensus points at the three headlines: in 2014 the houses sales will continue at the same level (or even rebound), the drop in prices will persist, however it will be smaller – in general terms; in the big cities and the prime zones or without stock the adjustment has almost been completed and the mortgage granting will stay at the same, very low level.

The three forecasts, althought not promising whatsoever, are better than the ones from the previous years´ends. One of them gets green light (more sales), one yellow (delicate depreciation) and one red (the deadlock on the credit flow). (…) If the experts´predictions fulfill, the 2014 won´t be a good year for housing but the prices could at least finally hit the bottom. The bottom is, however “very deep” as José García Montalvo from the Economy Department in the University of Pompeu Fabra appoints it. (…)

An independent consultant José Luis Ruiz Bartolomé clarifies, “The coastal provinces will experience an increase in the real estate transactions because the foreigners will continue raising the volume of purchases, but I don´t think there will be an upsurge at the national level. (…)”.

For sure the investment funds will maintain their leading role and will contribute to the better statistics on the Spanish market. (…)

The majority of the experts agrees with Julio Gil, the director of Horizone Consulting Inmobiliario, who denominates the forthcoming year as possibly “stable” and it can witness “a little improvement”, as  Raúl García, the director of Company Development of Tinsa, adds.

However, there are others, like Mikel Echavarren, the CEO of the IREA consulting company, who optimistically states: “the housing market in 2014 is going to surprise us positively”. (…)

Be that as it may, it seems that the sector has met the bottom reaching annual sales of 350.000, but not in case of the prices. The consensus mentions screech in the fall, but the fall to the bottom. (…) The research results make us predict that the average drop-off will stand between 7 and 8%. It is worth to mention that Standard & Poor’s foresees depreciation of 5% in 2014 and of 1% in 2015. According to INE, the prices currently fall by 7,9%, althought in the intertrimestrial terms they rise by 0,7%.

García Montalvo highlights that “the purchases of the foreign funds might make the sellers adjust less the prices and because of this the value will dip down as well. In turn, this will delay the transactions due to generating expectations. Following the domino effect this will delay the adjustments. (…) There is one more factor that might influence the prices: the role that the new owners of the real estate platforms of banks will play”.

Where is the bottom for the house prices? The experts agree: the key index to measure it is the number of times when the amount exceeds the annual gross income of the buyer. At present, the index shows 5.8 and it shall fall down to 4.5 to be sustainable, as Ángel Serrano, the general director of Business from Aguirre Newman, says.

The third conclusion drawn by the experts is negative: the credit granted for financing houses will remain halted. The news is really bad for the mortgage market as it has already fallen by 80% in regard to its golden age.

BBVA and Santander have announced that in 2014 they will revive the liquidity but 7 out of 12 experts don´t believe it. (…)

Finally, as it always happen in the sector, we must take all the predictions with a pinch of salt. However, for the first time in six years one may say that the upcoming year looks better than the passing one. Is it little? It is something.

Source: Expansión

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BBVA, CaixaBank and Popular Redeem 27.800 Million Euros in Mortgage Agreements

The year 2013 has been much more propitious for the financial institutions due to the return of the investors´trust in the Spanish market.

On the other hand, the deleveraging process going on within the sector reduces in a way the need of financing. As a consequence, the entities depend less and less on the financing from the European Central Bank (BCE). The three banks have decided to redeem their titles used as guarantors at auctions of the monetary financial institution, mainly mortgage agreements.

Since April BBVA, CaixaBank and Popular have redeemed debt of this type for the amount of 27.840 million Euros, according to the data provided by Expansión, made available by CNMV.

Out of the three banks, CaixaBank is the one which has been the most active selling for 12.700 million Euros, compared to BBVA with 9.840 millon and Popular with 5.300 million gains.


What is the benefit that the banks derive from sales of the mortgage agreements? The entities get rid of this kind of assets committed to their mortgage portfolios. Increase in such second line of liquidity or the policy to maintain own mortgage agreements in balance in order to enter the auctions of BCE, reduces the margin of issuing the debt among the investors.

