Servihabitat: 9 out of 10 Non-Resident Buyers Prefer the Beach

18 December 2017 – Eje Prime

17% of the homes purchased in Spain today have a foreign accent. During the first half of 2017, 83,675 homes were acquired by foreign buyers, which represents an increase of 10% with respect to the same period last year. Nevertheless, that increase weakened slightly if we look at the previous quarter, according to the Servihabitat Trends report published by the national servicer.

The reason for this annual increase is found in the climate: 83.7% of non-resident buyers in Spain during the first six months of this year focused their attention on just seven provinces, all of which offer sun and sand. Málaga leads the ranking, exceeding even Alicante according to the latest figures. According to data from the Ministry of Development, 30% of all house purchases by foreigners were recorded in Málaga, compared to 23% in Alicante (…).

The data is clear. Almost nine out of every ten foreign buyers in the Spanish market values the quality of life offered by the Mediterranean climate. Another factor to take into account is the reason for the purchase. In this sense, the Government reports that 95.8% of new foreign house buyers in Spain are resident in the country, which accounts for 80,191 properties in total (…). ,

Besides Málaga and Alicante, the other most sought-after provinces by these investors are: Almería (9.6%), the Balearic Islands (9.2%), Las Palmas (5.2%), Tenerife (4.7%) and Murcia (3.5%). Beyond these coastal areas, the remaining 12.7% is spread over the rest of the country, with large cities such as Madrid and Barcelona accounting for a large share.

Influence in the regional market  

As well as the growing number of international investors, their influence in the regional markets where they are interested in buying homes is noteworthy. In regions such as Alicante and Tenerife, overseas investors account for almost half of all residential property purchases in the regions. Similarly, in the Balearic Islands, Málaga, Las Palmas and Girona, the figure exceeds 30%.

In Cataluña and the Community of Madrid, house purchases by foreigners account for 15.9% and 8.8% of the total number of operations, respectively.

At the other end of the spectrum, the regions where fewest foreign investors are active are Extremadura (2.2%), followed by Galicia (2.5%) and País Vasco (3.3%).

Brits lead the investor ranking

In terms of the country of origin of overseas investors in Spain, British buyers continue to constitute the largest community of house buyers in the country, although their market share decreased during the third quarter of this year, from 19% to 15.13%, according to data from the College of Registrars.

The collateral damage from Brexit may have led to that decrease, although the loss in the purchasing power of UK households will have also played its part, due to the depreciation of the pound against the euro, according to the servicer’s report.

After Brits in the ranking of foreign investors in Spain, come the French and Germans, although neither group manages to account for 10% of the total market. The Swedes, Belgians, Italians and Romanians, all with a percentage market share of around 5%, buy similar numbers of homes in the Spanish residential market, which is speaking more languages every day.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

CBRE: New House Prices Are Soaring In Spain’s Large Cities

22 June 2017 – Idealista

New homes are becoming an “endangered species” in the real estate market in Spain’s large cities and along the coast. The increase in demand versus the shortage of supply means that prices are rising by more than the average growth rate of 4%-6% in capital cities such as Madrid and Barcelona, according to the forecasts published by CBRE for 2017. In addition, despite the greater increase in construction activity, the gradual rise in the value of buildable land is having an effect on the final price of new homes.

According to the residential report from CBRE for 2017, the average price of homes in Spain will grow during the course of this year by between 4% and 6%, although in some markets, such as in the large cities and along the coast, the increase in house values will be greater, given the demand-side pressure.

“Although the recovery in the residential market is not leading to significant tensions in terms of house prices at the national level, sharp rises are being seen in the price of new homes in certain local markets with high demand and a very limited supply of new homes”, said Samuel Población, National Director of Residential and Land at CBRE.

New housing is starting to become scarce in markets such as Madrid and Barcelona, as well as in areas along the coast such as Alicante and Málaga, despite the fact that the construction of new homes is being concentrated in these capital cities. The report warns that the current levels of construction are not going to be sufficient to absorb the demand for these types homes over the next two years.

CBRE calculates that this demand amounts to between 120,000 and 140,000 units per year, whereas in recent years, an average of around 51,000 homes have been completed per year. Moreover, the number of housing permits being granted still falls below the threshold of 80,000 homes per year.

“There is potential for the construction of new homes, given that the building rates for the next 2 or 3 years are unlikely to cover the entire demand”, explained Samuel Población. “The increase in the construction of homes in areas such as Madrid, Barcelona, Valencia, Costa del Sol, the Balearic Islands and País Vasco, is key to containing the inflationary trends in prices”, he added.

Controlling the increase in demand for buildable land

(…). According to data from the Ministry of Development, the average price of urban land in provinces such as Madrid, the Balearic Islands and Málaga amounted to 27%, 36% and 40%, respectively, of the historical series (which ranges between the maximum and minimum in the period 2004-2016) in the fourth quarter of 2016. “This suggests an intensification in demand for land in these locations”, said sources at the consultancy.

CBRE warns that in the last few months of 2016 and the first months of 2017, the market for land saw more activity and the number of transactions involving urban plots of land rose by just over 10% in 2016 with respect to 2015 (…).

Original story: Idealista (by D. Marrero)

Translation: Carmel Drake

Tinsa: Investment In Coastal Housing Soars

19 June 2017 – Expansión

Guide for investors along the coast / House prices rose in 62% of Spain’s coastal towns during the first quarter of the year, in particular, along the Mediterranean Arc and in the Canary and Balearic Islands, thanks primarily to an increase in demand from investors and foreigners. The forecasts from analysts point to a clear improvement in prices this year in more than half of the areas analysed along the coast. Antigua, in Fuerteventura, recorded the best YoY price rise in Q1 2017, up by 26.1%. (…).

The holiday home market is performing well once again in the majority of Spain’s coastal regions and some economists say that 2017 could be the year of consolidation in the real estate sector. Property prices recorded YoY increases in 84 of the 136 coastal towns analysed, based on data for the first quarter of 2017. In 2016, that figure amounted to 71 and in 2015, just 32, according to the latest report from the appraisal company Tinsa about Coastal Housing.

Political stability, following the failed motion of no-confidence, has combined with economic growth, thanks to the good outlooks from analysts. The forecasts for GDP growth show that the figure is going to exceed 3% this year for the third consecutive year. Moreover, Spain is a strong candidate to become the tourism leader at the global level, with a record forecast in terms of visitor numbers of 82 million this year. The increase in confidence has opened the financing tap, driven by demand for housing, amongst Spanish and overseas investors alike, looking to acquire a second home. (…).

The highest increases were recorded in the Mediterranean Arc – Costa Dorada, south of Alicante, the western coast of Málaga and the Cádiz coast – and the islands, both the Canary and Balearic Islands – in particular, Mallorca and Ibiza. The Atlantic and Cantabrian coasts are recovering more slowly, above all in the area of A Coruña and Asturias, in part due to more significant price decreases following the crisis. Nevertheless, that area has some exceptions, such as Guipúzcoa, where demand for holiday homes mergers with demand for primary residences.

The burst of the real estate bubble meant that this sector was one of the hardest hit by the crisis. In some regions, prices dropped by 60%. (…). It is true that this decrease was less marked in some of the coastal areas, thanks to demand from tourism. Along the Mediterranean Coast, the areas that lag behind the most are the coasts of Almería and Granada, which are still recovering, as well as the south of Valencia and Barcelona, and Gerona, Tarragona and Castellón, to the north of the arc. (…). Excluding those capital cities that have a coastline, Antigua (Fuerteventura) recorded the highest house price increase, with a rise of 26.1% in the first quarter of 2017, compared to the same period in 2016. That was driven by an increase in demand, given that sales there soared by no less than 81% in 2016. The second highest price rise was seen in Gavà (Barcelona), with 17.8%, followed by Mojácar (Almería), with 17.3%. The outlook for prices in 2017 is promising. According to analysts, prices will improve in more than half of the areas analysed (52%). (…).

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

The Real Estate Recovery Cools Off In Valencia

12 May 2017 – Las Provincias

The recovery will have to wait. The signs of reactivation that were seen in the real estate development sector in the Community of Valencia in 2015 cooled off again in 2016. Although the number of operations involving land purchases grew by 38% last year, from 511 to 826, the fact is that they involved smaller spaces. This means that the surface area sold to property developers decreased by 10.6% from 2.3 million m2 to 2 million m2, according to data from the Ministry of Development.

The only exceptions were in the tourist areas to the south of Alicante and in the city of Valencia. “The area to the south of Alicante is still the most active place, with significant property development activity (c. 2,000 homes under construction), led by a significant recovery in purchases by non-residents. The typical buyer at this initial stage of the recovery can afford to acquire a home with own funds or with a significant down payment, representing more than 40% of the property value”, said the Director of Sales and Marketing at Solvia (Banc de Sabadell), José Peral.

In 2015, demand for buildable residential land increased along the Alicante coast, primarily in the coastal tourist towns that spark the most interest in the international market, such as Xàbia, Dénia, Benidorm, Calpe and Orihuela-Costa. Thus, in some of these areas and, in particular, in the latter, the supply of available land decreased considerably and transaction prices increased, which is why some property developers have started to move to the northern coast of Alicante, for example, to Finestrat.

Nevertheless, this trend, which started in the south of Alicante is now moving to other areas. For example, the new build market in the city of Valencia did an about-turn in 2016 after several years of inactivity, according to Peral. Currently, a great deal of activity is being undertaken: a lot of projects are already underway, building permits have been granted for others, and others still are in the pre-sales process.

This situation explains the focus being placed on these markets by the new players arriving in the Community of Valencia, such as the fund Neinor Homes, which is constructing its first projects in the Valencian neighbourhood of Malilla and in Playa de San Juan de Alicante.

In terms of the capital’s metropolitan area, there has been a slight uptake in demand for buildable residential plots of land in towns with more than 20,000 inhabitants. It is also worth noting the number of transactions involving plots of land (…) for family homes, involving small and medium-sized local property developers.

Original story: Las Provincias (by A. Castillote and Á. Mohorte)

Translation: Carmel Drake

Will 2017 See The Consolidation Of The RE Sector?

30 April 2017 – Expansión

Outlook / The experts believe that house prices will rise by around 5% and sales by more than 10% this year.

The recovery in the housing market is unequivocal and so the question that the real estate consultants are now asking is: “Will 2017 be the year of consolidation?”. In other words, “Will the recovery extend across the whole country and will the sector reach cruising speed?”. That is the million-dollar question.

The consensus of the real estate experts consulted by Expansión reveals that house prices are expected to grow by between 4% and 6% in 2017. Similarly, the overall forecast is that the number of residential property sales could reach 500,000 this year, which is regarded as the “healthy” or “normal” level for a market such as Spain.

There is also consensus that the number of operations involving new and second-hand homes will rise by around 10%, at least. Spain’s National Institute of Statistics (INE) certified that 403,866 homes were sold last year, up by 13.6% compared to 2015. It was the first time since 2010 that the figure had exceeded the 400,000 threshold, and this year will be even better, in the opinion of the analysts. House sales will grow in every single autonomous region in 2017, above all in Cataluña, the Balearic Islands, the Canary Islands and Madrid, which are the four regions that are setting the trend for the sector as a whole.

Something similar is happening with average house prices. The boost from the large cities is now having an effect on medium-sized (provincial) capitals, the majority of which are clearly recovering in 2017. Not in vain, Tinsa reported a few weeks ago that the appraisal value of residential properties experienced a YoY increase of 2.7% in March, but rose more than twice as much, by 5.5%, in the provincial capitals and major cities.

Almost all of the forecasts from the major real estate analysts place the rise in prices at around 5%, and underline the disparity in the various real estate markets in the country. Servihabitat thinks that residential property prices will rise by 4.3%. The consultancy firm Aguirre Newman estimates “growth of around 6%”. JLL predicts that prices in city centres and in exclusive locations along the coast will see “increases of more than 6%”. CBRE forecasts that house prices will rise by between 4% and 5% in 2017 and by more than 6% in Madrid and Barcelona”.

The creation of new households and, above all, the significant increase in purchases by investors is spurring on demand. These two variables, combined with the significant rise in the rental market, mean that Madrid and Barcelona are still the major drivers of the market. During the first quarter of 2017, prices rose by 12.1% in the Catalan capital and by 7.7% in the Spanish capital.

The data from the other three large cities is much less extreme. The price of homes rose by just 1.1% in Valencia, fell by 1.1% in Sevilla and increased by 2.5% in Zaragoza. Other capitals saw higher increases in house prices, including Alicante (+11.7%), Vitoria (+9.3%) and Las Palmas de Gran Canaria (+7.8%). (…).

Original story: Expansión (by J. M. Lamet)

Translation: Carmel Drake

Cajamar Puts 2,500 Homes Up For Sale With Discounts Of Up To 30%

21 December 2016 – Expansión

Grupo Cooperativo Cajamar has put more than 2,500 properties up for sale, with discounts of up to 30%. The assets are located all over Spain, including in major regional capitals, commuter cities and small towns, according to a press release issued by the entity yesterday.

This offer from the rural saving banks of the Cajamar group will be known as the ‘Christmas Campaign’ and the discounts will apply until 31 January 2017.

The supply includes both urban and coastal properties, as well as new builds and second-hand homes. Most of the properties are located in Andalucía (890) and the Community of Valencia (790), followed by Madrid (260), Murcia (160), Cataluña (140, 60 of which are located in Tarragona) and Castilla y León (140, 110 in Valladolid).

Doubtful debt rate

As at 30 September 2016, Cajamar’s doubtful debt rate stood at 13.77%. At the height of the crisis, it reached 17%, as a result of the entity’s absorption of Ruralcaja, without any public aid, making it the entity with the second highest rate in the sector in Spain. The doubtful debt rate of its property developer business amounted to 79.04%, well above the average for the sector (25%).

The total number of doubtful assets has decreased by 20.4% in the last year, particularly thanks to the sale of a batch of loans worth €328 million. The coverage ratio amounts to 47.62%. The entry of foreclosed assets onto the balance sheet has decreased by 12.61% in the last year and now amounts to €491 million in gross terms. Sales have increased by 35.62% to €257 million.

Cajamar has an agreement with Haya Real Estate to sell its properties to individuals.

Original story: Expansión

Translation: Carmel Drake

Sareb Sells 25% More Tourist Homes Than It Had Forecast

5 September 2016 – El Mundo

This summer, Sareb has taken advantage of the fact that savers have limited alternative investment options and that its assets are well priced…to boost property sales.  (…).

Unlike other commercial companies, the aim of Sareb (in which the State holds a 45% stake) is to reduce its balance sheet by selling off all of its assets, which primarily comprise non-performing or risky real estate loans and involve more property developers than individual borrowers, inherited from the former troubled banks.

In this case, the typical clients of the company chaired by Jaime Echegoyen (pictured above) are large financial investors specialising in generating profits from assets that the banks are unable to maintain. Nevertheless, with the activation of demand in the second-hand real estate sector, the bad bank is trying to take advantage of every opportunity and in April it put 2,237 homes up for sale (to private investors) along the coast.

The commercial objective is much lower and the bad bank does not intend to liquidate 100% of its supply. Nevertheless, between sales and reservations, the company has managed to offload 330 homes this summer for a total amount of €31 million, which represents a 25% increase with respect to its budget. The company has not revealed the prices at which it acquired these assets from their original owners.

Sareb, which uses sales companies belonging to or related to Bankia, Banco Sabadell, CaixaBank and Santander, will extend the campaign that it launched in April by at least another month to try and maximise the returns from savers interested in acquiring properties at good prices. The prices of the homes put up for sale in 20 provinces across nine autonomous regions started at €32,000 for a flat in Torrevieja (Alicante) and went up to €866,000 for a 342 sqm family home in Calviá (Palma de Mallorca) with five bedrooms, four bathrooms and a swimming pool.

Neither of those properties have been sold yet. Half of the homes in the portfolio are located in Valencia, where several now extinct entities, such as Bancaja (Bankia) and Caja de Ahorros del Mediterráneo (CAM, nowadays part of Banco Sabadell) undertook very intense activity in the run up to the burst of the real estate bubble. Specifically, the province with the highest number of properties up for sale is Castellón, with 791 homes. (…).

Last year, Sareb owned 105,000 properties, 80,000 loans and 375,000 collateral properties. Nevertheless, the Bank of Spain issued new regulations, which come into force in October, requiring the bad bank to individually value each asset on a regular basis using a methodology validated by the supervisor; that forced the bad bank to update the value of all of its assets. Sareb was thus required to perform an additional clean up amounting to €2,044 million, an operation that followed other similar measures already undertaken in 2013 and 2014, amounting to €968 million.

For that reason, the entity needed a recapitalisation, which its shareholders undertook converting €2,170 million of subordinated debt into capital, which it used to finance the acquisition of toxic assets from the rescued banks. (…).

Original story: El Mundo

Translation: Carmel Drake

Tinsa: Holiday Home Prices Rises Spread Along The Coast

15 June 2016 – El Mundo

Holiday home price increases have spread to more than twice the number of municipalities that they were seen in last year, with the Costa del Sol, Alicante, Balearic and Canary Islands enjoying the most active markets. Meanwhile, Castellón, the Cantabrian coast, Menorca and La Palma are still seeing price decreases/stabilisation. Those are the findings of the Coastal Homes 2016 report prepared by Tinsa, which shows that prices increased in 71 of the 136 municipalities analysed along the coast during Q1 2016, compared with 35 in 2015 and 4 in 2014.

The appraisal company explained that although this trend, “which is more in line with a stabilisation phase than a clear recovery” is spreading “gradually”, the coastal market is still “very heterogeneous”, given that prices in certain locations are still decreasing at an annual rate of more than 5%. The company added that the most repeated pattern is the absence of construction as well as of transactions involving land. (…).

By municipality, the towns of Teguise and Tías, in Lanzarote, recorded the highest YoY price rises during the first quarter, with increases of 17.8% and 14%, respectively, according to provisional data from Tinsa’s appraisals. They were followed by Gavà (Barcelona) and Benicarló (Castellón), both of which saw an increase of 13.2%, and Blanes (Gerona), where prices rose by 12.8%, with respect to Q1 2015.

The largest decreases were recorded in Piélagos (Cantabria), where the average price fell by 16% over the last 12 months; Antigua (Fuerteventura), down by 12.6%; and Los Alcázares (Murcia), with a decrease of 10.6%.

Price decreases of more than 50%

Similarly, the report shows that the Spanish coast accounted for a large majority of the highest price decreases during the crisis. Of the municipalities analysed, the most intense reduction since 2007 was recorded in Mataró (Barcelona), where the average price has decreased by 59.8% since the height of the boom. (…).

Stable outlook

Tinsa’s forecast for the next few months is characterised by stabilisation. Tinsa expects prices to remain stable in just over half of the regions analysed in its report and for prices to rise in just over a third of the areas. This forecast for improving prices focuses primarily along the coast of Valencia Alicante, Málaga, Palma de Mallorca, Canary Islands and San Sebastián, as well as along some stretches of the coast in Gerona, Barcelona, Cádiz and Asturias.

In terms of the supply of holiday homes, the report notes that it mostly comprises second-hand properties. The stock generated in recent years as a result of the slowdown in financing and sales is gradually being absorbed.

Moreover, Tinsa’s technical network classifies the over-supply of holiday homes as “very abundant” in just 8 of the 55 regions. These include the northern coast of Castellón; the Manga del Mar Menor; the west of Almería; the south of Barcelona; the central stretch of the Tarragona coast; the western region of Cádiz and the eastern coast of Vizcaya.

To evaluate the degree of difficulty in terms of stock absorption, Tinsa concludes that the current stock is “manageable in the short term” in 56% of the regions. This group includes the coasts of the provinces of Girona, Valencia, Huelva, Granada and San Sebastián, as well as Ibiza, Fuerteventura and Lanzarote, and most of the provinces of Alicante, Murcia and Cádiz. (…).

Original story: El Mundo

Translation: Carmel Drake

Speculation Returns To The Market For Land In Madrid & Along The Coast

11 April 2016 – ABC

During the years of the crisis, investors regarded land as one of the least attractive assets. In fact, in the face of scarce demand and the paralysis in the construction sector, land values fell to historic lows. (…).

Sales of urban land, the substratum of real estate developments, are growing again after nine years of consecutive decreases. And they are doing so at a healthy – and on occasion, vertiginous – rate in certain areas of the country where the housing market has already started its recovery, such as the more illustrious areas of major cities, including the north of Madrid and established areas along the coast (Málaga, Palma de Mallorca and the Canary Islands). So much so that a warning is now spreading amongst analysts and agents in the sector: the scarcity of developable land – which does not require land planning approval – in certain areas, and renewed interest from investors is generating a new “overheating” in the price of transactions, something not seen since the burst of the real estate bubble.

The latest “Market Trends” report prepared by Solvia, the real estate arm of Banco Sabadell, warns that the expectation of a strong recovery in value is incubating operations of a speculative nature. “The fact that the supply of well-located land is scarce in areas with demand, that there is widespread liquidity in the market and that there is fierce competition to acquire assets, means that land purchases are being made for speculative purposes, in certain specific cases, for subsequent resale at significantly higher prices”.

In this sense, the study, which does not cite who is behind such transactions, highlights the cases of the Madrilenian neighbourhoods of Valdebebas and Montecarmelo. In the case of the latter, the price of land has risen by between 40% and 60% to €2,400/m2.

Montecarmelo and Valdebebas

Fernando Rodríguez de Acuña, Director General of Operations at the consultancy firm RR de Acuña y Asociados distinguishes between three players in the race for land: the financial entities and large investors, who have put their assets up for sale “in stages” and the small and medium-sized funds, which are more prone to speculative operations given that they seek high short-term yields. The confluence of these players has given rise to a situation in which both the activity and value of these real estate assets have increased significantly, if we exclude the statistical effect of operations carried out by financial entities foreclosing unpaid debt. Thus, the number of transactions carried out by operators in the sector (developers, funds and cooperatives) increased by 37% in 2015 compared with the year before and by 60% in terms of transaction volume. (…).

According to the experts, two operations in particular have caused prices in the land market in the Spanish capital to sky-rocket: firstly, the sale of 14 plots containing more than 93,000 m2 of buildable space, by the Valdebebas Compensation Board to the property developer Pryconsa for more than €55 million and secondly, the acquisition of a plot of land in Montecarmelo by Cogesa, which belongs to the Dragados group, for more than €20 million. (…).

Original story: ABC (by Luis M. Ontoso)

Translation: Carmel Drake