Tag: city centre

Strong Recovery In Madrid’s Market For New Homes

14 July 2015 – Cinco Días

The lack of new housing developments in Madrid in recent years means that the few blocks that have been built are being sold quickly, as the economic environment improves. So much so that the marketing company Foro Consultores has conducted the first comprehensive study of the new build segment, which not only estimates the size of the stock of new homes in the capital, it also calculates when that stock may be depleted if the current strong rate of sales continues.

The study, based on visits to all of the developments currently for sale and simulations of purchases or direct surveys at the sites, has focused on analysing the existing supply in new urban developments (Arroyo del Fresno, Montecarmelo, Las Tablas, Sanchinarro, Valdebebas, El Cañaveral, El Ensanche de Vallecas and Carabanchel), since those are the areas where the new builds are concentrated. Whole new buildings are the exception rather than the rule in the city centre and in the city’s more established neighbourhoods.

Foro Consultores begins its report by highlighting the number of new homes: currently the stock of new homes available for sale in Madrid amounts to 1,770, of which 781 are “free” and 989 are social housing (VPO) homes. That figure represents just 20% of the total number of buildings that have started to be built since 2010. Moreover, we are talking about very small numbers if we take into account that the study has analysed 102 developments in total, containing 4,001 “free” homes and 3,861 social housing homes, almost 8,000 homes, which came onto the market in recent years as turnkey properties or homes sold off-plan.

4.1 homes sold per development per month

The uptake of homes by region is not uniform. More than half of the new homes built in El Cañaveral, in the south of the city – the last development to get underway – have not yet been sold. Meanwhile, in other new neighbourhoods, such as Montecarmelo, less than 5% of the new homes or those under construction remain unsold. Furthermore, in Ensanche de Vallecas in 2007, there were almost 3,000 unsubsidised new homes for sale, but now there are just 166 left.

As well as the scarcity of supply due to the construction paralysis in recent years, one of the keys that explains the fast absorption of the stock is the acceleration in the rate of sales in recent months. Foro Consultores estimates that if no new developments come onto the market, then the excess would be depleted in just six months, at the current sales rate of 4.1 homes per development per month.

The study highlights that these 4.1 homes sold (per development per month) represents the sale of 5.3% of developments every 30 days, an average rhythm that has not been seen since 2003, and for unsubsidised housing, that figure is almost 5 homes per development per month, whereas during the crisis, it never exceeded one unit per month.

The study also shows that 79% of the developments on the market were started between 2010 and 2015, and of those 77% have already been sold.

In terms of prices, the report also highlights that in certain developments in El Cañaveral, the price of unsubsidised homes is lower than the price of VPO homes, which is not very typical in Madrid. “This shows that the social housing pricing model is out of synch with the market and that the promoters of unsubsidised homes have adapted better to the changes in conditions”, explained Foro Consultores.

In the areas analysed, the absolute prices of unsubsidised homes ranges between €77,000 and €657,000, with an average price of €273,021. Meanwhile, the prices of VPO homes range between €38,474 and €382,652, with an average price of €150,721.

Finally, the study concludes that by type of home, three-bedroom houses are in most demand. Meanwhile, the construction of studios and small flats, which were so fashionable during the boom, is now reducing.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Fitch: House Prices Are Bottoming Out

24 March 2015 – Idealista

…but no rapid rises are expected.

The ratings agency Fitch considers that the decrease in house prices in Spain is coming to an end, but warns that the recovery will be slow. According to the company, one of the main reasons for the improvement in prices is the return of mortgage lending.

Fitch says that Spain faces a slow recovery in the housing market. It considers that prices have practically bottomed out, but rules out any rapid price increases. In fact, it points out that the high level of unemployment, together with the high supply of unsold homes constructed between 2006 and 2007, are two of the factors that will prevent a rapid rebound in prices.

It recalls that house sales increased by 19.6% year-on-year in 2014, according to data published by INE, but that despite that, the number of homes sold amounted to less than half the sales recorded in 2007. The agency expects the number of house sales to increase to move than 400,000 homes this year.

But it also believes that there will be a two-speed recovery. The slowest recovery will be seen in coastal areas and on the outskirts of large cities where there is a larger supply of homes. By contrast, in the centre of large cities, such as Madrid and Barcelona, prices will increase.

Original story: Idealista

Translation: Carmel Drake

Office Rents In Barcelona To Grow By 30% In Three Years

18 February 2015 – Misoficinas.es

Barcelona is one of the cities with the greatest potential for real estate growth in Europe. At least, it is according to the 2015 Trend report, prepared by CBRE.

The international consultancy firm’s 2015 Trend Report says that the office segment is the main driver of Barcelona’s (real estate) market, and it estimates that rents will grow by between 25% and 30% between now and 2018.

Significant investment was made in offices in Barcelona in 2014, amounting to €844 million in total, i.e. 139% more than in 2013. In total, 19 transactions were closed (an increase of 31%) and more than 340,000 m2 of properties changed hands (112% more than in the previous year). This data clearly shows that investors’ appetite for this type of asset has returned to its pre-crisis levels.

In terms of occupancy rates, tenants leased 258,000 m2 of office space in 2014, the highest figure since the start of the crisis, and very close to the annual average for the past 10 years, with new business areas (Plaza Europa, 22@) accounting for 45% of the total, recovering their domination over the city centre.

An important factor to take into account is the progressive decrease in stock in the city centre, which resulted in 90,000 m2 less (available) office space in 2014. The main reason for this change was the conversion of offices into hotels, such as in the cases of Torre Agbar and the former headquarters of Cuatrecasas, as well as demand by tenants for higher quality, efficient spaces.

The report includes a Real Estate Barometer, which has been calculated for more than 10 years, based on a survey conducted with almost 200 industry executives. According to the majority of these executives, the most interesting development is that the role of vulture funds in Spain will decrease in 2015 with respect to last year. In fact, 64% confirm that this year will be dominated by ‘core’ funds and investors, i.e. those that invest on a long-term basis and are looking for greater security.

In terms of investment, the main players in the sector consider that the office and retail outlet segments will account for the majority of investment in Spain, whereby continuing the trend observed in previous years.

Original story: Misoficina.es

Translation: Carmel Drake