CESCE: The Construction Sector Will Grow By 3% In 2015

18 August 2015 – Expansión

The construction sector will grow by 3% in 2015 and building work will begin on 45,000 new homes, according to the Sector Report prepared by CESCE, the company responsible for the Integrated Management of Commercial Risk and Credit Services.

This increase represents a turnaround for the construction sector with respect to the previous seven years, which have seen nothing but decreases.

In this sense, CESCE’s analysis predicts that the highest growth will be seen in the renovation and maintenance segment (3.9%), followed by non-residential construction (3.2%), residential construction (2.8%), and finally, by civil engineering, with a rise of 1.8%.

The company states that the production value of the construction sector amounted to €97,972 million in 2014, and that this figure is expected to increase to €100,900 million in 2015.

In total, 58,776 construction permits were granted in 2014, an increase of 0.06% with respect to 2013 – although minute, that rise was significant, as it was the first time the number of permits had increased after seven years of consecutive decreases. Nevertheless, the figure is still a long way below the peaks recorded in 2006, when 911,000 permits were granted in a single year.

According to CESCE, the adjustment in prices has resulted in a prolongation of the good times in the wholesale real estate market, but the improvement has been slow to impact retail sales and even slower to affect the construction market itself.

In 2014, the sale of homes increased by 21.6% YoY, to 365,593 units, with rises reported in all of the autonomous regions, in particular in Ceuta and Melilla, Madrid and Navarra, which recorded annual increases of 44%, 31% and 31%, respectively.

In 2014, the construction of 46,795 new homes was completed, a decrease of 93% since 2007, when 641,419 properties were finished. The figure in 2014 was 28% lower than in 2013, and represented the minimum of the historical series, which was created in 2000.

Nevertheless, the rental market in Spain has been strengthened by the economic crisis, since it has gone from being practically residual to accounting for 20% of Spain’s households (compared with 80% of homes that are occupied by their owners).

This percentage is still a long way below the average rate of rented homes in the rest of Europe (38%) and Germany (60%), although analysis of the data indicates that there has been a structural change in Spain both in terms of the market, as well as in terms of society’s mindset.

Original story: Expansión

Translation: Carmel Drake

Uncertainty Over Extension Of “Anti-Bankruptcy” Law: RE Firms On Tenterhooks

9 April 2015 – Expansión

The real estate sector is still waiting to see whether Mariano Rajoy’s Government will extend (the term of) Royal Decree Law 10/2008. The legislation has been in place for seven years now, even though it was initially designed to last for only two. The law allows companies to avoid being wound up when the losses they incur result from real estate, real estate investments or stocks.

The Royal Decree was passed to limit the impact of the decrease in the value of real estate assets, which generated millions of euros of losses for many of the key companies in the sector. Therefore, the Government granted them two years to rebalance their accounts and maintain their production activity.

Year after year, first the Government of José Luis Rodríguez Zapatero and then that of Mariano Rajoy, has extended this law. Had it had not done so, several large companies, such as Reyal Urbis and Quabit, would have gone under by now.

Even if the law is not extended (this time around), neither of those two listed real estate companies will be effected (given that the first has already filed for bankruptcy and the second has increased its capital), but many others in the sector will be.

Companies and experts in the real estate sector had assumed that a decision would be announced at the most recent Council of Ministers in March. However, given that no announcement has yet been made, many now believe that it will not be extended.

Last year, the term of the Royal Decree 10/2008 was extended at the beginning of March. Then, CiU used an amendment to a piece of legislation that did not have any clear link to the real estate sector (the bill for the privatisation of the state insurance company Cesce) to make the request for another extension.

The business fabric

Sources close to the Government say that a final decision has not yet been taken. “Activity is now returning to the real estate sector; as such it would be incomprehensible that companies that have survived an unprecedented crisis have to file for liquidation now, just because the Royal Decree Law 10/2008 is not extended for another year. The destruction of the business fabric that took so many years to establish, as well as the job losses, make us think that an extension of the term of the Royal Decree is justified”, says Juan Antonio Gómez Pintado, Chairman of the association of real estate companies in Madrid (Asprima).

Companies in the sector are not the only ones interested in extending the term of the Royal Decree. Wind and photovoltaic companies, affected by cuts in premiums for those types of energy, have also made use of this legislation to avoid being wound up.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Elliott, Apollo & Cerberus Strive For Cesce

18/06/2014 – Expansion

Investment funds Cerberus, Elliott and Apollo will tilt at a bidding for 50.2% of Compañía Española de Seguros de Crédito a la Exportación (Cesce, translated as Spanish Company For Export Credit) to be put up for sale by the Government soon. The three firms have previously invested in financial businesses like Sareb or savings banks.

In total, around 10 companies showed interest in the state company, among which one may find Spanish Mapfre, Mutua Madrileña or Axesor. The total value of Cesce is estimated at between 300 and 320 million Euros.


Original article: Expansión

Translation: AURA REE