Month: May 2014

According to the data provided by Spain´s Institute of Statistics (or INE), the number of mortgage approvals registered in March was higher than in the previous month. This has not happened since 2010.

Thus, 16.625 loans were granted in March, by only 0.2% more comparing with February but  by 2% more than in the same month 2013. However, one must take into consideration that this year´s Easter befell in April, while last year in March and this fact may have driven the positive figures.

In general, there are numerous signs of growing tendency of the market. Over the past three years, mortgage approvals declined 32% year-on-year. In 2005 and 2006, just before the real estate bubble burst, each month saw 130.000 granted loans.

Moreover, in March the amount lent for house purchase stood at €1.7 billion, increasing year-on-year by 7.7%, considerably higher than the number of mortgages. It is because an average amount per loan shows 102.397 Euros, 5.6% more.

Fernando Encinar, research director for idealista.com forecasts “the upcoming months may bring rise and at the end of the year we may even see positive development”.

Average interest rate for a mortgage was still above the benchmark, at 4.04%, but lower than in February (4.11%) and by 25 bps smaller than the 4.29% in November. Around 92%  of the mortgages are lent at variable rate, while 87.3% at Euribor as the reference. Average term is 20 years.

Over the past few months banks started to lend mousily at 2% differential over Euribor, for instance Santander, Bankinter, ING Direct, Cajasur, Caja Duero-España, Caja Rural de Granada, Deutsche Bank or Barclays. The Bank of Spain announced a 40% upsurge in lending in March.

In fact, also amendments in mortgages are carried out more frequently than before, setting at 4.4%. Subrogations pledged by the lender rose by 34.6%, while subrogation via property purchase increased 3.2%. Changes in terms and conditions stagnated with -1%.

 
Original article: Cinco Días (by Nuño Rodrigo Palacios)
Translation: AURA REE

 The company chaired by Manuel Manrique has announced not long ago intention to open Testa´s capital for new investors and stakeholders, as well as improve the branch´s solvency through capital enlargement.

In a notice sent the the CNMV (Spain´s Stock Market Commission) Sacyr wrote it is exploring the possibility without specifying the amount or time.

Testa is also weighting up Public Stock Offering (PSO) for €500 million. The steps will be discussed at the nearest shareholders´meeting to take place on 2nd July.

Together with the enlargement, Sacyr holding presently 99.5% of the company would lose a part of the stake but without losing control over Testa.

The affiliate possesses in its portfolio one of the towers in the northern part of the Paseo de la Castellana street in Madrid, as well as office buildings in prime areas of the capital and Barcelona, hotels, shopping malls, logistics platforms, nursing homes and houses for rent.

 
 
Original article: Expansión (after Europa Press)
Translation: AURA REE

Yesterday, the shares of Realia on the Continuous Stock Market geared up and shot by 10.6% to €1.39 per share. The sudden jump should be probably assigned to the imminent arrival of binding offers for the real estate firm to its main stakeholders, FCC and Bankia, tomorrow.

The operation follows the recent transfer of Realia´s French branch, SIIC de Paris, to Eurosic.

What is more, yesterday 29.9 million new shares of the real estate company were listed in the Stock Exchange, equal to 6.85% of the stake. FCC swapped the debt Realia owned to it for shares and now the construction company holds 36% instead of 30%. After a year of intensive tightening the belt, the real estate firm will start to analyze selective purchases again.

Year-to-date, Realia´s shares registered a 67% appreciation thanks to the looming sale and it is believed that when FCC and Bankia shed their 64% stake, the purchaser will have to submit a takeover bid for the entire company.

 
Original article: El Confidencial (by R. U.)
Translation: AURA REE

The obligation to cover the asset impairment imposed by the Bank of Spain and which has taken Sareb aback will have devastating effects on the bad bank´s annual results. Even though its business plan is still being revised, saying good-bye to profits forecasted for 2014 and 2015 seems inevitable. Some sources from the market estimate Sareb will bear the cost of between €200-300 million only this year.

As a consequence, the promised return of 14% set for the 15 years of the bad bank´s lifespan will drastically fall down even to meagre 2%.

Briefly, the blueprint regulation issued by the Bank of Spain forces Sareb to re-appraise its assets and give provisions to those which lost their value.

The bad bank´s business plan foresaw profits of  €63 million this year. If all estimations (sales, prices, etc.) come true, it will lose between €140 and 240 million. For the next year, the profit was expected to hit €140 million. Unfortunately, now, the re-appraisals staggered for over 3 years will affect the results of 2015 as well.

“They hope to tie-up the loss in 2016 and from then on, start welcoming profits again”, says an expert from the market. In 2016, the profits were supposed to mark €198 million. It is worth to mention that in 2013 a smiliar situation occured, when Sareb had to valuate its loan portfolio from the scratch and thereby lost €261 million, much more than the €47 million included in the plan.

The sudden delay of benefit puts the 13% annual percentage rate (13,98% in the most optimistic scenario) out of reach. Sources from the sector agree the reduction will hurt the bad bank, dipping down 2% – 4%.

No one dreads, however, that Sareb will run out of the equity, except for a PSOE politician, Valeriano Gomez who is afraid the new reform will “require more public money pumped into the bad bank”.

Sareb itself feels offended: “it looks like changing the rules in the middle of the game. The Bank of Spain fixed the transfer prices, not us, and now it claims they were wrong and we have to cover the impariment”.

Authorities defend themselves by assuring the regulation is the only way of making the annual results of Sareb feasible, especially out of Spain. “You cannot maintain the value of your assets remains the same over 15 years, you should revise them from time to time and cover all emerging deterioration”.

 
Original article: El Confidencial (by Eduardo Segovia)
Translation: AURA REE

Senior economist of the International Monetary Fund (IMF) Paulo Medas said yesterday the end of housing prices correction in Spain “is very near”, however he reminded the sector “still requires a lot of work”. In his annual report on Spanish economy, he stated “we do not know whether the prices will fall further or not but everything points to the final bottoming-out of values”.

He underlined the unsold real estate supply load creates great pressure on the market.

In spite of all that, he told there are “positive” signs of emerging recovery for the property market.

Likewise, Medas reckons there is no jeopardy of new real estate bubble, even with the significant increase of foreign investment.

According to general director of Sociedad de Tasación, Juan Fernandez-Aceytuno, in terms of prices, the market will hit the rock bottom level in 2015. “The moment of touching the bottom is essential as then the transaction number will shoot up”.

During his hearing at the Madrid Real Estate Conference included in the SIMA programme, he indicated that the decisive factor for mortgages rebound will be the purchase of mortgage-backed securities and bonds.

 
Original article: ExpansiónPro (by Mercedes Seraller, Miércoles 28 de Mayo 2014, pp. 25)
Translation: AURA REE