BBVA: Málaga Has The Most Active RE Market In Spain

27 March 2017 – Málaga Hoy

Málaga is the Spanish province with the most real estate tension, given that it has the highest index of sales as a proportion of existing stock, a parameter that indicates the dynamism of the area. Moreover, that pressure is leading to an increase in house prices, to the extent that Málaga has seen the third highest price rises of all of Spain’s provinces over the last three years.

Those are the findings from the Real Estate Market in Spain report, prepared by BBVA, which was presented in Málaga on Thursday by the analysts Félix Lores and David Cortés. The study reveals that between 2014 and 2016, 28.4 homes were sold in Málaga for every 1,000 property stock, thanks to an increase in demand during the period of almost 15%. The only other province to come close was Alicante, with 25 purchases for every 1,000 homes; and Málaga was thirteen points above the Spanish average. That was, in part, due to the fact that Málaga and Alicante are the two Spanish provinces where most homes are sold to non-resident foreigners.

When demand exceeds supply, prices rise. On average, Málaga was the third-ranked Spanish province in terms of the highest house price rises between 2014 and 2016, at 3.1%, triple the national average. During that period, property prices rose by more only in the Balearic Islands (3.5%) and Barcelona (3.3%). In more than half of Spain’s provinces, not only has a reactivation of the market not been felt, but house prices are continuing to fall. In Sevilla, for example, house prices decreased by 1.6% during the same period.

“Sales have been recovering since 2013, with Madrid, Barcelona and the Mediterranean region, together with the islands, leading the way”, said Lores. According to these experts, this boost is consolidated because it is being driven by an improvement in employment and household income, which means that it is not subject to speculative movements (with feet stuck in the mud) like in the case of property price bubbles. In fact, the analysts from BBVA deny that we are seeing the start of a real estate bubble.

Looking to the future, Málaga is also one of the leading provinces in Spain, given that it is one of those that has most contributed to the increase in visas in the country, together with Madrid, Barcelona and Alicante. Between 2014 and 2016, the number of housing visas granted grew by 55% in Málaga, although it is worth remembering that the starting point was very low and well below than the volumes signed at the height of the real estate boom. More business is forecast because, amongst other factors, the sector has been so quiet in recent years, also demand exists and supply is limited, however there are several uncertainties, such as the effect of Brexit on British residential tourists, the macroeconomic impacts that Trump’s protectionist policies in the USA may have and the results of upcoming elections in several European countries.

Original story: Málaga Hoy (by Ángel Recio)

Translation: Carmel Drake

Taylor Wimpey Keen To Sell Its Spanish Subsidiary

3 March 2017 – Expansión

The British group has said that it will consider offers for its subsidiary, which builds homes along the Mediterranean coast and owns assets worth €150 million.

Taylor Wimpey said on Monday that its presence in Spain “is not strategic over the long term”, which is why the company is willing to sell its business in the country if an interested party submits an attractive acquisition proposal.

The Spanish subsidiary of the British real estate company generated an operating profit of GBP 20.6 million (€24 million) in 2016, a figure that doubled the amount (GBP 10 million) it obtained in the previous year. The improvement in results was due to an increase in house sales in the Balearic Islands, Andalucía and Alicante, the main areas where the company has developments.

The firm completed the sale of 304 Spanish properties in 2016 at an average price of €358,000, exceeding the 251 homes sold the previous year at an average price of €315,000. Most of those properties were sold to foreigners wanting a second home in Spain for their holidays or to retire. In total, Taylor Wimpey recorded turnover of GBP 93.6 million in Spain during 2016, compared with €58.1 million during the previous year.

“The residential market in Spain remained positive throughout 2016”, said the company on Monday during the presentation of its results for last year. “Although the weakness of the pound had an impact on British buyers, we still managed to generate a healthy rate of sales during the year, thanks to our diverse client base”. Citizens from Germany, Belgium and Sweden made up for the decrease in interest from UK investors, who in addition to being hit by a reduction in purchasing power due to the depreciation of the pound, were also fearful about the possibility of losing their rights to travel to and reside in Spain post-Brexit.

Pete Redfern, CEO at Taylor Wimpey, was asked during a meeting with analysts about the possibility of selling the firm’s business in Spain, once its profitability has been restored after the losses it suffered during the real estate crisis. According to Redfern, “the environment in Spain has improved, although it is still an environment that is not seeing a significant entry of new capital. Our business is functioning well, but if a good offer appears to buy it (then we would be interested). Our strategy over the long term does not involve staying in Spain”.

Taylor Wimpey has assets on its balance sheet in Spain worth GBP 123.7 million (€145 million). On 28 June last year, five days after the Brexit referendum, the company undertook a €100 million bond issue, to cover the currency risk of its Spanish business, whereby ceasing to finance its assets in pounds. Those bonds pay out an annual return of 2.02% and have a repayment term of seven years.

In total, the Spanish subsidiary has 19 developments, with a portfolio of 293 homes reserved, for a value of GBP 88 million.

The real estate company left the market in Gibraltar three years ago.

The Taylor Wimpey group, which besides Spain, operates only in the United Kingdom, recorded turnover of GBP 3,676 million in 2016 and generated a net profit of GBP 589.7 million.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake

House Prices Decrease By The Most In Castellón In 2016

13 December 2016 – El Mundo

House prices are still falling in the province of Castellón, despite the fact that they are rising in Spain as a whole (by 4% over the last 12 months) and have now recorded 10 consecutive quarters of increases.

Castellón closed the third quarter of the year as the province where house prices decreased by the most in the last year, with a YoY decline of 4%. Only in La Rioja have house prices fallen by more than the average for unsubsidised homes, with a decrease of 5%, according to the latest statistics from the Ministry of Development.

At the moment, the average unsubsidised home in the province of Castellón costs €1,027/m2, which represents a decrease of 3.3% compared with the previous quarter and of 4% compared to a year ago.

Castellón is the cheapest place to buy an unsubsidised home at the moment, based on average prices. And the province not only offers the lowest prices, it is also where prices are continuing to decrease despite the increase that they are experiencing across the rest of Spain and also in the rest of the Community of Valencia.

The highest increase in house prices was recorded in the province of Valencia, although Alicante registered the highest prices. In this sense, it is worth noting that, according to the statistics from the Ministry of Development, the average cost of an unsubsidised home amounted to €1,117.1/m2 at the end of Q3 2016. This figure represents an increase of 1.9% with respect to the second quarter of the year and a rise of 4% over the last 12 months. Meanwhile, the average price of unsubsidised homes in Alicante amounted to €1,240.6/m2, having risen by 1.3% during the quarter and by 1.4% in the last year, according to the same sources at the Ministry of Development.

And as house prices continue to decrease in the province of Castellón, so too do the number of home purchases. In this sense, it is worth remembering that Castellón is the province where the number of new home sales has fallen by the most in the last year. Nevertheless, and despite the 46.50% decrease in new house sales across Castellón in the last year, the volume of total transactions is positive due to the vortex experienced in terms of demand for second-hand properties.

In the province of Castellón, 6,043 homes have been sold in the last year, which represents an increase of 6.92% YoY. Despite this rise, with a total of 696 transactions involving new homes in the last year, the province has registered a decrease of 46.50% in terms of the number of operations involving new homes, the highest in all of Spain. Meanwhile, second-hand homes account for the majority of the transactions registered in the province of Castellón, with a total of 5,347 sales, which represents 88.48% of the total, according to the latest data.

Original story: El Mundo (by Berta Ribés)

Translation: Carmel Drake

Hotel Investment Is Thriving In Valencia & Alicante

2 December 2016 – Levante-EMV

Hotel investment has increased by 162% and profitability has soared by 17.5% in Valencia and by 27.5% in Alicante, driven by the tourist boom. According to sources in the hotel and real estate sector, the owners of buildings are aware of the increase in investor demand; and offers for buildings up for sale and rent in Valencia have multiplied. Specifically, three properties in iconic locations have come onto the market in recent weeks for €15 million and another three have been put up for rent. Several operations have also been signed, including the Valencian chain Casual Hotel’s purchase of the former Hotel Londres in the Plaza del Ayuntamiento for €6 million and the acquisition by the chain Myr of the Café Madrid building, in an operation amounting to €12 million.

According to the consultancy firm CBRE, the increase in the number of operations is due to “strong demand from investors to buy and capitalise hotel assets, and benefit from the clear recovery in the real estate sector in Spain and the strengthening of the economy, which is expected record GDP growth of 3.1% this year. Moreover, international tourism in Spain is expected to exceed the 70 million visitor threshold for the first time this year”.

Sources in the sector explained that one of the properties that has been put up for sale (for €6 million) is on one of the streets adjacent to the Plaza del Ayuntamiento; another, located on Calle Ballesteros is on the market for €3.5 million; and another one, next to the Palacio del Marqués de Dos Aguas, is up for sale for €9 million. In addition, the German property developer Ratisbona (linked to the Vice-President of Bayern de Munich, Rudolf Schels) has acquired an office building on Calle María Cristina (next to the Plaza del Ayuntamiento) for €3 million, which it plans to convert into a hotel.

Above all, hotel operators are interested in leasing properties as an alternative to buying them. Real estate sources state that there are three high-profile projects in the rental market at the moment: the property at number 1 on Calle Colón; the former headquarters of CAM on the corner of Pascual y Genís with Martín Cubelles; and the former Telefónica building on Calle Isabela Católica.

The building on Calle Colón 1 was the former headquarters of the Social Security agency. The Dénia-based property developer Enrique Pla and the Valencian-based businessman Enrique Ballester acquired the nine-storey property for €14.2 million a year ago and sold the lower three floors in the summer for €20 million (where a Pull and Bear store is due to be opened). The two businessmen have now decided to generate returns from the rest of the building and are converting it into a hotel with the aim of leasing it to a chain.

The former headquarters of the CAM is an office building belonging to employees of Banco Sabadell through their pension fund. The same real estate sources said that the building is not up for sale, but that the owners are looking for a hotel operator who may be interested in operating it (amongst other options). (…).

The former Iberdrola building on Calle Isabela Católica has been closed for years and its owners are also trying to turn it into a hotel. Iberdrola sold the building to a group of local real estate companies led by Gesfesa for €24 million before the collapse of the real estate market.

Original story: Levante-EMV (by Ramón Ferrando)

Translation: Carmel Drake

Banks Accelerate Sales From RE Cemeteries

25 October 2016 – El Mundo

The skeletons of half finished construction sites are one of the symbols of the crisis in the real estate sector, which fell to its knees in 2008. (…). Countless developments fell victim to the crash in activity, zero demand and the closure of the financing tap.

That gave rise to a vast catalogue of half finished developments (…), which can still be found across the Community of Valencia, one of the largest real estate cemeteries in Spain. This group of toxic assets was transferred into the hands of the banks and Sareb, and they are now putting their feet down on the gas to get rid of the properties, which are still weighing down heavily on their balance sheets. The entities have been hovering over these real estate supplies for too long now; they need to get rid of them.

Nevertheless, the operation is more complicated than it might seem at first glance: it means convincing local property developers to work together with the financial institutions to reactivate the failed projects, complete the unfinished homes, sell them and recover all or some of the money tied up in the stock. According to market sources, the major stumbling block in attracting businesses to take this step once and for all, is the conditions of the agreements being offered. Although the demands relating to financing, the marketing of homes and the selection of customers and prices, amongst other aspects, have been eased compared to previous years, they are still too harsh and risky for property developers. Some of the most active entities in this sense are Solvia, Sareb and Santander, which together have been managing around 100 suspended developments in three provinces since the outbreak of the crisis and which now want to relaunch them again in collaboration with business people in the sector.

Sabadell’s real estate subsidiary has around 50 unfinished developments located in Castellón, Valencia and Alicante. Its sales team is combing the market looking for possible investors who may be interested in resuming construction at these sites. From Elche, Alicante, Elda, Los Montesinos, Albatera, Orihuela, Santa Pola, Mutxamel, Sax, to Finestrat, etc, the province is littered with buildings and urbanisations, owned by Solvia, whose construction stopped dead with the collapse in property development activity. The same thing happened in Valencia.

The marketing strategy for these types of assets is not exactly easy, given that the investment involves effectively bringing projects back from the dead. Sources at Solvia state that “those interested in these types of assets are local property developers and construction companies with average profiles who are looking for these types of assets to complete the building work”.

The target market comprises professionals who are experts in their immediate environment and who have sufficient capacity to complete the construction work and then put the properties up for sale. Solvia, in addition to managing sales to property developers, also provides marketing services once the development has been completed. And all of that with the hook of financing from Sabadell. Sareb, Santander and Solvia manage suspended developments between them that may supply up to 1,300 homes in the region. Not all of the offers will be successful. The developments that cannot be sold will probably be demolished. The projects that have more chance of success are those located in tourist areas along the coast and whose target is overseas buyers. (…).

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

TH Real Estate Sells L’Aljub Shopping Centre For €100M+

13 May 2016 – Mis Locales

According to El Confidencial, the fund manager TH Real Estate has sold the L’Aljub shopping centre, located in the Alicante town of Elche, for more than €100 million. In addition, the firm has purchased a shopping centre in Bolonia, Italy, through its European Cities Fund, which represents the first acquisition by the fund that aims to secure financing amounting to €3,000 million – €3,500 million over the next five years.

The operator has taken the decision to sell off L’Aljub as part of a divestment strategy that will involve the sale of other assets all over Europe. TH Real Estate made its first investment in the Alicante shopping centre in 2007, although it did not complete its acquisition until 2014.

In Spain, TH Real Estate manages the following shopping centes: Bulevar (Getafe), Mexueiro (Vigo), Islazul (Madrid), Vialia (Málaga), Miramar (Fuengirola), Nervión (Sevilla), as well as Norteshopping (in Porto-Portugal). It also manages the Alovera Industrial Park (Guadalajara).

Original story: Mis Locales

Translation: Carmel Drake

Brexit May Shatter British Dream Of A Home In Spanish Sun

6 July 2016 – Bloomberg

Londoner Joanne Connor may sell her holiday home in southern Spain as a falling currency drives up the cost in pounds of her household bills and mortgage payments following the U.K.’s decision to leave the European Union.

“The cost of living in Spain has shot up for us overnight,” the 39-year-old mother of two from London said in a phone interview. “If the pound stays this low or continues to drop, we will end up having to sell.”

Sales in some coastal areas of Spain could tumble by as much as 20% in the next 18 months as a sliding pound erodes the spending power of British buyers and owners following the vote to leave the EU, according to Aura Real Estate Experts, an independent advisory firm focused on Spanish property. Britons make up the largest contingent of overseas home buyers in Spain.

Connor has to change pounds into euros to meet the 400 euros ($445) a month mortgage payments on the two-bedroom home. The 9 percent decline in the pound’s value against the euro since the Brexit vote will limit her visits to Spain to just one this year, compared with six times in previous years.

“It’s not just the mortgage which is now more expensive; it’s the car hire, the utility bills, food,” Connor said.

Foreign and domestic home buying in Spain evaporated when the economy collapsed during the financial crisis, leading to an international bailout of its banks and the worst recession in the country’s democratic history. While overseas buyers have begun to return to the market, prices are still well below their pre-crisis peak.

Connor purchased her Spanish property in 2005 for 120,000 euros and says it may now be worth 75,000 euros, based on the price for which similar properties are selling in the Mazarron Country Club in the southern region of Murcia, where her holiday home is located.

U.K. citizens represented 21% of the 46,090 purchases made by overseas buyers last year, data from Spain’s College of Property Registrars show. Foreign buyers made up 13% of all Spanish house purchases in 2015. In Murcia and Andalusia, Britons account for 54% and 29% of transactions by foreigners respectively, according to the study by Aura Real Estate Experts.

Purchases on hold

“We had 10 would-be buyers and two have put their plans on hold after Brexit,” said Mary Arro, partner at Mia Property Boutique in Alicante, which specializes in real estate deals along the Spanish Costa Blanca. “The concern is sterling — they want to know where the pound goes next.”

In the municipalities of Benitachell in Alicante and Benahavis in Malaga, sales could drop by around 20% and prices decline by around 9% in the next year-and-a-half as Britons sell or up or shun future purchases, according to Aura Real Estate Experts. The firm also identified 15 other towns in Alicante and Almeria where sales are expected to fall as much as 17% over the same period.

Spain attracted the largest number of British tourists in Europe, with 16 million people arriving in 2015, according to data from Euromonitor. In the five months through May, they spent almost 5 billion euros in Spain, 14% more than a year earlier, the Spanish statistics office said on Tuesday. Britons accounted for about a fifth of all spending by foreign tourists.

Dario Fernandez Palacios, an agent a Marbella-based real estate broker Prime Invest, said home sales to British buyers had already slowed “noticeably” in the months leading up to the U.K. referendum on June 23. “Now they are totally paralyzed,” he said by phone.

“The coming months, and probably years, are expected to be marred by uncertainty in and outside the U.K.,” said Wouter Geerts, a travel analyst at Euromonitor International.

Original story: Bloomberg (by Sharon R. Smyth and María Tadeo)

Edited by: Carmel Drake

Lar España Completes Acquisition of ‘Portal de la Marina’

4 April 2016 – Mis Locales

The Socimi, which already owned 59% of the asset and the hypermarket, has completed the acquisition of the remaining 41% stake for €14.58 million.

The Socimi Lar España Real Estate has acquired 41% of the company Puerta Marítima de Ondara, which, in turn, owns the Portal de la Marina de Ondara shopping centre in Alicante.

The Socimi had already acquired 59% of the company in October 2014, and it acquired the hypermarket in June 2015, in such a way that, following the recent acquisition, it now owns the entire Portal de la Marina shopping complex, worth €94.5 million.

Figures relating to activity at Portal de la Marina in 2015 clearly reveal its appeal, given that it recorded a 13% increase in sales compared with the previous year and a 6% increase in the number of visitors, to 3.76 million.

José Manuel Llovet, Director of Retail, said that “with this acquisition, we have consolidated 100% of Portal de la Marina, an excellent regional shopping complex, and this allows us to accelerate the decision making process and drive our ambitious management and value creation plans.

The shopping complex has a leasable surface area of approximately 40,000 m2, spread across 120 stores over two floors. It has eight cinema screens, with brands such as Cortefiel, H&M, Mango, C&A, Tien21 and eight brands from the Inditex Group, as well as 1,600 parking spaces.

Following this purchase, Lar España has now acquired assets worth €961 million, of which €686 million has been spent on the purchase of twelve retail premises located in Madrid, Valencia, Sevilla, Alicante, Cantabria, Lugo, León, Vizcaya, Navarra, Guipúzcoa, Palencia, Albacete and Barcelona; €150 million on the purchase of four office buildings in Madrid and one in Barcelona; €70 million on the acquisition of four logistics assets in Guadalajara and one in Valencia; and €55 million on the acquisition of a residential asset in Madrid.

Original story: Mis Locales

Translation: Carmel Drake

‘Ciudad de la Luz’ Will Be Sold For At Least €47M

22 February 2016 – Expansión

The second attempt is underway to auction off the Ciudad de la Luz cinematographic studios in Alicante, which are owned by the Generalitat Valenciana. The sale is being forced by Brussels, which has ruled that the €265 million invested by the Valencian Administration represented unlawful State aid.

The new round of auctioning will take place after just one offer was received during the first round and that was disqualified for failing to comply with the conditions.

The new documents value the complex in Alicante at €94.4 million, but financial bids may be submitted with a maximum discount of up to 50%. In order words, the minimum bid that can be made for the entire Ciudad de la Luz complex stands at €47.2 million.

Brussels has finally approved the new documents prepared by the Valencian Government after months of negotiations, but it has imposed several conditions on the sale. Thus, the European Commission states that the complex may be sold in its entirety or on a piecemeal basis, in six lots, contrary to the aspirations of the Generalitat, which has also failed to defend the use of the studios for cinematographic purposes. The documents state that the studios may be sold for use by any type of industry and to the highest bidder.

Nevertheless, the Consell has succeeded in ensuring that the starting figure for the bidding is much higher than the previous one, given that the last auction, which was suspended in August last year, allowed offers to be made for as little as €20 million. Moreover, the potential purchasers must submit a business plan, which may or may not be linked to the film industry. Also, the proposed activity must not generate noise or environmental damage, and the site may not be used for speculative purposes. The Administration has excluded three buildings from sale: the training centre, the offices and the catering facilities.

Brussels will decide

Investors now have a period of two months, ending on 18 April, to submit their proposals. At that point, the purchase offers will be assessed and the winner will be chosen, so that the deal can be closed in June. Brussels reserves the right to have the last word and will have to approve any deal.

The current CEO of the public company Ciudad de la Luz, Miguel Mazón, said yesterday that the Government had contributed around €500 million in public money to the complex and its activity since Eduardo Zaplana introduced the flagship project in the year 2000.

Original story: Expansión (by Mª. J. Cruz)

Translation: Carmel Drake