16/12/2014 – El Mundo
Construction in the capital seems to have regained the pulse lost during years of being halted and focused basically on new neighbourhood of Valdebebas. Thousands of dwellings have started to be raised in the last months in various areas of Madrid, proving the turning point for Spanish housing after the dark times of 2013 has come.
From January to November, 3.043 new building permits were granted to Madrid’s builders and architects, local City Hall’s data shows. These are not only numbers, though. They embody a wide spectrum of renewed and rich residential supply coming forward to meet unsatisfied apetitte for new real estate. What is more, the housing has little or nothing to do with the boom, none in terms of prices (pretty competitive), nor typology (quality and tailor-made), and not even the location (nice areas).
The boiling, long-awaited supply also comes from new players. Thus, traditional developers had to face up to the new realm and learn how to live in harmony with other residential market kings like the banks looking to add value to their repossessed land, and investment funds, which spotted a golden strike in this segment. Moreover, the cooperatives have increased their activity, betting on short- and mid-term development.
Awaiting the large-scale projects to start, such as the 50 Raimundo Fernandez Villaverde and the Cuatro Caminos Metro depots’ plot, cranes work round the clock on the building sites in other locations, like the Arroyo de Fresno and Valdebebas neighborhoods in the north of Madrid and in the Ensanche de Vallecas in the south-east. The three town-planning ventures represent the epicenter of the capital’s new construction, let alone the Sanchinarro, Las Tablas and Montecarmelo developments, also in the north.
Speaking of geographical distribution of the new permits, 701 of the total 3.043 granted (rehabilitations included) were for Villa de Vallecas, 698 for Fuencarral-El Pardo and 573 for Hortaleza areas, simply the most desirable districts.
However, not only does the property development flourish in new and large housing estates, but also in other places where more than a hundred of homes were built. Namely, there were 203 applications for permits in Tetuan, 201 in Moncloa-Aravaca, 157 in San Blas-Canillejas and 155 in Carabanchel neighborhoods.
On the other side, not even a single building permit was granted for Retiro, Chamberi, Puente de Vallecas, Moratalaz and Villaverde. Little available land or few buildings needing rehabilitations cripple new housing production in the first two, while the lingering stock, scares developers off the remaining three. In case of Puente de Vallecas, its closeness to Villa de Vallecas deprives it of the new home opportunities. Of the to-be-built supply, 2.474 are apartments and 569 single-family units (300 in Villa de Vallecas).
As experts point out, the cranes can be found in Puerta de Hierro (Fuencarral-El Pardo), El Barrial (Moncloa-Aravaca) and Las Rosas and Las Mercedes (San Blas-Canillejas). The two places mentioned at the beginning are unique and supply in there is usually destined for solvent, demarcation-oriented public.
While giving his opinion on new housing types, Carlos Smerdou, CEO of Foro Consultores, said the catalog shares one common feature: tailor-made, and therefore reaching high pre-sales before a project starts. ‘The goal is to respond to a demand which has been waiting for determined products in specific areas for years’, the director explained.
Dario Fernandez, the Residential, Town Planning and Land department Head of JLL, sees eye to eye with Mr Smerdou. ‘Many factors concurred to the increase in new construction, such as dormant demand in matured areas witnessing supply shortages’, he said. The expert praised the developments in the north, too. ‘Perhaps, these neighborhoods show a good response to more traditional/rational developing behavior, where considerable demand and little supply coincide’.
The exact parameters brought ACR and Allegra to constructing their October-launched Residencial Nature project nearby the Plaza de Castilla square (Tetuan district). ‘The quality, competitive price and meticulous design mark the standard for this and our future developments, to be located in active demand and restrained supply areas’, assured David Botin leading the Development Department at ACR.
Projects Settled on Cheap Land
Looking at results of the firms, it seems their strategy works flawlessly. ACR and Allegra sold 100% of the Residencial Nature in only few months. The closed complex has all types of common areas and 94 apartments at prices ranging from 115.000 and 275.000 euros. And the attractive prices could be set thanks to huge discounts on the land, reaching up to 80% in some parts of Madrid, as well as to limited building activity.
Via Celere‘s chairman, Juan Antonio Gomez-Pintado supports the modus operandi: ‘All the residential product started in 2014 was developed on basis of an exhaustive market study and on the plots where such a diverse product did not exist’. The developer ran property developements in Embajadores, Arcentales and Valdebebas this year, focusing on the best energy efficiency class (A) and special common areas.
In this context, Smerdou adds that the new housing industry walks towards normalization due to adjustment in prices, fundamentally. ‘Average discount in the developed areas of Madrid posts between 30% and 40% from the market’s peaks. Vallecas is an exception with 50%-off values, where banks trade REO land’, he claims.
According to the latest update by Sociedad de Tasacion, in June, a new square meter cost 2.669 euros on average, down 32.9% from June 2007 (3.978 euros). By the capital’s districts, prices fell the deepest in Chamartin (down 46.9%) and in Villaverde (42.1%).
When it comes to features of the new construction homes, Smerdou points out their sizes. ‘The new dwelling units are bigger than those built during the real estate bubble. We return to three-bedroom houses and one-bed and bedsit apartments are going out of fashion’, he remarked. ‘Properties for living are replacing investment units’.
General director at Grupo Ibosa, Juan Jose Perucho adds other indirect keys to their trading success: better expertise in the real estate invoking demand. ‘The fear did not disappear but the buyers seek information about the track and history of managers and developers’, he assured. Grupo Ibosa has set four cooperative property developments in Valdebebas running with almost 200 unsubsidized or partly-public homes inside estates called Auriga, Sagittae, Orion and Atenea.
‘Many believe the pricing cannot be lower so they started to buy homes for living instead of speculative investment’, Mr Perucho said.
Original story: El Mundo (by Jorge Salido Cobo)
Translation: AURA REE