9 November 2017 – Expansión
The blast of property developer activity and the entry of funds into the residential business have caused land purchases to soar in recent months. According to forecasts from BNP Paribas Real Estate, 2017 is set to close with approximately 22,700 land purchase transactions in total, with a combined value of €4,076 million, which represents an increase of 37% compared to 2016.
The consultancy firm explains in a report about the residential market that interest is focused on the more stable markets, such as Madrid and Barcelona. Nevertheless, the scarcity of available buildable land has led to searches for plots in other markets too, such as Sevilla, Málaga and Valencia.
“After overcoming some very tough years for the real estate market, and in particular the land market, with the paralysis of property developer activity, the segment started to recover over the last two years, in line with the improvement in the fundamentals of the market and the good performance of the economy”, explain sources at the consultancy firm.
The report points out that, although there is a lot of available land in Spain, the average time it takes to create buildable land is eight years, due to the administrative processes that are required. “Over the last 10 years, no land has been generated; no one was interested in investing in the market”.
In certain areas of the more established markets, that lack of buildable land is leading to an increase in prices, with rises of up to 30% and even 40% over the last two years. In this way, in markets such as Valdebebas, Montecarmelo and El Cañaveral (in Madrid) have seen significant land price increases, as a result of the fact that the supply of buildable land is very limited.
BNP Paribas Real Estate highlights the change brought about in the sector due to the increased demand and the entry of investment funds eager to back the market.
Property developers such as Neinor, Aedas – both of which are listed – , Vía Célere, Metrovacesa and Aelca are taking advantage of the good times that the sector is enjoying and the upwards cycle, in general, to strengthen their presence and launch new developments.
The report points out that, during the eight months to August, 315,795 house purchase operations were closed. It forecasts that the total number of transactions could reach 530,000 homes in 2017, which would represent a return to the pre-crisis levels. The main international market is the United Kingdom, whose citizens account for 14.9% of transactions by overseas players, despite Brexit. In addition to the Brits, the French, Germans, Belgians, Italians and Nordics are the other main buyers of homes in Spain.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake