Wimpey Protects Its Homes In Spain From Brexit

28 July 2016 – Expansión

The British real estate company has refinanced its property developments on the coast through the issue of bonds amounting to €100 million.

One of the consequences of the UK referendum, held on 23 June in which Britons voted in favour of Brexit (to exit the European Union), may be a decrease in the volume of house purchases on the Spanish coast by citizens of the United Kingdom, as a result of the depreciation in the pound against the euro and fears about future restrictions over the free movement of people between the two countries.

Taylor Wimpey, the real estate company that has property developments in Andalucía, Alicante and the Baleric Islands, aimed mainly at British buyers, has decided to protect itself against those risks through a debt issue in euros to “hedge its investments in Spain”.

On 28 June, just five days after the referendum, the company completed a private placement of bonds amounting to €100 million with institutional investors, secured by its Spanish assets. The securities pay annual interest of 2.02% and are due to mature in June 2023.

According to market sources, this operation seeks to refinance in euros Taylor Wimpey’s debt associated with its assets in Spain, which amount to €168 million. By having the assets and debt of its Spanish subsidiary denominated in the same currency, the group’s balance sheet is more stable in the face of possible fluctuations in exchange rates in the future.

Currently, Taylor Wimpey has several property developments underway along the Spanish coast, where it has already committed to sell 399 homes.

During the first half of 2016, the firm completed the sale of 53 homes in Spain, at an average price of €342,000. Interestingly, one of these property buyers was Pete Redfern, the CEO of Taylor Wimpey. The chief executive of the group acquired two houses from the Spanish subsidiary, one for €278,000 and the other for €350,250. According to the company, the first home was sold at market price, whilst the other was purchased by Redfern taking advantage of the discount plan offered to employees “under the same terms offered to all other staff”.

Taylor Wimpey’s revenue in Spain between January and June amounted to GBP 14.8 million (€17.6 million), generating an operating profit of GBP 0.3 million. “We hope to continue making progress in the Spanish market during the rest of the year, given the strength of our order book” said the group. “Looking further ahead, we remain cautiously optimistic, given the potential implications of the macroeconomic environment in Europe”.

The company, which besides its business on the Spanish coast, is heavily focused on the United Kingdom, recorded revenues of GBP 1,457 million during H1 2016, up by 9.1%. At the results presentation yesterday, Redfern said that Brexit had not yet affected the group’s sales in the British market.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake

INE: Mortgages Increased By 25.8% In August

28 October 2015 – Público

The number of new mortgages signed for house purchases increased by 25.8% in August, compared with the same period a year earlier, as 19,272 new loans were granted. Nevertheless, and according to the data published yesterday by the National Institute of Statistics (INE), if we compare the figures in August with those of July, then the number of new mortgage signings decreased by 11.9%.

The total volume of mortgages granted to purchase homes in August amounted to €2,010 million, an increase of 26.5% YoY, but a decrease of 11.9% compared with the previous month. Moreover, the average size of those mortgages increased by 0.6% YoY to amount to €104,318, although in comparison with July, this figure represented a decrease of 0.1%.

89.2% of the mortgages constituted in August had variable interest rates, compared with 10.8% that had fixed interest rates. Euribor was the reference rate used for the constitution of most new variable rate mortgages, specifically it was used in 91.8% of the new contracts of this type.

The average interest rate (at the beginning of the contract term) for mortgages granted to buy homes was 3.25%, i.e. 13.4% lower than the rate recorded in August 2014. The total number of mortgages registering changes to their conditions in the property records in August amounted to 13,205, i.e. 14% fewer than in August last year.

By autonomous region, the following CCAAs registered the highest number of new mortgages for homes in August: Andalucía (3,722), Madrid (3,450) and Cataluña (2,545). The autonomous regions that recorded the highest YoY increases were: La Rioja (up by 65.9%), Valencia (58.3%) and Navarra (36.5%). On a YoY basis, only two regions recorded decreases, namely Aragón (-5.2%) and the Balearic Islands (-2.1%). (…).

Meanwhile, the autonomous regions that loaned the most capital for the constitution of mortgages for homes were Madrid (€489.4 million), Andalucía (€331.4 million) and Cataluña (€304.5 million).

The experts expect the number of house purchases to keep increasing

The leading real estate websites in Spain expect house sales to continue to increase over the coming months, given the normalisation of the sector and the decrease in prices following the burst of the real estate bubble. (…).

The experts at fotocasa.es think that this positive trend will continue during 2015 and into 2016, but they add that we should be “cautiously optimistic” since the current figures are still a long way off of the levels recorded in 2005. “The mortgage statistics are very closely linked to the increase in credit from the banks and the significant decrease in house prices that we have seen in recent years”.

Original story: Público

Translation: Carmel Drake