Tag: College of Property Registrars

Global Geopolitics Fuels Demand for Luxury Homes in Madrid

12 May 2019 – El Confidencial

Wealthy investors and families from China, Russia, Venezuela and Mexico are particularly active in the luxury home segment in Madrid, in particular in the districts of Salamanca, Chamberí, Retiro and Moncloa-Aravaca.

According to the College of Property Registrars, foreigners accounted for 6.7% of all residential purchases over €500,000 in the Community of Madrid in 2017, a figure that rose to 8.4% in 2018.

There are several pull-factors motivating these buyers including tax exemptions, golden visas (thanks to Law 14/2013), (relative) legal certainty, low rates of crime and affordable prices, compared to Miami and other European capitals. The language, climate and excellent transport infrastructure also play their role, as do the world-class universities and business schools in the Spanish capital.

A number of push-factors are also evident, which is where the geopolitical developments come into play. The political and economic crisis in Venezuela, the election of Andrés Manuel López Obrador as the President of Mexico in December, the political uncertainty in Cataluña and even the on-going Brexit saga, are all important reasons for wealthy buyers to turn their backs on their home countries in favour of Madrid when it comes to buying a property.

To date, since they were introduced in 2014, 2,948 golden visas have been granted for the purchase of luxury homes, with half going to Chinese citizens (1,476) and a fifth going to Russians (621).

Moreover, according to official statistics from Spain’s National Institute for Statistics, the number of Mexican residents in Spain has risen from just over 20,000 in 2014 to more than 25,200 by the end of 2018, of whom one third live in Madrid.

Meanwhile, the number of Venezuelan residents has increased from just over 32,000 five years ago to 57,120 in 2018. Nevertheless, in both cases, the real number of arrivals is higher since many move to Spain through family links making them entitled to Spanish passports.

Original story: El Confidencial (by Marcos García)

Translation/Summary: Carmel Drake

Swedes Are On A Mission To Buy Homes In Spain

17 July 2017 – Economía Digital

Foreigners are buying more homes than ever in Spain. Last year saw a new historical high, with more than 53,000 purchases by overseas buyers, despite a decline in acquisitions by the Brits and the French and a stagnation in purchases by the Germans. Instead, the Swedes have arrived and with them, Swedish real estate companies.

Swedes have risen to fourth position in the ranking of house purchases by foreigners. In its latest statistical annual, the College of Property Registrars in Spain highlights that overseas buyers are showing the “greatest strength”. According to the annual, Britons continue to occupy first place in the ranking, accounting for 19% of total sales to foreigners, although that figure has decreased with respect to 2015 (21.3%). They are paying for the effects of Brexit. The French have also lost strength, to account for 8.05% of the total, compared to 8.72% a year earlier. The Germans remained at 7.69%, just a few tenths more than in the previous year. By contrast, the Swedes increased their share to 6.72% from 5.89% a year earlier, which means that they purchased almost 4,000 homes in 2016.

When analysing this data, it is worth taking into account the demographic weight of the respective countries. Sweden had a population of 10 million in January, whilst Germany has a population of 82 million, France 67 million and Great Britain 58 million. And so, although the population is much smaller, Swedes are buying almost as many homes in Spain as the Germans and French.

The strength of the krona compared to the euro

Sources at the Swedish agencies attribute this interest in Spain to several reasons: the exorbitant prices of properties in their own country; the strength of the krona with respect to the euro; the desire of their compatriots to own a second home near a sunny beach; and, also, the publicity campaigns being carried out.

The most well-known of the Swedish real estate companies is Fastighetsbyrán, which forms part of the Swedbank group, the country’s main bank. It has a dozen franchises in Spain. Its CEO, Daniel Nilsson, said that it sold 1,050 homes in Spain to Swedish compatriots last year for a total amount of €250 million. Its market share in the housing segment for Swedes in Spain is almost 25%.

In terms of location, Swedes concentrate their purchases along the coasts in the south of the peninsula – preferably between the province of Alicante to the Portuguese Algarve – as well as in the Canary and Balearic Islands. (…). Investment funds have also arrived, such as Catella, which is headquartered in Stockholm and which last year closed four operations amounting to €84 million: two residential buildings in Madrid, another one in Barcelona and a retail park in Vinaroz (Castellón)

The Swedish real estate companies are unique in that the vast majority of the personnel and clients of the franchised offices come from the same country. (…).

The second largest Swedish real estate company in terms of sales is Bjurfors, with half a dozen franchises in Spain. From their offices in Marbella, they explain that they are open to clients from everywhere, but they acknowledge that, for the time being, all of their clients are Scandinavian, and most of them are Swedish.

