Tag: cities

CBRE: Logistics Inv’t Rose By 29% To €664M In H1 2017

20 July 2017 – Eje Prime

Investment in the Spanish logistics market soared once more during the first half of the year. Transactions involving logistics assets amounted to €664 million during the first six months of 2017, representing an increase of 29% with respect to the same period last year, when investment stood at €514 million, according to a study prepared by the real estate consultancy firm CBRE.

In the second quarter alone, industrial and logistics investment reached €364 million, a figure that far surpassed the amount recorded in the second quarter of 2016 (€300 million).

According to the consultancy firm, the difference compared to previous years is that the “appeal” of this sector is not concentrated only in Madrid and Barcelona, but rather it extends to other cities, such as Zaragoza, Valencia, Bilbao, Málaga and Sevilla.

Similarly, interest in investment in high-risk projects has been consolidated, due to the growth in the volume of logistics space leased in every city caused by e-commerce. In fact, investors who have never shown any interest in logistics have started to consider the sector as a necessary component of their portfolios, according to CBRE.

Some of the main logistics transactions closed so far this year include GIC’s acquisition of the Acero portfolio, worth €243 million; CIC’s purchase of Logicor’s assets; and Axiare’s acquisition of the second phase of a project located in San Fernando de Henares (Madrid), worth €38 million.

Original story: Eje Prime

Translation: Carmel Drake

Bank Of Spain: The Housing Market Is Not Overheating

4 April 2017 – El Mundo

The Bank of Spain (BdE) does not perceive “any signs of overheating” in the housing market, nor does it expect the real estate sector to overheat anytime soon, given that the recovery in the market is happening at the same time as the process to deleverage the economy.

During the presentation of the supervisory body’s macroeconomic forecasts for the Spanish economy (2017-2020), the Director General of Economics and Statistics at the Bank of Spain, Pablo Hernández de Cos, denied that the housing market is showing any signs of overheating.

Hernández de Cos highlighted that the housing market has been enjoying a recovery for several quarters, which is being seen in the number of transactions, the number of new builds started and the trend in prices, although the Bank of Spain does not expect “the market to overheat”.

Despite the fact that the growth rates “may be significant”, the Director of the Bank of Spain said that after a “very significant” adjustment process in the sector in terms of transactions and the correction of prices, the recovery in the market is taking place in parallel to the continuation of the process to deleverage the Spanish economy. “We are not seeing any signs of overheating”, he added.

“Uneven” reactivation

In its forecasts, the supervisory body notes that high-frequency information relating to both the number of new builds started and the number of transactions involving residential properties, indicates a “continuation of the path of gradual improvement in residential investment, whose prolongation during the forecast horizon will be based on the favourable evolution of employment, the expected continuation of propitious financing conditions and the expectation that assets are going to appreciate in value”.

Nevertheless, it forecasts that the recovery will progress in an “uneven” way by region, with the main cities and autonomous regions most focused on tourism experiencing the most intense growth. In any case, it warns that the latter areas may experience a certain moderation in demand as a result of the process for the United Kingdom’s exit from the European Union (EU).

Original story: El Mundo 

Translation: Carmel Drake

Tecnocasa: Rental Prices Rose By 4.72% In 2016

21 February 2017 – El Mundo

The rental market is booming, in particular, rental prices. They are accelerating significantly in the cities of Madrid and Barcelona, above all, in the latter.

In 2016, the average price of second-hand rental homes in the Catalan capital soared by 11.84% in YoY terms, whilst in the Spanish capital, prices rose by the not insignificant amount of 6.26%. In this way, the average increase in rental prices across the country with respect to 2015 amounted to 4.72%, according to the III Report about the rental market 2016 prepared by Tecnocasa and the University Pompeu Fabra (UPF) in Barcelona.

Converting these percentages into absolute terms, the average monthly price per m2 rose to €12.09/m2 in Barcelona, to €11.20/m2 in Madrid and to €8.87/m2 across Spain as a whole. “The difference (between the two largest cities in the country) is growing”, say sources at Tecnocasa.

According to the real estate network, other indicators that provide further evidence of the boom in the rental market include: the average period of time required to market a home; the final price with respect to the asking price; and the number of visits needed for a property to be leased. In terms of the first of these factors, it currently takes only 30 days to lease a home, which is 11 days less than in 2013 and another indication of the high demand that exists nowadays.

In the same vein, the number of visits needed to lease a home decreased to 7.22 on average in 2016, a figure that is well below the number registered in 2012 (8.44). Finally, in light of these parameters, it is hardly surprising that the final agreed price is increasingly closer to the asking price. “Tenants’ bargaining power has decreased. The final rental price paid is just 3% below the asking price”, according to Tecnocasa. In 2012, that discount averaged 6%.

Finally, sources at the real estate firm and the university responsible for the study describe the profiles of typical landlords and tenants. On the supply side, there are increasingly more pensioners (32%). Moreover, 95% of landlords are Spanish and 65% are married.

In terms of the typical tenant, they are usually single (58%), with a permanent employment contract (68%) and aged between 25 and 44 years (73%). Like in the case of landlords, the majority are Spanish (73%).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

Mitula: Rental Prices Soar In Spain’s Large Cities

25 January 2017 – El Mundo

The residential rental market is riding high at the moment and this good situation is reflected in rental prices, which are soaring in most of Spain’s major cities, according to a study by the home finder Mitula. Specifically, rental prices have increased by more than 60% in Barcelona over the last five years, whilst in Madrid, they have risen by almost 20% during the same period.

In this way, average rental prices in the Spanish capital amounted to around €1,048 per month in 2012, a figure that has grown in a sustained way over the last five years. By January 2017, the average rent in Madrid stood at €1,256, which represents an increase of 19.85%.

Other cities such as Barcelona and Palma have also seen their residential rental prices soar, but to an even greater extent. In the case of the Catalan capital, for example, the average rent has risen from €892 in January 2012 to €1,478 in January 2017, which represents an increase of 65.70%.

Palma has also seen its rental prices move upwards. A rental home in the capital of the Balearic Islands used to cost around €700 per month on average in 2012. Nowadays, the same property costs around €1,000 (€986), up by 40%, according to Mitula.

This upwards trend is being repeated in most of Spain’s major capitals, but there is one exception: Santander. The capital of Cantabria is one of the few cities where rental prices have remained practically frozen. At the moment, a rental home costs €649 per month, on average, which is 2.84% less than five years ago, when the figure stood at around €668/per month.

Original story: El Mundo

Translation: Carmel Drake

Land Expropriations Will Be Cheaper After Latest Law Reform

3 February 2016 – Cinco Días

After everything that has happened in the real estate sector since property prices and the production of housing came crashing down, perhaps few will remember the major impact that resulted from the approval of the Land Law (8/2007 and RDL 2/2008). The new legislation was created with the aim of stopping judges from using their discretion in administrative litigation cases, so as to prevent them, in certain cases, from assigning fair values to plots of land subject to expropriation, on the basis that, spurred on by strong demand during the boom times, the values being assigned were leading to a speculative phenomenon that was having serious repercussions on the accounts and financial viability of numerous companies.

In this way, the legislator reduced the categories into which land had been divided historically and established the existence of just two classes: urban (plots) and rural (all others). As such, if land that had been used for agricultural production until that time, was going to be expropriated for the construction of a highway, then it would be valued as rural land (…) and not on the basis of the value of the asset to be constructed on it. (…).

In October last year, the new revised draft of the Land Law was approved, which is going to have an even greater influence of the original objective (to lower the cost of expropriations) and which is going to govern the conditions surrounding urban land in a more specific way. In terms of the valuation framework, it is based on a ruling issued by the Constitutional Court in 2014, which declared that setting the location coefficient (correction factor) at a maximum of two was null and unconstitutional.

In other words, the original law established that rural plots could be assigned a location coefficient to correct the value obtained by capitalising the income from the land. In these cases a correction coefficient (up to a maximum of two) could be applied, if the plots were located near to an urban centre or a centre of production or had certain environmental characteristics…. This represented a relief, in the event of an expropriation valuation, for those plots of land that many developers had stockpiled in outlying metropolitan areas of large cities in the hope of obtaining huge profits and which saw their value fall sharply as a result of the new legislation in 2008.

Nevertheless, the high court declared that the coefficient limit of two was unconstitutional and argued…that “it was not justified by the Law or by the preamble and could end up being whimsical, and prevent the real value of the land from being obtained. The court considers that…this limit is contrary to article 33.3 of the Constitution”. That article refers to the fact that “nobody can be deprived of their assets or rights, except on justified grounds for the public good or in social interest, provided proper compensation is paid and in accordance with the provisions of the law”. (…) .

According to Andrés Lorente, Director of Land at Tinsa, the method for valuing rural land involves dividing the land yield (calculated by capitalising the income from the land) by a capitalisation rate and applying that correction factor based on location to the result, where appropriate, where the correction factor may not exceed two.

“The provisions established in the new revised draft reflect higher rates, which means that the resulting land valuations could be significantly lower than those calculated under the previous legislation. Whereas before, the internal yield of the secondary market for public debt with a term of between two and six years was taken as the reference rate, now the average interest rate over the last three years on the State’s debt over 30 years is taken (3.663%)”, say sources at Tinsa.

As such, since the applicable rates have risen significantly, so the resulting land valuations are significantly lower. There are even cases in which expropriations now, under these new rules, result in a cost for the Administrations that is between five and six times lower than it would have been under the legal framework in force in 2008, says Lorente.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Tinsa: House Prices Rose By 5%+ In Cataluña In 2015

19 January 2016 – Expansión

With an increase of more than 5%, Cataluna was the autonomous region where house prices rose the most in 2015, which saw the first nationwide increase since 2008. Specifically, according to data published by the appraisal company Tinsa, new and second-hand house prices rose by 1% in Spain last year; with the Community of Madrid and the Balearic Islands also helping to drive that increase, with rises of 3.3% and 2.7%, respectively.

The Catalan provinces reported the greatest increases. Most notably, prices rose in Gerona by more than 10%. In addition, prices in Barcelona and Lérida increased by 5%, whilst in Tarragona, the only province in the region where prices did not rise, they dropped by -1.7%. Significant increases were also recorded in other provinces, besides those mentioned above in Madrid and the Balearic Islands – they included Albacete (4.5%), Ávila (2.4%), Orense (2.2%) and Castellón (2.1%). Similarly, prices in Cuenca, Huelva, Toledo, Cádiz, Málaga, Cantabria, Salamanca, Alicante, Granada, Las Palmas and Santa Cruz de Tenerife rose in line with the national average, all recording increases of around 1%

At the other end of the spectrum, and in contrast to the behaviour seen in the other autonomous regions, house prices in Navarra dropped significantly, by -8.5% YoY. Prices also fell sharply in Murcia, by -4.5%, whilst in Aragón and Extremadura, prices fell by -3.6% and -3.4%, respectively. Meanwhile, prices in País Vasco dropped by -2% and in Asturias, the Community of Valencia and Galicia, prices fell by more than -1%.

In this context, house prices fell by the most in the province of Teruel: specifically, by -8.7%. Moreover, the decrease in Córdoba amounted to -7.7%, whilst in Palencia prices dropped by -7.1%, in Álava by -6.5% and in Zamora by -5.9%. Notable price decreases were also recorded in Ciudad Real, Almería, Burgos, Cáceres and León, where they dropped by more than 4%.

Tinsa’s IMIE index for the fourth quarter of 2015 also includes the behaviour of prices in cities: the ranking was headed by Barcelona, where prices rose by 8.7%. The second city was Badajoz, with an increase of 5.7%, and that was followed by Ávila, where the increase reached 4.3%. Prices in the capital of Spain rose by 3.8% and price rises of more than 3% were also recorded in Cuenca and Ciudad Real. In Palma de Mallorca, prices rose by 2%, in Segovia they increased by 2% and prices in Burgos, Málaga and Cádiz all rose by more than 1%.

The provincial capitals where prices decreased the most were Pamplona and Palencia, with a decrease of more than -10% in both cases. In Zamora, prices fell by -9.2%, whilst in León, they dropped by more than -8%. Huesca, Tarragona and Castellón all recorded price decreases of -7%, and prices in Vitoria fell by almost the same amount. In Murcia and Almería, prices dropped by more than -6% and in Zaragoza, Vigo and Lérida, prices decreased by between -4% and -3.2%.

Original story: Expansión (by Daniel Viaña)

Translation: Carmel Drake