Month: August 2015

INE: House Sales Rose By 17% In June

6 August 2015 – Bloomberg

Spanish house sales rose by 17% in June from a year earlier, the largest increase since March 2014, as the country recovers from the worst recession in its democratic history.

The number of transactions rose by 3.8% compared with the previous month, according to data compiled by the National Statistics Institute (INE).

Spain has become one of the fastest-growing economies in the euro area, as exports surge and investment rebounds. This year, the country is set to record its highest growth rate since 2007.

Tinsa, Spain’s largest homes appraiser, said on 4 Aug that house prices fell by 2% in July from a year earlier, extending the cumulative drop since values peaked in 2007 to almost 42%.

Original story: Bloomberg (by Sharon R. Smyth)

Edited by: Carmel Drake

RE Investment Amounted To €8,500M In H1 2015

5 August 2015 – Cinco Días

The real estate market has been particularly active in H1 2015, as the new cycle of economic recovery gets underway. That was the main finding from the data published on Monday by the Association of Real Estate Consultants (‘Asociación de Consultoras Inmobiliarias’ or ACI), an organisation created in 2013 by the leading consultants in the sector.

If we exclude investment in housing, the volume of transactions amounted to €8,500 million during the first half of this year, whereas the figure reached just €3,500 million during H1 2014. As such, more than 2.4x as much money has been invested in Spain so far this year compared with the same period last year.

“The real estate market in Spain is showing strong signs of recovery, however we are seeing variations by asset, location and geography”, said Ricardo Martí-Fluxá, President of the ACI. “If we also consider that the fundamentals of the economy are indicating a clear, stable and sustainable upwards trend, then we can say that now is a great time for investors to acquire assets”, adds this career diplomat, who was the Secretary of State for Security in President José María Aznar’s first Government (PP).

“By type of investor, the Socimis and investment funds have been the most active purchasers, followed by private investors and property developers, amongst others”, according to a statement from the association. During H1 2015, 49% of all purchases were made by Socimis, followed by specialist investment funds (23%) and private investors (13%).

In fact, the Socimi Merlin Properties closed the largest transaction when it acquired Testa for €1,793 million, although the operation will be completed in several stages between now and 2016, when the Socimi will eventually acquire 100% of Sacyr’s former real estate company. Since the first Socimis debuted on the stock exchange just over a year ago, they have become key players in driving the recovery of the RE market.

Another one of these large firms is Hispania (in which the investor George Soros holds a stake), which invested €670 million between March last year and June this year. Meanwhile, Axiare has assets amounting to €571 million and Lar España has a target investment total of between €750 million and €850 million, which it plans to achieve during the coming months.

Original story: Cinco Días (by A. Simón)

Translation: Carmel Drake

New Hotel Socimi ‘Obsido’ To Debut On MAB In Sept

5 August 2015 – Idealista

Obsido Socimi, whose portfolio of retail assets is concentrated in Málaga, is set to become the next Socimi to list on the stock market in Spain; and it will do so in September, with a market value of €21.39 million….and a share price of €19.40.

Following the recent debuts of the Socimis owned by Blackstone and Deutsche Bank, Obsido will become the seventh Socimi to list on the Alternative Investment Market (‘Mercado Alternativo Bursátil’ or MAB). (…).

According to the company’s prospectus, Obsido Socimi is backed by Spanish and Norwegian capital. Håkan Tollefsen controls a 33.165% stake in the company (365,683 shares), as does Joaquín Hinojosa, whilst the Obsido Group, the parent company, holds a 0.26% stake (2,850 shares) and the other minority shareholders own the remaining shares (33.41%).

The company, which has the support of Armabex as the registered advisor and Banco Sabadell as the liquidity provider, has focused its real estate portfolio on Málaga, specifically two hotels in Marbella, according to Antonio Fernández, President of Armabex.

“All of the properties in the company’s real estate portfolio are located in the province of Málaga. As a result, the company’s business depends to a large extent on the overall economic conditions in the province and on demand for hotels in that area in particular”.

The seventh Socimi to list on MAB

Obsido is the seventh Socimi to debut on this exchange, which is also home to small companies looking to obtain financing to accelerate their expansion and SICAVs (the investment vehicles used by high net worth individuals).

The most recent Socimi to list on MAB was Trajano Iberia, owned by Deutsche Bank, which debuted on 30 July,… In addition, Entrecampos, Mercal Inmuebles, Promorent, Uro Property and Fidere (Blackstone’s Socimi) complete the line-up of Socimis listed on this alternative investment platform.

One thing is certain, Obsido will not be the last Socimi to debut on this market. In fact, analysts expect that the MAB will receive a new wave of Socimis after the summer.

