Rental Housing Suffers as Demand Swells Amidst Falling Supply

16 September 2019 – The supply of homes for rent has fallen over the last year, even as demand is increasing, placing upward pressure on prices and sparking furious debate within Spain. Arguments are raging in the media and political circles, with a rising number of people criticising socimis, investment funds and short-term rental operators like Airbnb.

According to a study by the real estate website Fotocasa, the supply of homes for rent on the market fell by 27% in the last year.  At the same time, there was a 56% increase in demand, leading to a search for the basis of the market changes.

However, the criticism leveled at investment funds and Airbnb seem to be unfounded. According to the Ministry of Development, the total stock of rental housing exceeds 2.3 million residences. The market share in the hands of large investors, however, is  just under 3% of the market, or about 115,000 homes.

Short-term real estate operators like Airbnb and its ilk also seem to be taking an unfair amount of blame.  Unlike in neighbouring Lisbon, Portugal, these operators only control about 4% of the total stock of such real estate in Barcelona, 0.8% in Madrid and 1.2% in Palma de Mallorca.

Original Story: Libre Mercado – Diego Sánchez de la Cruz

Photo: Europa Press

Adaptation/Translation: Richard D. K. Turner

TPG, Round Capital & Ares Enter Final Round of Bidding for Témpore

12 March 2019 – El Independiente

Sareb has reactivated the sale of its Socimi Témpore Properties and the funds TPG, Round Capital and Ares are some of the candidates in the final round of bidding.

The bad bank was close to signing the transaction last year but called it off due to a lack of transparency. Then, it was the US investment fund TPG, shareholder of companies such as Spotify, Airbnb and Burger King, who was the likely buyer of Témpore, which manages 2,249 residential homes worth €338 million.

Now, TPG is back in the final round of the new process, this time against two opponents. The real estate fund Round Hill already has a presence in Spain – just a few weeks ago it launched a joint venture with the fund KKR and the logistics firm Pulsar Properties to buy logistics platforms. Meanwhile, the US fund Ares has also starred in several transactions in Spain, particularly in conjunction with the Dutch real estate firm Redevco.

Témpore closed 2018 with a loss of €384,394, but is forecast to generate profits from 2020. Its portfolio of residential assets, which is managed by Azora, generated rental income of €7.3 million last year. Moreover, 80% of its assets are located in the metropolitan areas of major capitals and the rest are in areas with significant rental demand, such as Valencia, Sevilla, Zaragoza, Málaga and Almería.

Original story: El Independiente (by Ana Antón)

Translation: Carmel Drake

Sareb’s Board Suspends the Sale of its Socimi Témpore to Launch a ‘Transparent Process’

19 December 2018 – El Independiente

The sale of Tempore Properties, the Socimi owned by the Company for the Management of Assets proceeding from the Restructuring of the Banking System (Sareb), was almost a done deal, but the plug has been pulled at the final hurdle. Sareb and the investment fund TPG were in the midst of closing the final details of the operation when the Board of the so-called “bad bank” decided to reject the offer. To the bewilderment of the US group, the directors of Sareb have demanded the launch of an ordered and transparent sale process, according to sources familiar with the events speaking to El Independiente.

Tempore, which has just carried out a non-monetary capital increase for €150 million and which will soon manage 3,300 real estate assets worth €325 million, received several offers at the end of November. The bid from TPG was successful over the others, but the process did not have all of the guarantees, and so the members of Sareb’s Board of Directors took the decision to block the transaction.

“It makes sense, especially taking into account the legal problems that could be generated if a government agency participates in exclusive processes”, indicated sources in the sector. “The directors have to be increasingly careful with the operations that they approve or they may incur serious faults”, added another.

In this way, the entity that it seemed was going to become the new owner of the Socimi, TPG, is the shareholder of companies such as Spotify, Airbnb, Burger King, Lenovo, Ducati and Grohe, amongst others.

Sareb, in which the State owns a 45% stake, wanted to close the operation before the end of the year and improve the appearance of its accounts, which are set to report losses, for another year. Now, however, that operation will have to wait until 2019.

The Tempore portfolio being sold by Sareb is concentrated (80%) in the metropolitan areas of Spain’s major capitals, with the remaining assets located in geographical areas with significant demand in the rental market, such as Valencia, Sevilla, Zaragoza, Málaga and Almería.

Azora is responsible for the management of the portfolio, specifically for the administration and sale of the assets. The Socimi is led by the Director of Rentals at Sareb, Nicolás Díaz Saldaña. Before joining the bad bank, Saldaña led the international team at Metrovacesa during the toughest period of the real estate crisis (…).

Several sources in the financial sector have indicated that Sareb must maximise the cleanliness of the operations that it participates in, especially after some institutions have been called out for irregular sales.

The Bank of Spain took Sareb to task over some suspicious activity following an inspection, according to a report to which El Independiente has had access.

Original story: El Independiente (by Ana Antón)

Translation: Carmel Drake

The Boom in Tourist Apartments Cools Down

3 December 2018 – Eje Prime

The boom in Airbnb and other collaborative economy platforms has removed thousands of flats from the real estate market in recent years. The high returns that owners receive from the overnight stays of tourists are behind the phenomenon, which has contributed to a decrease in the supply of rental homes available for residents and, therefore, to an increase in rental prices, especially in the large cities. Nevertheless, this phenomenon appears to have peaked.

At least that is according to the latest results from the Tourist Apartment Occupancy Survey published by Spain’s National Institute of Statistics (INE). In October, Spain had 133,567 tourist apartments registered as such in the corresponding registers of the tourism councils of each autonomous region, which represented a decrease of 6,976 units with respect to the same month in 2017.

The decrease in October is the third consecutive monthly fall and the sixth so far this year; it comes after a period of continuous increases, which started in 2015. The maximum stock of tourist apartments in recent years was recorded in July of this year, with 167,241 units, coinciding with one of the months during which this indicator rises the most. Nevertheless, in August, the number of registered apartments decreased by 3.2% YoY, before falling by 2.3% in September and by 5% in October.

The decrease in the number of establishments took place in the last year to October in the five autonomous regions with the largest supply of that type of apartment. In the Canary Islands, where 45,958 apartments were recorded in October, the YoY decrease amounted to 2.9%, with 1,350 fewer establishments.

The most marked decrease, amounting to 13.1%, was recorded in the Community of Valencia, which lost 3,662 apartments, bringing the total to 24,280. The decrease amounted to 1.2% in Andalucía (with a stock of 18,442 apartments), 10.3% in the Balearic Islands (to 17,479 apartments) and 5.6% in Cataluña (to 10,895 apartments).

On the other hand, although the general trend is a decrease, in some autonomous regions, the volume of tourist apartments is continuing to rise, with increases in the double digits in some places, such as in the case of Cantabria, with an increase of 27.6% compared to October 2017 and of 14.8% in Castilla y León.

Original story: Eje Prime 

Translation: Carmel Drake

Fotocasa: Rental Prices Soar by 11%+ in Madrid, Valencia & Málaga

20 November 2018 – Expansión

The rental market has reached cruising speed faster than usual in the main Spanish capitals. The new normal has become double-digit increases, which have been accumulating on a sustained basis now for several months.

Madrid, Valencia and Málaga are leading the trend. In Madrid, rental prices soared by 13.2% in October in YoY terms; meanwhile, in Valencia, they leapt by 13%; and in Málaga, they rose by 11.3%. They are closely followed by Santa Cruz de Tenerife, where rental prices increased by 10.2% in YoY terms. These rises contrast with the overall moderate increase in rental prices in Spain, which were up by just 2.7% on average in October, according to the latest data published by the online portal Fotocasa.

“The average price of rentals in Spain are continuing to rise, but at a much lower rate than they were a year ago, when we were seeing double-digit YoY increases” explains Beatriz Toribio, Head of Research at Fotocasa.

In fact, the 2.7% increase is so heavily influenced by the large capitals that if we eliminate the increases in Madrid, Valencia and Málaga, the market would register a decrease of 3.2%.

Even so, the data for October constitutes a recovery, after a YoY decrease of 4.2% in the third quarter, the most acute reduction since the third quarter of 2007.

The strong tensions in prices in the main capitals are striking”, said Toribio, “above all, taking into account that a large part of them mean that we have now exceeded the maximum prices recorded in 2007 and 2008”.

This sustained increase in prices in the rental market is mainly explained by strong demand. On the one hand, the increase in house (sales) prices in the major cities means that the proportion of people who are ending up renting is increasing – a change in trend that is also being influenced by the preferences of young people to rent. On the other hand, the dynamism of tourism in these cities, together with the appearance of new accommodation platforms, such as Airbnb, in an environment characterised by low interest rates, have made rental an attractive option for investors. That, taking into account the scarce supply available in cities such as Madrid, is pushing prices up.

By contrast, rental prices are falling in cities with less economic dynamism, many of which are located inland, with acute problems in terms of depopulation and ageing demographics. Such is the case of Huesca, where prices fell by 25.7% in October, followed by Vitoria, with a decrease of 23.1% and Soria (-21.5%).

Although the rental market is more elastic than the purchase market against possible macroeconomic shocks, a significant slowdown in economic growth could have a negative impact on the real estate market.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Airbnb Delists 18,000 Andalusian Rental Flats Lacking Registration

5 October 2018

Since Monday, the online short-term rental platform is only displaying properties in Andalusia that are registered with the tourism office, reducing its supply to 40,800 listings.

Beginning this week, the vacation rental giant Airbnb will only display listings for homes in Andalusia that comply with local regulations and have the relevant registration number. The new requirement has led the online platform to eliminate 18,000 listings in Andalusia, reducing the supply in the region to 40,800, the company announced. The new rules are a severe blow to informal offerings in the region which will now no longer be able to advertise on the most important website for holiday rentals. “This unique agreement provides present and future hosts with the security and clarity they need to share their home responsibly,” the company stated.

Although the platform does not have data by province, statistics provided by the Tourism Registry of Andalusia points to a high concentration of tourist apartments on the Costa del Sol, an area that accounts for more than half of the supply of tourist housing for the region as a whole. The latest figures showed that 24,342 tourist apartments were registered in the province of Malaga, equivalent to a total of 127,218 beds.

Airbnb stated that almost half of the 18,000 listing for flats that were delisted for not having the necessary registration with the Tourism Registry of Andalusia had not had any reservations in the last year. The rest operated normally, despite not complying with the regulation. Airbnb’s new requirement served to remove those offerings from the market. That became possible after the company reached a compromise with the local government, through which Airbnb implemented a simplified online registration system earlier this year aimed at helping Andalusian hosts to comply with local rental laws.

“Airbnb’s agreement with the municipality was implemented in full on October 1. After the creation of a simplified online registration system, we have deactivated the advertisements that, as of September 30, did not include a registration number in accordance with the Andalusian tourism law,” the company announced. After the reduction, the platform now has 40,800 listings for tourist properties in Andalusia. The company also stated that almost 80% of property owners, or hosts, as the company calls them, have just one listing, while just 2% have more than five.

The typical Andalusian host is 47 years old and rents their property for 33 days a year. The majority of hosts are women (53%), and 79% of them have between 30 and 59 years of age.

The platform values its cooperation with the municipality and sees it as a model for the future. “Airbnb cooperated with the Andalusian government to create a tool that helps to support the community of responsible home sharers and is the only platform that is committed to sharing data with the authorities, making the task of inspection easier.”

Other online platforms grouped under the PAT banner announced that they would request mandatory registration for any new holiday homes in Andalusia starting this week. The association, made up of HomeAway, Rentalia, Spain-Holiday.com and Niumba, has a total of more than 60,000 holiday homes in Andalusia. It is another step towards the elimination of the informal market in the region and will further encourage the registration of flats that operate in the sector. Also, the PAT platforms announced their commitment to seek “solutions and tools” to extend the registration requirement to the entire supply of flats in Andalusia. The local government also announced “concrete actions” to create a new state framework for the sector by the end of the year.

Original Story: Diário Sur – Pilar Martínez

Photo: Francis Silva

Translation: Richard Turner

Madrid Plans Drastic New Rules that Could Affect 95% of Tourist Apartments

17 August 2018

The draft regulations from City Hall would mean any flat without separate access to the street would need a license.

The boom in tourist apartments in Madrid rented out via accommodation sites such as Airbnb is causing problems with regard to habitability, harmonious cohabitation, and safety, and is “affecting the price of housing,” causing an “astronomical rise in the price of rents” in the city centre. That’s according to new regulations for the sector proposed by City Hall, and which plan to drastically limit the supply of vacation homes in the most central neighbourhoods.

The plan states that the Airbnb model is causing the “expulsion of residents”

The rise in tourist apartments on offer via sites such as Airbnb and Homeaway is rapidly changing cities across the world, and as such has sparked debate over the pros and cons of the model. A report published this week by Spain’s competition watchdog, the CNMC, praised the arrival of such sites, pointing out that they offer an income stream for property owners, drive down prices of vacations, and “empower” the consumer.

In contrast, the cons can be found in the new plan from Madrid City Hall, which will be up for debate until September 27, ahead of its definitive approval.

The plan, to which EL PAÍS has had access, states that the Airbnb model is causing the “expulsion of residents,” and is having an “impact on the habitability of buildings, harmonious cohabitation, the safety of residents, and the use of public spaces, and is affecting the price of housing and the growth of other economic activities.”

In order to defend “residential use” of these neighbourhoods, the new plan states that tourist apartments that are rented out on a professional basis (i.e. more than three months a year) must obtain a license. And in districts in the centre and another three neighbouring areas, these licenses will not be granted if the apartment in question does not have an entrance that is independent from the rest of the flats in the block.

City Hall says that it is not trying to eliminate this kind of accommodation altogether

In practice, this will veto the vast majority of the current supply of tourist rentals, given that the rules will also exclude ground floor apartments that can be directly accessed from the street. When Madrid City Hall announced the plan several months ago, they forecast that this could affect 95% of apartments on offer.

City Hall says that it is not trying to eliminate this kind of accommodation altogether and points out that apartments that are rented out for fewer than three months a year, or where just a room is offered, will not be subject to these rules. The aim, they say, is to reduce the saturation of the market and to “decentralize use” so that more apartments are offered in other areas of the city.

The draft plan argues that the centre of the city is easily accessible from practically any area of the city, with four out of every five neighbourhoods in the capital under half-an-hour away via public transport.

The aim is to reduce the saturation of the market and to “decentralize use” so that more apartments are offered in other areas of the city.

The text describes a process by which more and more apartments are being converted into tourist rentals, thus reducing the stock of housing in the residential market and pushing up rents, as well as seeing many residents forced to leave and turning the centre into a high-income zone. “This increase in real estate market prices can have significant negative impacts,” the report states, “implying a new residential class segregation.”

The draft regulations also point out that the model is having a particular effect on young people, “who traditionally have rented properties in these neighbourhoods in groups.” What’s more, the text continues, this “colonization” is changing economic activity in these areas, prompting a greater focus on meeting demands of tourists.

Original Story: El País – Julio Núñez / J. A. Aunión

Foto: Luis Sevillano

Translation: Richard Turner

 

Spain’s CNMC Takes Madrid, Bilbao & San Sebastián to Court Over Anti-Airbnb Legislation

7 August 2018 – El País

The competition authorities are cracking down on the attempt by some of Spain’s large Town Halls to regulate the boom in tourist apartments, created by Airbnb and its competitors, which many blame for contributing to an increase in residential rental prices and the expulsion of the most underprivileged from the centre of Spain’s cities. The National Markets and Competition Commission (CNMC) announced on Tuesday that it is going to challenge the urban planning rules approved recently in Madrid, Bilbao and San Sebastián on the basis that they violate “competition” and harm consumers and users. Other rules, not yet in force, in Barcelona and Valencia, could also be targetted by the CNMC, warn sources at the agency.

Imposing a compulsory licence on those who rent their homes to tourists. Limiting the types of properties that may be leased for short periods. They are some of the measures introduced by the Town Halls that the CNMC is now challenging. And the battle doesn’t stop there. New rules that other cities decide to approve may also clash with the opinion of the market regulator, which is now sending the cases of Madrid, Bilbao and San Sebastián to the High Court of their respective autonomous regions. They will have to decide whether to admit the appeals and overturn, in part or in whole, the municipal regulations.

The body chaired by José María Marín Quemada said that it has sent a request to the three municipalities to provide explanations regarding the “need and proportionality” of the restrictions or, failing that, for those restrictions to be annulled. In the absence of a satisfactory response, the CNMC will resort to the courts through a contentious-administrative appeal. The informal talks held so far have made very clear the gulf that separates the independent body from the Town Halls.

In its note, the CNMC details the different regulations that are, in its opinion, deserving of appeal for being measures with “restrictive effects on competition”. Madrid requires a licence for the rental of tourist apartments and homes. The municipality also establishes a period of one year, extendable for one more, before new licences can be granted in areas such as the Centro district. According to the recently approved legislation, the rental of tourist apartments that do not have an independent entrance will be prohibited, which represents 95% of the homes in the city centre.

In both Bilbao and San Sebastián, the regulations limit tourist apartments to ground and first floors only, unless they have independent access from the street. In Bilbao, moreover, tourist apartments need to be authorised and registered; and in San Sebastián new tourist apartments are prohibited in certain parts of the centre.

Higher prices

The Competition authority believes that, with their decisions, the municipal teams in Madrid, Bilbao and San Sebastián “are impeding the entry of new operators and consolidating the position of the existing suppliers of tourist accommodation”. The body has announced that these measures will lead to “higher prices in terms of tourist accommodation” and lower quality, investment and innovation in tourist accommodation in those three cities (…).

The affected municipalities reacted quickly, stating that they will defend their regulations in the courts. The Town Hall of Madrid, governed by Manuela Carmena (Ahora Madrid) said that it wants to combine the defence of tourism with the rights of “citizens in our neighbourhoods”, according to Julio Núñez. “Our objective is introduce regulation that protects the residential use of land and favours competition in a sector where hostels and hotels already operate”, add sources at the Urban Planning Department (…).

Original story: El País (by Luis Doncel)

Translation: Carmel Drake

Carmena to Outlaw 95% of Madrid’s Tourist Apartments

27 July 2018 – Expansión

The days are numbered for tourist apartments in the centre of Madrid. Yesterday, the Town Hall of Madrid gave the green light to legislation that will put a limit on holiday rentals: 90 days or three months, is the maximum term that a person may rent their home for those purposes. From day 91 onwards, owners will need to have a commercial lodging licence, just like hotels.

Yesterday, the Spanish capital’s Governing Body approved the Special Plan for the Regulation of the Use of Lodgings, which will apply to the city’s most central neighbourhoods. The plan is expected to enter into force at the beginning of 2019, after being approved by the plenary session in October.

The Town Hall led by the mayor Manuela Carmena is also going to prohibit the operation of all homes destined to tourist rental that do not have an independent entrance, like in the case of hotels. According to the Town Hall, with that requirement, “95% of homes that operate as tourist apartments will no longer be able to do so”.

“Specifically, the affected radius will span 52.7 km, distributed in three concentric rings, depending on the massification of the ads. According to the Town Hall, in the rest of the municipality, “the existing legislation will be maintained”. Madrid is, in fact, the European capital where the number of adverts on these platforms has grown by the most, up by 67% in 2017 with respect to 2016, according to a report from Colliers International.

With this legislation, Madrid’s Town Hall is opening a new chapter in the fight between public administrations and tourist apartments. Its intention is to outlaw almost all of the tourist apartments that are advertised on platforms such as Airbnb in the centre of the city.

The prohibition is tacit. The trick is that 95% of the homes advertised on these platforms in the capital do not have an independent entrance. That limitation will only exist in the case of homes that are leased for more than three months. The 90-day limit draws a line between what is considered a home for tourist use and a property in the collaborative economy.

Obtaining a licence is not going to be easy. It will be subject to zoning, following in the footsteps of cities such as Barcelona. Once the Special Plan comes into force, it will not be possible to change the use of a home located within the inner two rings from residential to tertiary, given that those properties account for the majority of the regulated and unregulated tourist supply. Together with this new plan, the Town Hall has approved a moratorium that prohibits the granting of tourist licences of any kind for one year.

Putting a cap on rents

The objective of the plan is to preserve residential use in the central areas of the city that, with the tourist boom and rise of online platforms, are seeing rising rental prices.

In this vein, the Town Hall wants to establish maximum rental prices. To that end, and as it already did in the case of the request for the tourist tax, the delegate for Sustainable Urban Development, José Manuel Calvo, yesterday asked Sanchez’s Governments for the necessary powers.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Barcelona’s Town Hall has Shut Down 2,355 Illegal Tourist Apartments in 2 Years

11 July 2018 – Inmodiario

After launching the emergency plan against illegal tourist apartments (HUT) in July 2016, the Town Hall of Barcelona has closed 2,355 properties and is in the process of shutting down another 1,800.

Moreover, this summer the “Fair Tourism BCN” campaign is being promoted once again to inform and raise awareness amongst citizens and visitors alike about the dangers of this illegal activity for everyone.

In total, 10,635 files have been opened and 5,503 fines have been imposed, five times as many as during the period from 2014 to 2016. The number of termination orders rose from 663 in 2014 to 4,148 in 2016.

By area, the files opened have been located primarily in L’Eixample (3,193) and Ciutat Vella (2,920), followed by Sant Martí (1,220), Sants-Montjuïc (1,042) and Gràcia (939).

In addition to this activity, inspections have been conducted of: 81 entire buildings where it was suspected that illegal tourist activity was being undertaken; 21 student halls, also suspected of tourist activity; and 61 illegal B&Bs, under the umbrella of rooms for rent, which were leasing all of their rooms.

Besides the fining activity, the team comprising more than 100 inspectors and visualisers is continuing to work to ensure that closed down apartments do not reopen, to identify new illegal properties and to hunt down the organised networks that are managing more than one property.

In parallel, work is continuing with holiday rental platforms through a joint roundtable that has been working for some time with Homeaway, Booking, TripAdvisor, Rentalia and Apartur, and which has recently been joined by Airbnb.

Work is currently on-going to allow the Town Hall to have access to data about users who have joined the platforms since 1 June 2018.

Original story: Inmodiario 

Translation: Carmel Drake