The Mortgage Law restricts the issue of the loan agreements substituting for the mortgage portfolio possessed by a bank. (…)

The movement burgeoned when some entities had decided to adjust the value of their portfolios in regard to the postcrisis situation on the real estate market.

So did BBVA, pushing the value of the real estate properties giving coverage to its mortgages  down. (…)

All the changes make sense while the institutions depend less on the financing from the BCE. In Spain, the long term debt has been reduced and concentrated in 2 auctions in 3 years, also known as Ltro, between  320.567 and 209.769 in 12 months, according to the data of the Bank of Spain. (…)

Source: Expansión

The Bad Bank Transfers a Thousand Assets Valued at 146 Million Euros

The bad bank which has absorbed 50.449 million Euros in the real estate assets from banks and local cash offices with public aid, continues to shed weight. Sareb has transferred the portfolio “Teide”, consisting of residential houses, garages, storage rooms, trade premises, buildings under construction and land, valued at 146 million Euros, as the bad bank informed today.

The operation will be conducted via creation of the banking assets fund (FAB), a tool for collective investment designed under Sareb´s guidance in search for more opportunities of indirect asset sales to the investors. Thus, the fund shares will be hold in minority by Sareb and also by the Lar real estate group and the Fortress fund.

FAB, the new fund, has been already registered with the National Stock Market Commission (CNMV). By holding a part of shares of the fund, the entity chaired by Belen Romana “may derive benefit from any future sale of the mentioned real estate assets”. The awarded property is situated in Andalusia, Catalonia, Castilla and Leon, Galicia and Madrid and the Lar group will manage them.

6.400 Properties Sold

By mid November, Sareb has sold 6.400 properties, while its business plan had been established at 34.000 units sold by 2016. What is more, the bad bank has sold Metrovacesa´s debt worth 115.5 million Euros in last months, all the syndicated loans of Colonial for 245 millions and two other portfolios inherited from the banking institutions for 323 millions.

The company assures that the sales rythm is speeding up and it has already got a few initiated operations bound to complete in the following months, such as the Harvest Project, including 22 rustic properties  and the Operation Corona, consisting of 600 offices in the Community of Madrid. In the first year of its activity, Sareb earned more than 2.000 million Euros, althought probably it will close the exercise with losses.

Source: ABC.es

Housing. The Number of Completed Houses Drops by 43.8% by October

Between January and October only 56.650 houses being under construction have been finished. This number constitutes a decrease in comparison to the same period in 2012 (100.801 houses) of 43.8%, according to the data presented by the Ministry of Development and collected by Servimedia.

The number of finished houses supports the negative tendency in the last exercises which began in 2013. Taking into account the bunch of 2012 with 120.206 units, the dip was equal to 28,4% and it summarized the five consecutive years of decline. Since the maximum number noted down in 2007 (641.419  completed dwellings), the market witnessed reduction of 81%.

Out of all the houses finished in the first 10 months of the year, 99.2% (56.175) corresponds to the private developers and 0,8% (475) to the public administrations. With regard to 2012, the number of houses constructed by the private developers fell by 43.2%, and the number of the public ones by 75.8%.

If it comes to the private enterprise, 32.787 corresponded to corporate entities facing annual drop by 46,7%; 18.243 to legal persons and owners associations (-32,4%) and 3.903 to cooperatives (-47,5%). Moreover, there are 1.242 work completion permits of other type for private developers.

On the other hand, the value of the construction material implementation proceding from liquidation dipped by 42,2%, down to 7.048,6 million Euros.

Source: El Economista

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Financial Sector Foresees Upsurge in Real Estate Property Sales in 2014

The Spanish financial sector predicts better performance for the real estate market in 2014, thanks to rebound in economy pushing the sales rates up in comparison to 2013.

According to the latest data from October provided by the National Institute of Statistics (INE), the sales of houses in Spain fell by 10%, with 22.770 operations entered in the Property Register. It is supposed to mark the sixth month of drop-offs.

Moreover, the number of the residential mortgages reached 14.704 in October, 23,2 % less in the annual rate.

Despite all the data, experts, analysts, consultants and the four great real estate companies: Aguirre Newman, CBRE, Jones Lang Lasalle and Knight Frank, believe that the year 2014 will witness an increase, both in sales and property prices, due to the fact that the Spanish real estate market prices have already reached the rock bottom level.

And even though Jones Lang Lasalle assures they will do it in 2014, and since then they will stabilize, the real estate portal Pisos.com estimates that the prices might still fall by 10, 11% that year. 

In the same way Bankinter claims that for the first time in five and a half year the real estate market begins to show fresh traces of the market revival, after the prices touched the bottom and started a stabilization stage which will give way to the recovery.

Sources of the Santander Bank share the opinion above and even if they do not foresee the prices tapering out, they still believe in their slight movement upwards in the statistical graphs in 2014.

The same sources consulted by Efe precised that the sales to the foreigners experience a real increase, already representing 18% of all. Also, the investment demand goes up, as the data of the number of transactions without mortgage shows.

What is more, the number of the housing starts which is at the minimum level of 350.000 per year, will speed up in 2014. (…)

According to Bankia, the economy is going to turn in 2014. The bank sells assets consisting in a great majority of assets belonging to Sareb, which are also supposed to rise in 2014.

By the mid November Sareb, created in order to manage the assets procedent from banks´ restructuring, sold 6.400 properties earning 2.200 million Euros of gross income.

Finally, the Sabadell Bank sources inform that the entity developes intensively in terms of sales and it closed the year 2012 with 2.316 properties sold. The number enlarges up to 2.900 at the end of 2013.

Source: Expansión

Kutxabank Sells a Building in San Sebastian for 13.3 Million Euros

Kutxabank has just released a new streamlining strategy for corporate real estate property by selling a building in the center of San Sebastian to the Council of Gipuzkoa for 13.3 million Euros. The 8-floor property is situated at the corner of the Garibai and Peñaflorida Streets. It has been occupied by offices and service companies of the provincial institution for the last three decades. The Council will pay in 5 years´ period at a zero interest rate, according to the institutional sources. The Council has aquired 5 out of 7 thousand square meters of the building´s surface, as the ground floor and a part of the basement will still be occupied by Kutxabank.

By this operation, the bank proceeding from a merger of three Basque banks: BBK, Kutxa and Vital, releases its new policy of disinvestment in the corporate headquarters, which is going to affect other buildings in San Sebastian and in Bilbao. All the property involved in the new sales strategy is a singular building with high differential value, located in the center of one of these cities. Moreover, in all cases Kutxabank will leave a part of a building for itself.

One of the buildings for sale is the former headquarters of the Caja Municipal on the Gran Vía Street in Bilbao.

Kutxabank wishes to improve its sales efficiency and desinvest in the company´s portfolio assets. The merger has already sold its shares of NH, Euskaltel and Ibermática.

Source: Expansión

IBA Capital Relaunches ABC Serrano Shopping Center

Target: make ABC Serrano, one of the best situated commercial complexes of Madrid, up. This is what IBA Capital is planning for the following year to include in its to accomplish list. The great patrimonies´manager closed the purchase of one of the few shopping centers existing in the Milla de Oro of Madrid.

The company, founded by Jesús Valderrama, Sergio García and Thierry Julienne, acquired the center after disbursment of 60 million Euros and negotiations with its owner, Reyal Urbis real estate firm (in the arrangement started in February) and with the entity owning the property, Hypothe-kenbank (formerly known as Eurohypo). At the same transaction, IBA also bought an office building located at number 25 of Avenida de San Luis in Madrid (premises of Unidad Editorial, Expansión´s publishing company).

In summer, IBA acquired a building on the Plaza Catalunya Square in Barcelona from El Corte Inglés. “We are looking for property in prime zones so that it would not be difficult to find another tenant in case the previous one moves out. We don´t want logistical warehouses giving profiltability of 20%; we choose security” –  Thierry Julienne points out. (…)

The Tender

Once the shopping center was acquired, IBA Capital called up a tender for architect offices to relaunch it. At the final stage in which such offices as Herzog & de Meuron and International Architecture Development (IAD) participated, the renovation was granted to L35, an office chaired by Tristán López Chicheri and specialised in the shopping center design. “The idea is to add to verticality of the bulding, joining the elevators and stairs and creating the heart in the atrium zone” – says Julienne.

Awaiting the licences and procedures to be brought to an end, IBA pursues at starting the works in the second quarter of 2014.

The project will involve renovation of the shopping center, improving its accesibility, amenities and its general image and raising the number of shops with taller window displays. “There is an unused space of almost 2.000 square meters situated between the entrance from the Serrano Street and the upper floor destined for catering.”

The center covers more than 14.000 square meters of a Gross Lettable Area (SBA) about 93% of which is occupied. (…)

The Tenants

In order to fill the new space in, IBA has signed contracts with fashion brands interested in entering into the Spanish market. “(…) The demand is huge because paying 180 Euros per square meter for a local on the street and paying 80 Euros in a shopping center is uncomparable” – explain the partners from IBA Capital.

(…) Also, new tenants from the catering field are wanted. (…)

(…) The remodelling works will be carried out at night in order not to disturb the other tenants, including Mercadona. (…)

Moreover, the parking zone will be rearranged to improve accesibility to the center by creating more spaces, raising their number from present 287 to more than 300.

Source: Expansión

Santander Will Receive 550 Million Euros for Sale of 85% of Altamira to Apollo

Santander will close in the forthcoming days the sale of one of the biggest real estate platforms in Spain. The entity chaired by Emilio Botín will earn around 550 million Euros for transferring 85% of its branch associated with the real estate, Altamira, to the U.S. fund  Apollo Global Management, according to the sources close to the operation.

When Santander and Apollo put their signatures of the document, the operation will become the one of the greatest in terms of money involved, just after the Popular Bank´s handing Aliseda to two U.S. funds for 415 million Euros. Still the entity chaired by Ángel Ron holds huge percentage of its real estate subsidary, 49% on basis of the agreement between him and Värde Partners and Kennedy Wilson.

The pact between Santander and Apollo involves transfer of Altamira´s staff – about 500 people – and a 10-year management contract. According to it, the U.S. fund will be obliged to manage and sell the property awarded to Santander and its non-performing loans. (…)

Apollo will not disburse all in cash but it will pay with help of the consortium of banks´financing. Santander itself belongs to the consortium.

The director of the U.S. fund Leon Black had already announced in an interview for Expansión that he would invest 1.000 million Euros in Spain between 2013 and 2015. Apart from Altamira it acquired Evo from NCG for 60 millions and Finanmadrid from Bankia for 1.6 million Euros. (…)

Apollo took part in the auction of Altamira, known as the Bison Project, together with 3 other main funds investing in Spain: Cerberus, Centerbridge and Starwood.

The transaction gives Santander a chance to earn great captial gains in a single year which previously brought it some losses. (…)

Santander reduced the weight of the real estate company´s balance last year, changing it from 15.450 millons to 11.420 millions between September 2012 and September 2013, according to the entity´s data.

Source: Expansión

Defence Earns 14 Million Euros by Selling Two Plots

The Ministry of Defence closed the sale of two plots: in Ibiza and in Seville, as a part of the deference accorded to the real estate assets plan for the Public Administration approved this year.

The last asset transferred was the Quartermaster’s Barracks in La Oliva in Seville. The parcel covering more than 47.000 square meters having development potential of 28.915 square meters, has been sold at the auction by Addmeet. The sale price was set at about 6 million Euros (128 €/m2) paid by Inmobiliaria del Sur.

The plot, adjacent to the Real Club Pineda of Seville, could be used either for residential (there may be built up to 228 dwellings), hotels or for fixture and fittings purposes.

Awarding of the Quartermaster’s Barracks was granted only few days after the Defence had transferred another plot in Ibiza´s port. The land of 5.137 square meters has been sold for 8.5 million Euros to an Italian businessman, Giuseppe Cipriani. Its touristically attractive location and the opportunity to built both a hotel or properties for commercial and entertainment use, set the price up at 1.577 Euros per square meter.

In total, the Defence gained 14 million Euros. It is the Ministry holding the biggest number of assets for sale (almost 7.000) in the lot of the property that the State put on sale (15.000).

Source: Expansión