Original story: Idealista

Translation: Carmel Drake

Tinsa: House Prices Fell By 2% In July

5 August 2015 – Expansión

According to Tinsa, house prices in July have recorded a cumulative decrease of 41% since 2007.

The decline in house prices moderated to 2% in July, the smallest YoY decrease since May 2008, but recorded a cumulative decrease of 41.5% from the peak figures registered during the last quarter of 2007, according to the Local Markets Index (IMIE) published by Tinsa yesterday.

This data from the appraisal company shows that the residential market is continuing to stabilise, a process that began during the second half of 2013.

The best figures were recorded on the Mediterranean Coast, where the average price increased by 2.8%.

Overall, the residential market showed signs of recovery in almost all areas, with a slight fall of just 0.5% between the end of 2014 and July 2015. Moreover, in three of the five areas analysed, the evolution in prices was positive during the first seven months of the year.

On the Mediterranean Coast, where prices decreased by 47.6% on average during the crisis, prices have increased by 3.8% on average since the end of 2014.

Meanwhile, in the provincial capitals and major cities, as well as in the Balearic and Canary Islands, prices have increased by several tenths so far in 2015: by 0.2% and 0.9%, respectively.

However, with the exception of the Mediterranean Coast, prices have decreased over the last twelve months in the majority of regions.

Average prices in provincial capitals and major cities and in other municipalities in July were 1.8% below their levels in July 2014, on average.

The decrease was more acute in metropolitan areas, which recorded a YoY drop of 4%, and in the Balearic and Canary Islands, where prices decreased by 4.8% compared with a year earlier.

Since 2007, house prices have recorded a cumulative decrease of 41.5% on average in Spain.

The greatest decreases have been registered on the Mediterranean Coast, with a 47.6% decrease, followed by the metropolitan areas and provincial capitals and major cities, which all recorded cumulative declines of 45.1%.

By contrast, the smallest cumulative decreases have been recorded in the Balearic and Canary Islands, with a decline of 30.5% and in other municipalities, where prices have fallen by 36.4%, on average.

Original story: Expansión

Translation: Carmel Drake

Savills: “Investors Have 18 Months Left To Buy In Spain”

3 August 2015 – Expansión

The CEO of the British real estate consultancy Savills says that he expects the Spanish market to attract a lot of capital from Asian investors over the next 18 months.

In 1980, Jeremy Helsby started work at the real estate consultancy firm Savills, renowned for selling some of the most exclusive properties in the world. The company, which is 155 years old, first made a name for itself selling homes in the English countryside, but soon expanded its focus. At the end of 2014, Savills advised on the sale of the Gherkin, the cucumber shaped skyscraper in the City of London, which was sold to the Brazilian millionaire Joseph Safra for GBP 726 million.

Helsby…has been CEO at Savills since 2008 and was the architect of the international expansion of the firm, which has become one of the largest in the world, competing alongside US firms, such as CBRE and JLL…The company now has 20,000 employees around the world and more than half of its sales are generated outside of the UK.

Spain

According to Helsby, the modus operandi of international investors has changed. Their priority now is to diversify their investments and they are generally expanding beyond their own local markets.

In this context, Spain is one of the three or four most interesting markets in the world for major international investors, after the UK, Germany and France. “Investors come to Spain because they consider that the market here offers good opportunities and because assets are cheap”, explains the CEO, whilst noting that the first investors to arrive were the opportunistic funds, above all the US giants, including Apollo and Blackstone. “Investors have 18 months left to buy in Spain and we expect to see a lot of money arriving from Asia during this period”.

In his opinion, Spain’s two largest cities – Madrid and Barcelona – will be the key targets for investment, since they have “attractive properties, strong businesses and low prices following the economic crisis”.

These price reductions, which were as high as 40% in certain parts of Spain, have attracted a lot of investors. “Investors are buying because they think assets are cheap and because they expect there to be an increase in demand. The economy is growing. If we take a 5-year view, these assets may be sold a good prices”, he says. The question is who will buy the assets in the next round. “That is the million dollar question”, acknowledges Helsby. “Most of the recent investments have been made by opportunistic funds, but in three years time, they are going to want to sell their assets and it is not clear yet who will take them over”.

This flood of foreign investment in Spain has led Savills to reopen its office in Barcelona. “Our customers are asking us to help them buy properties there”, says Helsby, who took the decision to close the office in the Cataluñan capital in 2007 because “the market was dead”, he recalls. “It is a sign of confidence in the Spanish market and we hope to earn a lot of money there”.

Savills recorded turnover of GBP 1,000 million in 2014, up 19% and its profit before tax grew by 21% to €84.7 million. Last year, Helsby earned GBP 2.2 million (€2.8 million) for his work as the head of the firm, up by 33% from the previous year. (…).

Original story: Expansión

Translation: Carmel Drake

Banks Sell 35,000 Foreclosed Homes In H1 2015

3 August 2015 – Expansión

An increase of 10% / Bankia, Popular and Bankinter are leading the increase in house sales, due to a rise in demand, the macroeconomic improvement and the institutions’ appetite to grant more mortgages.

The divestment of the real estate assets continues to be one of the Spanish banking sector’s main priorities. The major entities in the country have sold almost 35,000 homes during the first half of the year, an increase of 10% compared with the same period last year, according to the half year results published to date.

Leading bankers have explained that the improvement in demand, thanks to the macroeconomic recovery and the re-opening of the credit tap, has facilitated this trend. “We have noticed a significant increase in retail demand”, said Francisco Gómez, the CEO at Popular, last Friday.

Just as important for this recovery is the fact that house prices have risen and are now coming into line with the levels that the banks have accounted for them on their balance sheets, following the provisions made in recent years.

Furthermore, the entities are now realising that they can sell their assets with lower discounts and in some cases, even make small profits. In this way, José Antonio Álvarez, CEO at Santander, reported at the entity’s results presentation, that discounts have decreased from 40% to 35%; and Carlos Torres, the number two at BBVA highlighted that his entity has obtained profits of €35 million from sales made during the first half of the year. Sabadell has also seen an increase in its sales prices.

Despite this increase, the balance of foreclosed assets on the entities’ balance sheets has remained stable and even increased slightly in some cases, given that the banks are continuing to convert loans into non-performing assets. At the end of 2014, the sector still held more than €80,000 million in homes, property developments and land on their balance sheets, left over from the crisis, according to figures from the Bank of Spain.

Bankia is one of the entities that has accelerated its sales in recent months, doubling them during the first half of the year. The CEO of the bank, José Sevilla, explained that these assets represent an unnecessary cost for the entity. For that reason, in addition to the sales it is making to individuals through its branch network, it has launched an operation to get rid of all of its foreclosed assets – Project Big Bang – worth €4,800 million, for which it will receive bids in September.

New asset managers

Sources at Popular, another one of the entities that has seen the greatest increase in sales during the first half of the year, note that another one of the key changes has been the entry of new professional management firms into the sector, following the sale of several real estate managers in 2013. “Our sales management has improved significantly thanks to the Aliseda operation. And we expect that trend to continue in the future”, said Gómez. Popular is set to exceed its goal of generating €2,000 million from the sale of properties in 2015.

Ibercaja also notes a “positive trend” with a 66% increase in the sale of homes. That entity has a similar plan to that of Bankia, i.e. to sell all of its foreclosed assets in the short-medium term, just like Kutxabank did last year.

On the other hand, the three largest banks have decreased their sales in terms of the number of units. These financial groups are focusing on reducing the discounts they offer, and they are under less pressure since their real estate arms have decreased their losses over the last year: by 38% in the case of Santander and by 35% in the case of BBVA.

Meanwhile, CaixaBank generated €2,346 million from the sale and rental of real estate assets in the last twelve months, an increase of 2.5% compared with the previous twelve months, according to data from the entity.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

S&P: House Prices To Rise By 2.5% In 2015 & 2016

3 August 2015 – La Razón

The ratings agency Standard & Poor’s (S&P) expects house prices in Spain to increase by 2.5% this year and next, and to rise by 4% in 2017, driven by the economic recovery, which is gaining strength, and low interest rates.

If these forecasts are correct, house prices will rise again after years of decreases following the burst of the housing bubble.

According to data from S&P, the downwards trend was finally broken in 2014, when prices remained stable.

The improving economic conditions and low interest rates will also push prices up in other European countries.

In fact, within the Eurozone, real estate prices are set to record the greatest increase in Ireland this year, which will see growth of 9%, followed by Germany (5%), Portugal (4%) and the Netherlands (3%).

The markets in Ireland and the Netherlands, which were amongst the worst affected by the crisis, will continue to improve in 2016, with average price rises of 5% and 3.5%, respectively.

Just like in Spain, prices are also expected to stop falling in Italy this year, although unlike in Spain, they are not expected to increase, rather they will remain stable.

Only the French and Belgian markets are expected to register decreases this year, of 3% and 2%, respectively. In the case of Belgium, the downwards trend is forecast to continue into 2016.

Beyond the Eurozone, S&P expects that prices will continue to grow from strength to strength in the United Kingdom, specifically by 7%, although at a lower rate than in 2014 (10%).

The Bank of England may increase interest rates this year and whereby curb the increases over the next few years, to 5% in 2016 and 2.5% in 2017.

In the case of Switzerland, house prices will experience a slight recovery, with an increase of 1.5% this year, after rising by just 0.1% in 2014.

Original story: La Razón

Translation: Carmel Drake