Tag: APCE

Developers & Funds Team Up To Construct Homes

7 March 2016 – Finanzas

The crisis that has affected the real estate sector since 2007 has given rise to new alliances between the main players in the market, such as the unions between international funds and domestic property developers that have proliferated, particularly in last two years.

With the return of credit to the real estate sector….alliances have started form between international funds who want to expand beyond the tertiary sector and move their money into the segment for residential development, in the hope that the economic recovery will consolidate and demand will increase, and traditional developers, which have the know-how about the residential sector.

The President of the trade association for construction developers in Spain (APCE), Juan Antonio Gómez-Pintado, admits that the information available about these alliances is vague because the sector is still “not very transparent” and figures are scarce.

Data from the Ministry of Development indicates that the number of permits requested for the construction of new homes shot up by 42.5% last year, to reach 49,695 certificates in November. Nevertheless, although the data from 2015 is the best figure in the last five year, it still falls well short of the maximum reached in 2006, when 865,561 permits were requested.

In the midst of this opacity, Gómez-Pintado explains that all of this began when the funds, which manage “a lot money but have few employees”, decided to construct homes and “sought out developers with extensive knowledge of the area where they wanted to invest and with sophisticated (internal) structures”, to allow them to report on the status of expense accounts and construction work on a weekly basis and, above all, to work with players that display good practices and regulatory compliance.

Medium-sized and large developers

Thus, Gómez-Pintado says that the funds are interested in medium-sized and large development companies, whilst the CEO of Aelca, José Juan Martín, says that they are also keeping their eyes on those developers that have knowledge of micro-markets.

When it comes to launching an operation, the funds prefer to invest in new developments with their partner, right from the start. Again, the aversion to risk is there and so they prefer to team up with a developer from the get-go, i.e. to buy the plot of land. (…).

In terms of location, Mikel Echavarren, CEO of the financial consulting firm Irea, points to destinations such as Madrid, the Costa del Sol and the city of Málaga, the Balearic Islands, Barcelona and the surrounding area, and the Mediterranean Coast, as the most attractive areas for this type of partnership.

Great opportunity

The sources consulted agree that these partnerships represent a good opportunity for developers, especially those players that decreased in size during the crisis and now want to grow again.

To this end, the President of APCE believes that this is “a model that is here to stay”. “The funds have a time horizon of 5 to 7 years, over which they have to recover their investment, and if things go well then they will stay”, he adds.

In Martín’s opinion, “there are no long-term relationships at the moment, but that is something that is improving every day” because “bank financing is continuing to provide support, but there is an initial investment for projects that the banks will never finance”.

Henceforth, the CEO of Aleca believes that “long-lasting relationships” will also arise between property developers and funds, but he thinks that they will only happen in the case of those developers that have a vision of all or almost all of the domestic market. (…).

Original story: Finanzas

Translation: Carmel Drake

RE In 2016: The Experts Are Cautiously Optimistic

31 December 2015 – El Economista

Experts in the real estate sector continue to talk about the improvement experienced in the market in 2015 with caution; and they consider that 2016 will be the year of stabilisation following almost a decade of severe crisis. But, above all, the experts believe that we will see new homes being constructed once again next year.

That is according to the statistics published by the Ministry of Development for construction permits (…).

Given that it takes around 18 months for a new development to be constructed, in 2016 we can expect to see the inauguration of properties for which permits were granted at the end of 2014 and during 2015.

In this way, the President of the Spain’s Property Developers’ Association (APCE), Juan Antonio Gómez-Pintado, believes that investment funds and Socimis will both continue to be key players in 2016, although he says that the role of “property developers will become increasingly important and we will probably see (more) joint operations between these players”.

Such operations are already taking place in certain areas where new build properties are scarce, with investors approaching traditional property developers to leverage their experience in the sector in exchange for providing financial muscle. (…).

Other forecasts for next year

With this outlook, Beatriz Toribio, Head of Research at fotocasa.es expects to see a YoY increase in the price of second-hand housing in 2016, for the first time in eight years, as well as a lower rate of growth in terms of sales volumes, not because of a decrease in activity, but because the comparison will be made against figures from 2015, which will not have the same “step effect” that we have seen in 2015, with respect to the 2014 figures. (…).

Stabilisation or recovery

Against this backdrop, the experts have differing opinions when it comes to naming the current situation in the real estate sector. Juan Fernández-Aceytuno, the Director General of Sociedad de Tasación, thinks that 2016 could be the year of “consolidation”, but warns that several uncertainties still exist in the market.

Beatriz Toribio also thinks that it is still too soon to be talking about recovery because at the moment, house sales represent just one third of the volumes recorded ten years ago”, and so she prefers to describe it as the “normalisation” of the sector.

The main challenges facing the sector

In terms of the main challenges facing the real estate sector in 2016, Toribio believes that the main one is having the capacity to construct homes that new buyers actually want to purchase, in terms of quality, design and energy saving features, at prices that they are willing to pay, as well as reducing the housing stock at the same time.

According to Fernández-Aceytuno, the sector needs to open the market up to the demand that has been building up during the crisis to drain the stock of unsold properties. Finally, APCE has said that the sector’s main task for 2016 is to cultivate “more transparency” and to improve its image.

Property developers want a Housing Minister

In any case, given the political uncertainty following the general elections on 20 December, property developers in Spain believe that “having a Secretary of State or Minister for Housing would be more than justified” given the sector’s weight in terms of GDP. (…).

Original story: El Economista

Translation: Carmel Drake

RE Experts: Spain’s RE Sector Is Back In Fashion

22 October 2015 – Cinco Días

A wave of optimism is in the air at the Barcelona Meeting Point trade fair.

Senior executives from Colonial, Merlin Properties and Grupo Lar appeared optimistic on Wednesday, regarding the growth of the real estate sector in Spain, based on the comments they made during a session entitled ‘Spain: Back in fashion’ at the real estate trade fair Barcelona Meeting Point (BMP), which is being held until Sunday at the Montjuïc de Fira centre in Barcelona.

The President of Grupo Lar, Luis Pereda and the founding partner of Merlin Properties, Ismael Clemente, were in agreement that prices in Spain are starting to increase, but that they are still below the levels seen in other European countries, which is attracting international investors.

The CEO of Colonial, Pere Viñolas, spoke about the “positive outlook” for an increase in yields associated with these price increases, although he qualified this by saying that the results of the operations that we are now beginning to see will not have an impact on income statements until 2016.

Pereda said that the decrease in rental prices in Spain has been more marked than in other countries, but that the recovery will be too, because rental contracts are shorter term here (around three or four years).

Clemente confirmed that Spain is now in a very promising phase of the real estate cycle. “We have five to seven strong years ahead of us”, although there will be risks, such as the evolution of world (economic) growth and political influences. (…).

During the event to open the trade fair, which this year brings together 280 companies from fifteen countries and almost 40 international investment funds, the Secretary of State for the Economy, Álvaro Nadal, warned that “political uncertainty” may scare off investors from Spain. (…).

With just two months to go until the general election and with the Catalan sovereign debate still raging, the Government’s representative for the Economy said that, if we can guarantee that the improvement in competitiveness, economic growth, creation of employment and consolidation of the public accounts are all going to continue in Spain “without any disruptions” then we “will be reasonably certain that investors” will continue to support the country.

By contrast, added Nadal, “if the future looks like it holds other things, then they are less likely to want to invest”.

That was the message that Nadal wanted to send to the business people in the real estate sector, who are convinced that, for the time being at least, the political tension is not affecting business and that national and international investors are clear in their desire to back Spanish real estate.

“In Barcelona, half of our buyers are from overseas and we have not detected even the slightest interest from them in political matters. It seems that people are either certain that nothing is going to happen or that whatever happens, it will not impact their investment”, explained the CEO of the Catalan property developer Vertix, Elena Massot. (…).

Other participants of BMP also agreed that the expansion of the sector is now a reality, after several years of severe crisis, but that the recovery is going to be slow and uneven. (…).

This recovery will be more intense in the major capitals, where the prices of some properties have already started to rise, but it could still take a while to reach areas where there is less demand, which means a Spanish real estate market that is moving at “two speeds”.

The Property Developers’ Association of Barcelona (APCE) estimates that construction will begin on between 6,000 and 6,500 new homes in Cataluña in 2015. That figure is notably higher than those recorded seen in recent years, but it is still a long way off the data for 2006.

The turning point happened in 2013, when construction began on just 3,036 homes across the whole autonomous region. In 2006, the peak year for construction, construction began on a whopping 126,000 homes. (…).

Original story: Cinco Días

Translation: Carmel Drake

Real Estate Companies Hope For Renewal of Their Life-Saving Law

16/12/2014 – Cinco Dias

Spanish real estate industry hopes that the Royal Decree-Law 10/2008 will be prolonged for at least one year more. Otherwise, we could witness ‘an haemorrhage’, as the new chairman of property developers association of Madrid (Asprima), Juan Antonio Gomez-Pintado, put it. His Barcelona counterpart from corresponding group Apce, Marc Torrent added that ‘a year of being in force is an absolute minimum’.

In 2008, the Government of Jose Luis Rodriguez Zapatero approved the Royal Decree as a preventive measure against massive losses of property managers triggered by value drop-off. ‘Impairment losses deriving from Tangible Fixed Assets, Real Estate Investments and related Stocks, Payables or Receivables shall not be recognized in annual corporate reporting’, the regulation states.

Disappearance of the law would have impacts on the article 27 of the consolidated text of the Corporate Law, as well as on the Bankruptcy Law 22/2003 from July 9th.

The regulation mentioned above indicates that if the losses take the equity down to below two-thirds of the social capital (for limited companies) and if during a year the firm does not recover, it must cut in the equity by necessary amount. The article 363.1. applies to all kinds of companies when the net worth posts below 50% of the share capital, which would mean either dissolution or balance recovery through the capital increase or decrease.

The Royal Decree-Law 10/2008 has been rolled over year after year, even if it was originally established for years 2008-2009 only. In 2011, a very similar regulation was approved, called the Royal Decree-Law 9/2011, which stretched the compensation period to three years.

Last March 7th, the Goverment approved the Royal Decree-Law 4/2014 with an aim to renew Zapatero’s ruling once more as ‘the exceptional period ends in 2014’.

The current Government of Spain has to decide until March whether it is going to prolong the law, which has saved many real estate firms from liquidation, or not. The authorities claim respective clauses were added to the Bankruptcy Law.

However, that regulation would not be enough to stop dissolution of the companies, reckons Mr Gomez-Pintado, as maintenance of the Royal Decree-Law is crucial while the norms on giving the second chance to viable firms are being negotiated for the other Law. Barcelona Developer Association Head Marc Torrent agreed that although the sector is surely experiencing a turning point, it is not capitalized sufficiently to face lack of the Law as the fight is also against becoming insolvent.

The Royal Decree-Law 10/2008 repeatedly appears in annual reports of real estate firms. When it comes to the listed ones, some of them managed to improve considerabe parts of their balances this year.

For instance, Colonial pointed out that if it hadn’t been to the Decree, its land affiliate Asentia would have been dissolved on 31st December 2013. The firm, now having Villar Mir as the majority stakeholder, sold the troublesome branch this year.

Furthermore, Martinsa Fadesa avoided liquidation in 2013, in spite of having net balance in the red. Quabit admitted an 18.8 million euro deficit in its accounts, but instead thanks to the Law it is planning to float its own Reit now.

Finally, Reyal Urbis, currently in talks with creditors, was shown a 429.9 million euro hole in 2013 but it defended itself from total bankruptcy by including the Royal Decree-Law 10/2008 in its annual reporting.

 

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: AURA REE

Developers Assure the Moment to Buy is Perfect

2/09/2014 – El Economista

The Spanish Association of Developers-Builders (in short APCE by its acronym in Spanish) assures it is ‘the ideal moment‘ to buy a dwelling as generally the ‘prices have bottomed-out‘, says its president Jose Manuel Galindo.

According to Galindo, the adjustment in prices has been proven by a 1.5% rise year-to-date. He claims the values are ‘swinging‘ and ‘pro-cyclical‘ as they deepen the distortions with visible ups and downs during the economic progress.

‘I wish they were more stable‘, complains Galiano. ‘We would like the prices to be tightly related to the cost of living index in the moments when it jumps and when it dips down‘. Given all that, the president of the APCE believes ‘the pendulum is at its extreme low‘ and therefore ‘the time to buy a home is perfect. In several years, we will see property values growing higher and higher‘.

 

Original article: El Economista

Translation: AURA REE