Tag: apartments

Foreigners Spent €463M On Canary Island Homes In H1 2015

3 November 2015 – ABC

The real estate market is being revived slowly, but surely in the Canary Islands. Most of this growth is due to foreign residents in the autonomous region, which have spent more than €460 million so far this year buying homes in the region. To put this amount into context, that figure is the highest seen in the last eight years. In fact, for example, it more than doubles the figures recorded in 2009, when the economic crisis had already taken hold in Spain.

The demand for apartments and homes is recovering but at a slow rate. According to statistics published by the Ministry of Development, in 2015, and specifically in the six months to June 2015,  9,560 homes were bought and sold in the Canary Islands: 4,909 in the province of Las Palmas and the remainder, 4,451 in the province of Santa Cruz de Tenerife. This reflects an increase compared with the fewer than 9,000 homes that were sold during the same period in 2014, the fewer than 7,600 that were sold in H1 2013 and the 7,650 that were sold in H1 2012. A positive trend for the Canary Islands’ economy, which is strengthened by the fact that the size of these real estate operations is also on the rise.

Data from the Department led by Ana Pastor reveals not only that the volume of transactions signed (by buyers of all nationalities) between April and June (almost €588 million) is the highest quarterly figure since Q3 2010, but also that the volume signed during the first half of 2015 (almost €1,100 million) represents the highest figure since H1 2010. Between January and June, house sales in the autonomous region amounted to €1,069.4 million, of which almost €545.5 million related to operations in the province of Las Palmas and around €524 million to transactions in the province of Santa Cruz de Tenerife.

The bulletin from the Ministry of Development also showed that the recovery in the real estate market in the autonomous region has reached an important segment of the market, i.e. that comprising foreigners. Overseas residents in the region were behind house purchases amounting to almost €462.3 million between January and June. These operations totalled just under €210 million during the first quarter of the year and just over €252.5 million during the second quarter. The last time this figure exceeded €252.5 million was in Q3 2007, i.e., just before the onset of the subprime mortgage crisis, when it reached €261.3 million. If we take this latest half year data as a benchmark, the €462.3 million spent represents the highest figure spent by foreign residents in the last eight years, i.e. since H1 2007, the year that marked the end of the boom and the beginning of the long years of hardship. (…).

These statistics also show that foreigners living in the autonomous region prefer to buy second-hand homes. More than €417 million of the €462.3 million spent by foreigners, i.e. more than 90%, was spent on second-hand apartments and homes. (…).

Land sales not increasing

However, another indicator clearly shows that the recovery of the real estate sector is not happening as quickly in the Canary Islands as in the rest of the country: sales of land. The latest data from Spain’s National Institute of Statistics (INE) show that whilst during the 8 months to August, 48,905 plots of land were sold in Spain, up by 10.5% compared with the same period in 2014; the comparable figure amounted to less than 1.5% in the Canary Islands, where just 1,257 plots were sold between January and August, an increase of just 19 (plots) compared with the previous year. At the height of the boom, 5,800 plots were sold in the autonomous region during the same period in 2007.

Original story: ABC

Translation: Carmel Drake

Only Apartments Defies Airbnb In Spanish Beach Tourism

6 September 2015 – Cinco Días

Apartments wants to enter the league of leading vacation rental platforms. The Spanish company, which two months ago purchased Migoa, has come to the holiday market from the urban segment. The short term vacation rental platform, founded in 2003 by Alon Eldar and Elisabet Cristià, bought in July Professional Holidays Rental, a platform operating under the brands Migoa and Holiday Rentals.

“Migoa is a platform that offers a fantastic technological solution that tracks similar to the Google search engine, with the capacity to process a lot of information in record time and offer it to the user,” explains Eldar. The businessman is committed to professionalization of the holiday rental platforms, “until now the owners have been uploading ads from their homes to each platform, but now we tend to use technological solutions for this.”

The operation has quadrupled the number of properties offered on Only Apartments, from 30,000 accommodations before the purchase to 130,000 after. These figures are still very distant from those of larger platforms, such as Airbnb, Wimdu and Homeaway. “We have taken an important step and from now on the product integration process will be much faster,” says Eldar. His objective is to reach 300,000 lodgings in 2016, a figure that would place them on the same level as Wimdu.

In addition, the purchase will allow them to enter the holiday rental market, a sector in which up to now they had little presence. “It is infinitely greater than the urban sector,” says Eldar, noting the “enormous” capacity to incorporate this type of accommodation into their portfolio in areas like Costa Dorada, where he claims there are more beds in apartments than in hotels.

The company’s goal is to become “the leading vacation rentals platform in Spain,” because, as Eldar points out, both Airbnb and Homeaway are overflowing with urban housing.

The acquisition has also strengthened the weight of Spain in the platform, so far accounting for 15% of total supply and now rising to 40%. Also, the platform has increased its presence in the United States this year, where it now has an office in New York, in addition to the one in Miami. The Miami office is your gateway to the United States, but also to Latin America, while the New York office reinforces its position on the market, where it raised the number of available accommodation by 65% since its arrival.

In the company they assure that 2016 will be the year with the highest registered growth. For now, in the absence of accounts for the first half of the year, which have not yet been published, Only Apartments closed last year with a turnover of 3.8 million euros, compared with 4.2 million a year earlier, and a loss of 869,000 euros; in 2013 they had a profit of 268,000 euros. For its part, Migoa, up to March, had a turnover of 49,500 euros and an equity of 618,000 euros.

Only Apartments debuted on the Mercado Alternativo Bursátil (MAB) in July 2014, the first debut after the outbreak of Gowex scandal. The holiday rental platform set the starting price of its titles at 1.26 euros and a revaluation of 57.14% was recorded in the first session. Fourteen months later, their shares accumulated a revaluation of 73% and stood at 2.19 euros, despite the low turnover of its securities. “The experience has been very positive,” reveals Alon Eldar, which does not rule out the jump to the continuous market in the future, although he clarifies that “all in good time, but not just yet.”

Controversy with hoteliers

Vacation rental platforms have been in the epicenter of criticism by the hotel industry, which claimed that their growth will affect the sustainability of Spanish tourism and asked that VAT exemption for these accommodations was eliminated, equating them to the hotels. In addition, Exceltur has requested the non-neutrality of these companies, on which Eldar commented that “they can not demand a responsibility from us that they don’t demand from Booking, we are not the proprietors.”

The management of Only Apartments does not object to the holiday rental platforms being charged with the tourist tax, which exists in some communities, like Catalonia, something, they say, “already being paid by agencies specialized in apartment rentals”. However, they see difficulties in the easy implementation of it.

Original story: Cinco Días

Translation: Lee La

Colau Wants To Turn Tourist Flats Into Social Housing

7 August 2015 – Expansión

Tourism in Barcelona / Colau will forgive 80% of the fines imposed on the most centrally-located unlicenced apartments if their owners agree to allow the properties to be used by the town hall (for social housing) for three years.

Curbing tourist “speculation” was one of the most-repeated slogans quoted by Ada Colau, the mayoress of Barcelona, during her election campaign. After suspending the opening of new hotels and hostels for a whole year across the entire city, now it is the turn of a new battery of measures, which will affect a key sector for the Catalan capital’s economy, tourism.

On Wednesday, the town hall reported that it is going to launch a pilot plan in the Ciutat Vella district – the most central area of the city – aimed at the owners of unlicenced tourist apartments who have been fined repeatedly in recent years.

In exchange for writing off 80% of their cumulative fines, the town hall will offer them the opportunity to place their apartments at the disposal of the town hall for a period of three years, which will then award them to families in situations of social emergency under rental agreements. If owners grant their properties for a longer period, then the town hall may write off 100% of their fines. Once the fines have been repaid, the apartment owners will receive the rent directly from the families.

From 15 September, the town hall will start to inform fined owners about this option for dealing with their penalties.

For the time being, the initiative will focus on 330 property owners, whose fining procedures have been completed. There are more illegal apartments whose penalties are still being processed, but for now the initiative will not affect them. On average, fines amount to €15,000 per property owner, but according to the law, they may reach up to €90,000.

As part of its measures to combat the new “speculative bubble”, the town hall has also announced that it will fine any digital platforms that advertise tourist flats without a licence from September.

The town hall explicitly cited two websites that account for 80% of the supply, Airbnb and Booking, and asked them to provide information to identify the apartments they advertise, so that checks can be completed to see which properties have licences and which do not.

Ada Colau’s team also warned the online platforms that they should include the licence numbers of the apartments they advertise. If they do not collaborate, they will be subject to significant fines, in accordance with the ruling legislation. They also stated that not all illegal apartments have been fined yet due to a lack of “political will”.

Reactions

The platform Airbnb said in a statement that the fines that have been announced “create confusion” and represent “a step back” in terms of the regulation of the sector.

The opposition parties, CiU and PP described the measures announced as “smoke (and mirrors)” and accused Colau of taking decisions for show (i.e just for the sake of being seen to do something) and C’s asked the town hall not to “blackmail” property owners. ERC rejected the idea to write off fines because it “rewards” those who have not held licences for years. The PSC saw the announcement as a positive move, but called for more inspections.

Original story: Expansión (by David Casals)

Translation: Carmel Drake

Otis Elevators Forecasts Recovery In Spanish Real Estate

20 January 2015 – Bloomberg

The view from the top floor of the Madrid headquarters of the Otis Elevator Company is that a recovery for Spanish real estate is at last in sight.

“We still need one more year to see clear growth in new building, but the outlook is improving,” said Bernardo Calleja, chief executive officer of Zardoya Otis SA, the company’s Spanish unit, in an interview in Madrid. “We will be selling more elevators in Spain in 2015 for sure.”

Calleja’s job running a company that has built and services a quarter of Spain’s stock of about a million installed elevators gives him a unique perspective on the state of Spain’s real estate market as it emerges from a seven-year slump. Spain went through a building boom before the European financial crisis, with the ensuing credit crunch sending housing starts tumbling 96 percent in 2013 from their peak in 2006.

Zardoya (ZOT) Otis is still relying on increased investment in building refurbishment and modern elevator equipment to drive sales. However, new residential building is starting to pick up in cities such as Madrid, Barcelona and Bilbao, said Calleja.

That’s good news for a company whose annual earnings have been dropping since 2010 and whose revenue from new equipment installations are down 75 percent from 2007 levels. Sales of elevators at Spain’s biggest supplier of the machines rose 14 percent in 2014 compared with the previous year, said Calleja.

Spanish history and housing policy put in place in the era of dictator Francisco Franco has made Spaniards among Europe’s most prolific apartment dwellers. As much as 65 percent of the Spanish population lives in apartments compared with 54 percent for Germany, 14 percent for the U.K. and a European Union average of 41 percent, according to Eurostat.

Elevator Country

The result is that Spain has more than 19 elevators per 1,000 inhabitants compared with about 11 for western Europe as a whole, about three for the U.S. and five for China, according to an August 2014 report by Credit Suisse.

Zardoya Otis maintains and services about 250,000 elevators in Spain out of a total of 1.9 million worldwide for Otis Elevator, a unit of United Technologies (UTX) Corp., the world’s leading maker of elevators, escalators and moving walkways.

A burst of growth engineered by Franco as he opened up the economy at the end of 1950s helped swell migration from the countryside to cities where new arrivals needed housing.

Encouraging home ownership was a key goal of the technocrats linked to the Catholic movement Opus Dei that Franco entrusted with running the economy as they sought growth while keeping Spain as a socially conservative country, journalist John Hooper wrote in his 1986 book “The New Spaniards.”

Legal Change

In 1960, Franco passed a law that encouraged investment in new buildings that could be sold for individual apartments. It was one of the legal changes that shaped the dense new barrios of housing blocks that fringe the historic hearts of Spanish cities, said Juan Antonio Modenes, a researcher at the Center for Demographic Studies and Geography department at Barcelona’s Autonomous University.

“The Spanish model of housing is not something historical — it’s really quite recent,” said Modenes. “There was migration to the cities and people bought apartments because the supply was already there.”

As high-rise apartment construction gathered pace, so did demand for the elevators made by Zardoya Otis, created by the 1972 merger of a company founded in Bilbao in 1919 and a unit of Otis. The firm thrived during a Spanish property boom that drove an eightfold increase in real estate-linked lending from 2002 to a 325 billion-euro peak in 2009.

Wave Down

The company learned the hard way that their ride up with the building boom had a flip side: It had to take the wave back down when that market slowed.

The bust that followed put more than 1 million people in the construction industry out of work. Housing starts fell to 29,232 in 2013 from a peak of 664,923 in 2006, according to Spain’s public works ministry.

Shares in Zardoya Otis, which trade on the Madrid stock exchange, are down about 60 percent from their 2007 high as revenue fell by a fifth between 2008 and 2013. The shares closed 2.5 percent higher at 9.60 euros yesterday.

The outlook for new elevator sales is starting to improve for Zardoya Otis as Spain emerges from its construction slump, said Gonzalo Sanz, an analyst at Mirabaud.

Still, the recovery in real estate looks patchy at best.

Home sales in Spain jumped 14 percent in November from a year earlier, according to the National Statistics Institute. While sales of used homes jumped 42 percent, sales of new homes — the sort that might need a new elevator — slid 21 percent.

Not Easy

It won’t be easy for Zardoya Otis as Spanish apartment administrators still lack funds to invest in elevator maintenance while weak inflation makes it hard to raise prices, said Sanz, who has a sell rating on the stock.

Calleja likes to point to features of Spain’s housing stock that may generate revenue in the future, such as the fact there are still 700,000 buildings of three levels or more that don’t have elevators. Their owners may tire of taking the stairs as they get older, he said.

Real growth will come when economic conditions improve enough to make Spaniards revert to their entrenched habit of buying the apartments they live in, said Calleja.

“Residential housing is the real motor of growth and it was the reason why we had such high growth for so many years,” he said.

Original story: Bloomberg (by Charles Penty and Sharon Smyth)

Edited by: Carmel Drake