Juan Velayos: Spain’s New Property Developers Will Regulate Land Prices
10 April 2017 – El Economista
Neinor Homes is advancing with the purchase of land to fulfil its plans, which include reaching a cruising speed of completing the construction of between 3,500 and 4,000 homes per year.
In the first quarter alone, the firm, which just a week ago was the first property developer to debut on the stock market in Spain since the crisis, spent €51.5 million buying up buildable land, amounting to almost 90,000 m2 and with capacity for the construction of 700 homes.
“We are continuing to see that now is a good time in the market to buy land”, said Juan Velayos, CEO at Neinor. In this sense, the director stated that the company that he manages is going to continue being very rigorous in these operations to achieve the property developer margin of 18% that it has set itself.
With respect to the rises in market prices that are being seen in some areas, Velayos considers that the new players in the property development market “will act as a natural regulator of the market”.
“I do not think that land prices are going to continue to rise by as much, provided buyers are disciplined. This is a business that is now working with its own funds and buyers with this profile are much stricter with their purchases”. “Unlike what I hear on the grapevine, I do not think that we are going to see a repeat of what has happened in previous periods and that we will only see price rises that make sense”.
The director said that the difference is marked by equity. “When the banks were putting up the cash, they (property developers) were more aggressive. Nevertheless, when you are spending money from your own pocket, you are more inclined to be disciplined. That phenomenon is going to regulate the market”.
On the other hand, Velayos considers that the availability of land is very important. “I think that Spain is going to have a lot of land for several years”. “It is true that there is a problem with buildable land, which we are all aware of. It is also true that the time needed to make land “buildable” is eternal, but there is no shortage of land”.
The director considers that “the solution is none other than to try to ensure that those time frames don’t last forever like they currently do, but there is no problem in Spain in terms of land classified as residential. Simply, the urban planning procedures need to adopt coherent deadlines, and that will gradually happen”.
“I believe that Spain is entering a new phase in which the sector is basically being institutionalised. I am sure that this cannot only remain in the private part of the value chain”. In this way, he is optimistic and hopes that the public sector will start to understand that “the property development market generates a lot of employment, wealth and contributes to GDP”, and that in the end “those harmed by the lack of land are none other than property buyers”.
The property developer will complete and hand over 300 homes this year, however, it will not be until 2018 when the homes of the new stage will start to be completed. Currently, Neinor Homes has more than 4,000 homes in progress and more than 2,000 homes in an advanced phase.
Original story: El Economista
Translation: Carmel Drake