20 January 2016 – Cinco Días
The property sector, one of the causes of the crisis, and certainly one of the sectors that was hardest hit by it, appears to have bottomed out. At least that is the opinion of 100 executives from the real estate sector interviewed by the consultancy CBRE for its “Trends in 2016” barometer, published yesterday.
82.9% of the experts consulted think that the residential sector has now bottomed out in terms of price decreases. Of those, 77% expect the cost of house purchases to grow by up to 10%.
“We are seeing a two-speed market when it comes to the recovery of prices. Prices in Madrid, Barcelona and the Costa del Sol are increasing, along with those in certain large provincial capitals”, says Lola Martínez-Brioso, Head of Research at CBRE. For example, prices in Madrid are increasing by 5%. “New developments have more opportunities in those cities where there is greater demand and at the same time, the stock of empty homes is smaller”, she adds.
According to this barometer, 39.5% of the experts point to the development of residential properties as one of the best segments for business opportunities, double the number that thought the same in this report a year ago.
Moreover, these experts predict a surprisingly high volume of new construction. 72.3% of the executives expect that more than 100,000 new homes will be constructed this year. Of those, 19.7% believe that this figure could even reach 250,000 new homes.
These forecasts represent a stark contrast to the reality of 2015. According to the Ministry of Development, during the 10 months to October 2015, construction began on 39,871 homes, which means that by year end, that figure may have reached 50,000. Nevertheless, the forecasts according to the barometer show that this rate of new builds will be at least double in 2016. “For the first time since 2007, we consider that residential development is the business with the greatest potential”, says Martínez-Brioso.
In the past, the record high was recorded in 2006, when more than 865,000 new homes were constructed in just one year. The last time more than 100,000 new units were constructed (in one year) was in 2009 (when 110,849 homes were built, according to the Ministry of Development).
One of the reasons behind this trend, according to CBRE, is the entry of foreign capital into property development in Spain, such as the case of the fund Lone Star, which acquired the real estate company Neinor last year and now plans to invest €1,000 million in land and new builds. (…).
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake