The last decision of the ECB will limit the rise of Euribor at 12 months.

The Euribor at 12 months, the main indicator for mortgages at one year, will close this month with a rise up to 0,524%. However, it looks like it will see a limitation to any rises after the last decision of the ECB.

In the last meeting of the ECB, Mario Draghi, its president, announced that the interest rates “will continue at its current levels or at lower ones during a longer time”. It also added that “50 basic points (current level of the rate) is not the limit”.

However, the euribor at 12 months has risen during this month of July due to a reduction of the expectation of a fall of the interest rates in view of the calm in the peripheral countries.

In any case, this mortgage indicator will close this month at 0,524%, from the 0,507 in June, experiencing its second month of increases. This means a reduction of 0,537 points from July 2012. (…)

Those experts consulted by indicate that the rises of euribor will be stopped by Draghi´s words. (…)

Sareb could demolish some of the unfinished developments.

A fourth of all promotions in the hands of Sareb are not being finished and they could be demolished. Sareb has decided to stop works at 150 of the 650 developments it has in its portfolio hoping to be able to restart them in the future, when they can be profitable, as indicated by sources of the “bad bank”. Until now, no decision has been taken on demolishing them.

The same sources have explained that “they do not plan to demolish any finished property and that in any case, they could demolish developments which are not too advanced, which after a certain period of time could be a danger for the security of individuals or which go against urban regulations”. For the rest of developments, Sareb has 15 years to develop and commercialize them.


Source: Expansión

Housing prices will drop another 10% in 2014, according to BBVA.

The managing director of BBVA, Ángel Cano, has estimated that the real fall of prices will reach around 35% at the end of this year and could reach 45% between this year and 2014, which would mean an additional cut of 10%. It has also communicated that the institution has gotten rid of more than 8600 properties until June. Therefore, Cano considers that from now on until the end of 2014 “we could see an additional fall” of prices. As explained by the executive of the financial institution, the descent of real estate prices is very “heterogeneous” depending on the regions and the geographical areas.

In the presentation of results of the first half of the year, Cano has defended the pace of sale of real estate assets carried out by the “blue bank”, while at the same time valuing the coverage rate of 44% in its exposure to this sector after the required provisions.

In the six first months of the year, BBVA was able to sell more than 8600 properties . 6600 of these assets have been directly commercialized by the institution. The rest, around 2000 units, are promotions included in the accounting books of the institution but owned by developers which were customers from the bank.

The managing director has assured that the institution continues to reduce its real estate risk and has added that the provisions are “fairly adjusted”, taking into account that the sales have been done on the accounting value.

On the sale of the nationalized institutions, Cano has explained that BBVA will analyze “and see all documents and information book” on CatalunyaBanc and NCG.

The bank will analyze the acquisition of these two institutions looking for the generation of value for the shareholder, while ruling out the sale of any strategic asset.

The managing director of BBVA has referred to the Turkish bank Garanti, valuing its “excellent” evolution in the last quarters and its “perfect” integration within the group.


Source: El Economista

Santander reduces its exposure to the real estate sector, although it slows the pace.

The real estate sector is penalized at the stock exchange and that is why everyone is trying to get rid of it. Banco Santander, the first financial institution to operate in the country, is not the one with the most credits to developers within the sector, nor is it the one which has obtained more assets through the assignment in payment.

In one year, the real estate activity of the bank has shifted from 19026 million Euros to 11580 million Euros, after a strategy of “reduction of assets”, the national share market commission explains. 6507 million of these are credits to developers, 53,7% less than the previous year and 3618 million Euros in seized properties included in the balance, 14,2% less in this year. The bank has another 1455 million Euros of shares in Metrovacesa – already excluded from the stock exchange- and Sareb, where he is the second biggest shareholder (16,8%).

From the point of view of the balance, the bank has created a perimeter called “discontinued real estate activity in Spain”, that includes credits to customers with “activities of real estate developments and which have a specialized management model”, it explains. Its subsidiary Altamira Real Estate and the rest of participated companies sold 8300 properties in the first half of the year, with an average discount of 45%.

It is true that this reduction of assets and exposure to the real estate sector is sensibly lower this year than in 2012. From January to June, Santander has reduced its credits to developers in 10,8% (around 600 million Euros less) and the value of the awarded properties in 1,5%, only 58 million Euros (37 in the second quarter). However, the real estate activity of the bank places it in a better position than its competitors such as La Caixa or Sabadell that have seen their real estate properties grow until June.

The managing director of the bank, Javier Marín, explained to analysts that the forecasts of the bank show a rise of default in the next few months due to the consumer credits and the credits to developers.

The bank has also reduced in 3% its mortgage portfolio to families for the acquisition of a home – one of its main businesses in Spain in the last few years – down to 51665 million Euros, that accumulate a default of 3,11%. One of the explanations is the slamming of mortgages within the sector, which has multiplied the value of the differentials. (…)

Source: El Mundo

The profit of rentals in Spain reaches 4,6% during the second quarter.

The acquisition of a property in Spain with the intention of renting it offered a gross profit of 4,6% during the second quarter of 2013, as informed by the website

According to the figures provided by the real estate website, the gross profit of a rented property in Madrid reached 4,2%, while this was of 4,1% in Barcelona.

Among the biggest cities in Spain, Seville is the one offering the best profit, with 4,4%, followed by Saragossa, with 4,3% and Valencia, with 4,2%. Bilbao and Valladolid are the least profitable big cities, with 3,9% and 4%, respectively.

From the rest of Spanish capitals, Lleida is the most profitable, with 6,2%. Las Palmas de Gran Canaria, Huesca, Alicante (4,7%, in all three cases) and Córdoba with 4,6%, follow. Cuenca, Badajoz and Huelva, with 4,5%, are behind.

The lowest profits can be found in A Coruña (3,1%), Ourense and San Sebastian (3,2%), followed by Lugo (3,3%) and Santander (3,4%).

“The prices of properties on sale and to rent are falling at different paces, while the selling price falls at a constant pace and everyone thinks it will continue falling, rentals are much more stable”, the chief of studies of, Fernando Encinar, declares.

“It is true that the difficult access to credit is forcing many people to rent instead of buying, which is making the “buy for rent” more and more interesting, to negotiate the buying price of a property well in order to place it in the rental market”, Encinar concluded.


Source: Idealista

Morgan Stanley gets rid of its shopping malls.

The market starts to brighten up. Last week, Morgan Stanley closed the sale of its three shopping malls in Spain, christened in the market as the good, the ugly and the bad. The operation, which had been looking for a buyer for a long time, has ended in the hands of Incus Capital, a newly created investment fund that has taken the opportunity of acquiring the first portfolio of assets in the Spanish market, as confirmed by official sources.

The decision taken by Morgan Stanley Real Estate Investment (MSREI) of liquidating its European real estate fund has favored the sale of El Mirador de Cuenca (Cuenca), Los Alcores (Alcalá de Guadaira-Sevilla) and Alzamora (Alcoy-Alicante) for nearly 30 million Euros. This price represents a discount of 75% on the 116 million Euros paid by Morgan Stanley and Grupo Lar in May 2007, just before the real estate bubble burst, in order to acquire the malls owned by the German fund SEB Immobilien Investment.

That operation was part of the investing alliance agreed by Grupo Lar and Morgan Stanley to position themselves in the booming sector of shopping malls, where one of the parts acted as a developer and the other one as a financer. The union of interests went even further, as the investment bank, through its funds, acquired 16,8% of the real estate company for 124 million Euros, as also done with Fadesa, expecting to participate in its initial public offering.

Before the collapse of the market, Grupo Lar had 15 medium-sized (with a maximum 20.000 square meters) shopping malls, most of them located in secondary cities and most of them in a joint investment with the funds of Morgan Stanley (Puente Genil-Córdoba, Navalmoral de la Mata-Cáceres, Puertollano-Ciudad Real, Los Palacios-Cádiz and Arcos de la Frontera-Cádiz). The commercialization of these assets is managed by Gentalia, the consulting and patrimony management firm developed as a line of business by Grupo Lar.

In order to carry out the sale of these three shopping malls, Morgan Stanley has carried out a restricted process, with the participation of funds such as Drago Capital or Baupost, investors with an opportunistic profile attracted by the existing price discount. According to sources in the market, the transaction was finished last week and the final buyer has been the unknown firm Incus Capital Advisors.

In spite of its recent constitution, there are veterans in the financial sector behind Incus Capital, specialists in managing credit and real estate investment portfolios. The drivers of this vehicle are Andrew Newton (ex Lehman Brothers) and Alejandro Moya (ex Morgan Stanley), who have developed the fund as a project parallel to Hipoges, a independent platform for the management and recovery of complicated credits with presence in Spain, Portugal and Brasil.

Source: El Confidencial

Foreign millionaire acquires a home in Spain in exchange for a visa.

The British citizen Alex Vaughan, co-owner of the real estate agency Lucas Fox, with headquarters in Barcelona, has been managing for many years the investments from foreigners in the Spanish luxury residential market. He assures that, since last October, the agency receives between 20 and 30 daily requests from people from all over the world and a high buying power interested in acquiring in Spain in exchange for a residence permit. Vaughan declares that his agency already has 200 investors with committed houses in Spain who are ready to buy when the law comes into force.

Since the Government announced last October that it would grant the Spanish residence to those investing in real estate assets, there have been thousands of millionaires from all over the world that have shown their interest in Spain. The fear of the country risk and the real estate bubble have shifted to the background, eclipsed by the promise of papers that will allow to live not only in Spain, but also to travel around the Schengen territory.

Most of the interested investors come from China, where Lucas Fox is in contact with twenty real estate investment firms (such as SQFT), which have a total of 500 Chinese citizens ready to buy. They have also received hundreds of requests from the United States, South America, Russia and India. Some of the interested investors come from more exotic countries, such as Ghana, Nigeria, Senegal, South Africa, Indonesia, Thailand, Egypt and Australia.

The draft of the Law of Entrepreneurs driven by the Government establishes that it will grant the residence permit to those buying properties for more than 500.000 Euros (with no charges) and also to those investing two million Euros in public debt, in shares of Spanish companies or in bank deposits, as well as to those assigning capital to general interest projects. The exact conditions are still unknown. “If the procedure is easy, we will see a huge number of acquisitions of properties”, Vaughan assures. The managing director of the real estate company Coldwell Banker in Spain, François Carrière, assures that some owners have rounded off upwards the properties which did not reach 500.000 Euros in order to attract these investors.

Lucas Fox has teamed up with the law firm Ecija in order to create a one–stop company window where investors will be able to manage the acquisition of a property and the obtaining of the residence permit as well. The lawyer in charge of this project, Gabriel Nadal, explains that even though the law has not been passed yet, it is planned that the buyer and its family will receive a permit for two years, renewable while they keep the property.

The foreigners that will invest in Spain in order to obtain the visa all meet the same traits: they have money, they believe that prices have reached their rock bottom level and they consider that prices are cheap, as they compare Barcelona or Madrid with cities such as London, Bombay and Shanghai. It could seem the dream of any real estate agent, but all agree that the investors have something else in common: “They are rich, but they are not stupid”.

The specialized agencies awaiting international investors assure that they know the current price level of the market and that they will not pay more than usual.

The star asset is a property in Barcelona, as most of the investors until now are Asians and have arrived attracted by the climate and the modernist architecture. The director in Shanghai of the real estate consulting company Singapur Squarefoot Global Properties (SQFT), Sylvan Ma, is specialized in the investments of Chinese families abroad. He explains that in order to buy in London, Chinese citizens do not need to visit the property: they can buy from Shanghai. But they show more reluctance when it comes to Spain. Sylvan Ma has been twice in Barcelona this year and he will travel there four more times. In each visit, he comes with ten Chinese citizens, “only those who are about to buy”, he explains. “When they land here, they see the sun, Paseo de Gracia, the architecture, the beach….. and they get crazy: think that in Shanghai they see the sun only five times per year”. Apart from Barcelona, they have visited country houses and castles at the Costa Brava and houses in Ibiza of more than six million Euros, but most of them will choose Barcelona.

The residence is also the main motive for the Egyptian Amr Shamel. He studied a master degree in Barcelona and now lives between Spain and Egypt. “I need the residence”, he says, while he visits a property at the Barceloneta beach, valued at 1,1 million Euro. “I will invest a bit more than 500.000 Euros, but I am also looking for my father, my uncles and friends”, as he works in an investment company. He thinks that prices are reasonable. “We will buy abroad because you are aware of the situation in our country”. The Indian investor Raj Airy sees a property in Barcelona as the entrance to Europe. “It is difficult for an Indian to get a visa, so we will invest here because the access is now easier”.

The investors from South America, however, have always preferred Madrid and it is foreseen that they will choose the capital.


Source: Expansión

BBVA will also finance the properties from Sareb.

After Santander, CaixaBank, Sabadell and Popular, also BBVA, the only healthy bank that has not entered Sareb´s capital, has reached an agreement with the bad bank to finance the sale of its properties. In line with what has been done by the other institutions, the bank presided over by Francisco González puts at the disposal of these credits 1000 million Euros.

According to the agreement signed today by the director of BBVA for Spain and Portugal, Jaime Saenz de Tejada, and the managing director of Sareb, Walter de Luna, the mortgage launched by the bank will finance any individual wishing to acquire properties, trade premises or storage rooms included in the portfolio of the bad bank. The financing will also reach those properties that appear as guarantees of loans to developers in the hands of Sareb and the assets transferred by the bad bank to another vehicle, such as the Banking Assets Funds (BAF).

For the purchase of a principal residence, BBVA offers a loan at a maximum of 30 years,  with a loan to value that does not exceed 80% and an interest rate of Euribor plus a minimum of 2,25%, for the customer with the maximum link with the bank. BBVA, however, does not inform what would be the differential applied to a non linked customer. When the loan is intended to finance a secondary home, the maximum amount it is financed is 60%, the deadline 25 years and the minimum differential over Euribor would be 3,25%.

Source: Expansion

Summer sales in properties from banks.

Hundreds of properties at less than 700 Euros per square meter. This is an example of the offer of properties at the seaside that can currently be found in the Spanish market.

Five years after the end of the real estate bubble, banks and developers have decided to accelerate the absorption of the stock of properties that floods the market, mainly in coastal areas. According to the last report from the valuation company Tinsa, instead of selling the 100.000 properties that were sold in 2005 and 2006, there have been sales of 20.000 properties in 2013, figures that should not increase until, at least, 2015.

This is why, real estate companies and above all, financial institutions, have decided to apply great discounts on the prices of their properties. “Generally speaking, we are currently at price levels from 2003 with descents since the years 2007 and 2008”, María Monasterio, director of the office of Aguirre Newman Andalusia, explains.

Tinsa assures that the prices of properties have dropped by 18% only this year, nearly 30% since the maximum levels, a descent that reaches up to 38% if we talk about holiday residences. “Prices have dropped around 50%, especially in Levante and Andalusia, although it is also true that this is an average figure. But, in general, there are very attractive prices in all the coastal areas in Spain”, Luis Corral, managing director of Foro Consultores.

At the Mediterranean coast and, especially in Casares and Estepona (Málaga); and El Egido, Vera and Roquetas de Mar (Almería), the descent has been higher than 50% from maximum levels. “In the case of Andalusia, there have been important price reductions in Manilva, due to the oversupply, and right now it is possible to find one bedroom apartments for 50.000 Euros and two bedroom apartments from 70.000 Euros. Or in Almeria, in the area of playa de Vera, it is possible to find them from 50.000 Euros, the managing director from Foro Consultores assures.

The main forerunners for these great discounts have been the financial institutions.

The need of getting rid of the awarded homes, originated from foreclosures and exchanges with developers, have obliged them to make very aggressive offers. “Most of the properties we commercialize have a price around 692 Euros per square meter, much less than half of the current cost of the square meter (1519 Euros, according to the Ministry of Infrastructure, in the first quarter of 2013)”.

In spite of these sales, the level of sales continues being low to absorb all the stock from the real estate boom.

For this reason, banks and real estate companies have concentrated in the foreign buyer. “The foreign demand has increased and it will continue doing so each year. It comes mainly from Russia, United Kingdom, Germany, Scandinavian countries, Netherlands and France”, Carlos Ferrer-Bonsoms managing director of Jones Lang La Salle España explains. “In the Balearic Islands, the strongest demand comes from the Germans and the Russians, followed by the British, very similar to the percentages at the Costa del Sol”, he adds.

Source: Expansion

Popular will also support the sale of properties from Sareb with 1000 million Euros.

Banco Popular joins the list of institutions that will support the sale of properties in the hands of the “bad bank”, Sareb, and will launch a specific mortgage which will have the availability of up to 1000 million Euros.

The bank presided over by Angel Ron becomes  therefore the fourth institution to help Sareb with the financing for the acquisition of homes and trade premises owned by the asset management company, after Santander, CaixaBank and Sabadell. These three institutions had already signed similar agreements to the one signed today between Popular and Sareb, for the same amount and with a deadline on the 31st December 2014, even though there is always a possibility for a renovation.

The next institution to join in could be BBVA which, according to financial sources consulted by Efe, is also thinking of supporting the acquisition of properties from Sareb with a similar agreement. With Popular´s mortgage it will be possible to finance up to 80% of the value of principal residences at a maximum deadline of 30 years and with an interest rate of Euribor plus 3,50 percentage points, although it can be reduced to 2,50 depending on the bonus applied.

When it comes to secondary residences, Popular offers an interest rate of Euribor plus 3,75 percentage points to finance up to 60% of the value of the property in 30 years, although if the buyer does not have its residence in Spain, the maximum deadline is 20 years and the mortgage reaches Euribor plus 4,25%.

The portfolio of properties from Sareb is made of around 55.700 properties and another 30.000 other assets, such as garage spaces and storage rooms. It also owns more than 185.000 square meters of office space, thirty hotels and 150.000 square meters of rental spaces in shopping malls.

Source: Expansión