Homes with sunny terraces

All of the employees consulted agreed that there is increasingly more demand. Scandinavian clients want homes with outdoor space: they have to have large sunny terraces or patios. Otherwise, they are not interested.

According to a study conducted by the Svenskar i Väriden organisation in 2015, more than 90,000 Swedes live for most of the year in Spain. According to data provided by the Swedish embassy in Madrid, in June 2016, there were 27,000 Swedes registered (empadronados) in Spain and two million travelled here for tourism last year. It is expected that 2.2 million will come this year.

Original story: Economía Digital (by Josep María Casas)

Translation: Carmel Drake

House Prices: How Much Upwards Wiggle Room Is There?

13 June 2017 – El Mundo

In many respects, the housing sector has been restored to its former glory: house sales are rising at an increasingly faster rate, the development of new homes has resumed and the granting of mortgages is growing apace. However, the jubilation in the residential market can be felt, above all, in the significant increase that prices are experiencing in the new real estate cycle.

House prices rose by 7.7% in YoY terms during the first quarter of 2017, according to Real Estate Statistics from the College of Property Registrars. In the historical series published by that body, that figure represents the highest increase in house prices since 2007, in what is now the third consecutive year of increases in the market after seven years of severe decreases. (…).

The Registrars highlight the favourable behaviour of the real estate and mortgage markets, but warn that this strong dynamism “does not justify any intensification of growth towards double digits anytime soon”.

The registrars reiterate in their analysis that “From a global perspective, the market is debating between sustainable growth and an intensification towards forgotten figures”. They attribute the significant increase in house prices to the consolidation of economic growth, creation of employment, low interest rates, activity in the mortgage market and overseas demand.

The main consequence of the variables listed by the registrars, which work in favour of rising prices is, clearly, the increase in the number of potential buyers of homes, as highlighted by Julio Gil, Managing Partner at Horizone Consulting Inmobiliario. “The factors that are driving the appreciation in house prices nowadays are demand-driven, with three very clear facets: pent-up demand from previous years, which is now coming into play, demand to reposition and demand to invest”, reflects Gil. (…).

Moreover, all indications are that prices will continue to rise, at least, in the medium term (…). What is not so clear is the intensity of that increase. (…).

According to the registrars “Our predictions are based on forecasts of moderate growth rates, defined to be YoY rates of around 5%-6%, although there may be cyclical periods of more intensive QoQ rates. It would seem that “the social and economic reality does not justify an intensification much greater than these amounts”. And they highlight: “The evolution in terms of the number of inhabitants, wage levels, the outlook in terms of interest rates etc. ought to put the brakes on the upwards trend, to a certain extent”.

That prediction is not shared by Gonzalo Bernardos, Economist and Director of the Masters in Real Estate Management and Development at the University of Barcelona. “House prices will rise by around 8% in 2017 if the net credit available to purchase a home does not increase; and will soar by around 13%, if lending rises by 5%”. For the time being, this expert does not see an obvious risk of a bubble and recalls that that only happened a decade ago after net credit had been increasing for 10 years by almost 20%. (…).

Looking ahead, Bernardos takes it for granted that the steep rise in house prices will be contained when the price of money increases (it currently stands at 0% in Europe). He calculates that, provided nothing changes in the international environment, this turning point in interest rates will happen at the end of 2018, which means that by 2019, the average YoY increase in house prices will be sustained at around 3%-4%-5%. (…).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

Registrars: House Prices Rose By 7.7% YoY In Q1

18 May 2017 – El Mundo

Homes are becoming increasingly expensive. House prices rose by 7.7% during the first quarter of 2017 in YoY terms, according to the real estate statistics published by the College of Property Registrars. With respect to the last quarter of 2016 – i.e. looking at the QoQ variation – the increase amounted to 4.1%. With these new increases, the cumulative adjustment since the peaks of 2007 continue to fall and now amount to 22.8%.

On the other hand, 113,738 house sales were recorded between January and March, representing the highest quarterly figure since the first three months of 2011. The increase amounted to 21.8%, with respect to the previous quarter. In interannual terms, the positive trend continued: prices rose by 14.4% with respect to the same quarter in 2016.

On this occasion, contrary to the trend seen in recent years, new house prices performed in line with the general increase, accounting for 18% of the total number of sales, with a significant QoQ rise of 27.5% (20,490 sales), whilst the sale of second-hand homes rose by 20.6% compared to the previous quarter, to reach 93,248 operations.

Purchases by overseas buyers reach peak levels

The weight of house purchases by overseas buyers remained relatively stable during the first quarter of the year to account for 13.1% of all registered sales. That corresponds to sales of around 15,000 properties per quarter. In cumulative YoY terms, foreigners accounted for 13.3% of all purchases, a historical maximum, and corresponding to more than 55,000 house purchases per year by overseas buyers.

By nationality, the British continued to lead the ranking, accounting for 14.5% of all purchases made by foreigners, although their continued fall over the last few quarters (during the previous quarter, they accounted for 16.4% of all purchases made by foreigners) has brought the figure to a new historical low over total purchases by foreigners. The French rose to second place with 9.6%, followed by the Germans (7.7%), Belgians (6.9%), Swedes (6.3%) and Italians (6.1%). These first six nationalities accounted for more than half of all house purchases by foreigners.

Average mortgage amounted to €116,182

Mortgage debt to buy a home increased by 3.6% compared to the previous quarter, to reach €116,182, whilst the number of fixed rate mortgages continued to rise sharply, in line with previous quarters, to account for 38.7% of all new contracts, compared to 31% in the previous quarter, a new maximum in the historical series.

This situation leaves variable rate mortgages at their lowest figure to date, especially, Euribor, which was the reference rate for just 60.3% of all mortgages. The average initial interest rates on new loans decreased slightly to reach 2.3% from 2.4% in the previous quarter.

The terms of new mortgage loans remained relatively stable, recording a slight increase of 0.7% compared to the previous quarter, and an average term of 23 years and four months.

Access to housing saw a slight deterioration: the average monthly mortgage repayment during the first quarter amounted to €536, representing a QoQ increase of 2.2%, whilst the percentage of that repayment over wage costs rose to 28.3% from 27.6%.

Original story: El Mundo 

Translation: Carmel Drake

Bank Of Spain: Housing Yields Soar By 10.9% In Q1 2016

18 July 2016 – Expansión

(…). According to the latest data from Bank of Spain relating to the first quarter of this year, the average gross annual return on housing amounted to 10.9% in Q1 2016. Three months earlier, the same indicator amounted to 8.8%, which gives an idea of how much the pace is speeding up.

This gross yield figure measures the combined effect of the appreciation in house prices, plus the income obtained from putting those houses up for rent, before tax. In other words, the figure takes into account not only the amount that each investor obtains from renting out his/her property, but also the amount that he/she would earn from selling it after twelve months, which is the most important information for investors.

Specifically, house prices rose by 6.3% YoY during Q1 2016, whilst rental income generated additional returns of 4.6% over and above the value of the asset. And that profit may increase over the coming years, given that Fotocasa calculates that rental prices increased by 4.8% YoY in June, the second highest rise since 2006.

Moreover, this figure is more significant in the context of depressed interest rates, where investments presented as alternatives to fixed income options are shining. For example, housing yields are six times higher than the returns on 10-year Spanish public debt, which is the reference rate used by the financial supervisor; moreover, housing has also offered a safer refuge against uncertainty than the stock exchanges in recent months. (…).

This gap between housing yields and the returns on other assets means that now is a great time to invest in rental housing, for both individual buyers and investment funds, given that the cost of mortgages are also at historical lows.

In fact, the College of Property Registrars indicates that last year, 12.71% of house purchases were made by legal persons, which shows the interest that housing is sparking amongst companies, due to the double returns it offers.

The business model of these businesses and individuals is clear: obtain fixed income from renting out the asset, for an amount that comfortably exceeds the associated operating costs, and also benefit from the appreciation in the property value, so that they can more than double their returns.

Overall increases

In addition, it is a pretty safe bet, given that house prices are rising in most autonomous regions (and the improvement in the labour market should prolong this rise) and rental prices are rising four times as quickly as purchase prices, according to data from Fotocasa. (…).

The percentage of citizens who prefer to rent rather than buy is increasing, from 19% to 21.2% of Spaniards in 2015. In the last three years, the rental market has absorbed more than 1 million homes and is 42.5% larger. For this reason, investors looking for high returns have thrown themselves into the hunt for properties in established locations, with demand, in order to rent them out.

Location and quality

In fact, the experts recommend paying special attention to the location and quality of housing, because Spain is no longer a homogeneous market…but rather a market evolving at two or three speeds, in which prices have not bottomed out yet or are stable in certain cities and neighbourhoods, whilst prices are clearly recovering in others. (…).

Original story: Expansión (by P. Cerezal)

Translation: Carmel Drake

Brexit May Shatter British Dream Of A Home In Spanish Sun

6 July 2016 – Bloomberg

Londoner Joanne Connor may sell her holiday home in southern Spain as a falling currency drives up the cost in pounds of her household bills and mortgage payments following the U.K.’s decision to leave the European Union.

“The cost of living in Spain has shot up for us overnight,” the 39-year-old mother of two from London said in a phone interview. “If the pound stays this low or continues to drop, we will end up having to sell.”

Sales in some coastal areas of Spain could tumble by as much as 20% in the next 18 months as a sliding pound erodes the spending power of British buyers and owners following the vote to leave the EU, according to Aura Real Estate Experts, an independent advisory firm focused on Spanish property. Britons make up the largest contingent of overseas home buyers in Spain.

Connor has to change pounds into euros to meet the 400 euros ($445) a month mortgage payments on the two-bedroom home. The 9 percent decline in the pound’s value against the euro since the Brexit vote will limit her visits to Spain to just one this year, compared with six times in previous years.

“It’s not just the mortgage which is now more expensive; it’s the car hire, the utility bills, food,” Connor said.

Foreign and domestic home buying in Spain evaporated when the economy collapsed during the financial crisis, leading to an international bailout of its banks and the worst recession in the country’s democratic history. While overseas buyers have begun to return to the market, prices are still well below their pre-crisis peak.

Connor purchased her Spanish property in 2005 for 120,000 euros and says it may now be worth 75,000 euros, based on the price for which similar properties are selling in the Mazarron Country Club in the southern region of Murcia, where her holiday home is located.

U.K. citizens represented 21% of the 46,090 purchases made by overseas buyers last year, data from Spain’s College of Property Registrars show. Foreign buyers made up 13% of all Spanish house purchases in 2015. In Murcia and Andalusia, Britons account for 54% and 29% of transactions by foreigners respectively, according to the study by Aura Real Estate Experts.

Purchases on hold

“We had 10 would-be buyers and two have put their plans on hold after Brexit,” said Mary Arro, partner at Mia Property Boutique in Alicante, which specializes in real estate deals along the Spanish Costa Blanca. “The concern is sterling — they want to know where the pound goes next.”

In the municipalities of Benitachell in Alicante and Benahavis in Malaga, sales could drop by around 20% and prices decline by around 9% in the next year-and-a-half as Britons sell or up or shun future purchases, according to Aura Real Estate Experts. The firm also identified 15 other towns in Alicante and Almeria where sales are expected to fall as much as 17% over the same period.

Spain attracted the largest number of British tourists in Europe, with 16 million people arriving in 2015, according to data from Euromonitor. In the five months through May, they spent almost 5 billion euros in Spain, 14% more than a year earlier, the Spanish statistics office said on Tuesday. Britons accounted for about a fifth of all spending by foreign tourists.

Dario Fernandez Palacios, an agent a Marbella-based real estate broker Prime Invest, said home sales to British buyers had already slowed “noticeably” in the months leading up to the U.K. referendum on June 23. “Now they are totally paralyzed,” he said by phone.

“The coming months, and probably years, are expected to be marred by uncertainty in and outside the U.K.,” said Wouter Geerts, a travel analyst at Euromonitor International.

Original story: Bloomberg (by Sharon R. Smyth and María Tadeo)

Edited by: Carmel Drake

Tinsa: Coastal House Prices Share In The RE Recovery

4 July 2016 – Expansión

Analysis by region / The price of tourist housing is thriving once again in many areas along the coast, including in the Balearic Islands, Canary Islands, Málaga, Cádiz, Alicante and Gerona. More than half of Spain’s beaches are experiencing clear recoveries in their property prices or are showing signs of recovery, with an increasingly active market, according to Tinsa; very few areas are still in decline.

The housing market has taken off with a bang, above all in the major cities. Nevertheless, certain other areas also stand out, in particular: the coasts, where 56% of the areas are now in recovery and where foreign demand and the limited stock in the prime areas has further encouraged increases in real estate prices. Specifically, and according to a recent report from the appraisal company Tinsa, 56.2% of the coast areas are now in a process of recovery, whilst prices have bottomed out in 28.1% of areas and only 15.8% are still experiencing price decreases.

In this way, the report highlights the Balearic and Canary Islands, which have several areas in “clear recovery”, followed by the Costa del Sol (Málaga) and the Costa de la Luz (Cádiz). In addition, there are significant improvements in Barcelona, Gerona and Alicante. In these areas, a good portion of the unsold housing stock has now been sold off, given that the number of transactions has shot up, and so too therefore has the granting of new permits, which have doubled. By contrast, prices in some parts of the Comunidad Valenciana, Murcia and Andalucía are still decreasing, as the markets there are saturated with unsold properties, which means it is still possible to find bargains relatively easily. The Cantabrian Coast has experienced a more moderate evolution. There are several keys that point to the prolongation of the rising trend. “We have been observing a moderate but stable increase in prices for several quarters now, foreign demand is rising sharply, above all along the coast, which means that the remaining unsold homes are now starting to run out in many areas”, said Beatriz Corredor, Director of Institutional Relations at the College of Property Registrars. (…).

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake