Tag: companies

Construction, the Sector that is Losing the Most Companies and Jobs due to Coronavirus

In March, the construction sector registered a 12.4% monthly drop in the number of companies registered for Social Security purposes, which represented the largest decline of any sector, and which was accompanied by the destruction of 147,701 jobs.

To date, construction is the sector of the Spanish economy that has suffered the greatest losses in terms of companies and jobs due to the Covid-19 coronavirus crisis.

According to data from the Ministry of Employment and Social Security, the construction sector has been the hardest hit in terms of the Spanish labour market, with the greatest losses during the month of March. In this way, between February and March, the number of construction companies registered for Social Security purposes fell by 12.4% compared to an average fall in the wider economy of 6.5%. “In absolute terms, 16,216 companies out of a total of the 131,069 that were registered for Social Security purposes in February ceased to be registered during the month of March,” explains Antonio Ramudo, Data Scientist at Brainsre.

The same goes for employment. During the month of March alone (the lockdown and State of Emergency were introduced on Saturday 14 March), more than 147,000 construction jobs were lost. “If we talk about workers, the construction sector saw a decrease of 16.8% between February and March 2020. In absolute terms, it went from having 881,014 Social Security-affiliated workers to having 733,313 in just one month. As such, 147,701 jobs were destroyed. That represents a 16% decrease compared to the previous year ”, according to the analyst from Brainsre.

The construction sector is not the only one within the real estate market to be hit, albeit to a lesser extent, by the coronavirus crisis. Other companies linked to real estate activities, such as those dedicated to the sale and rental of real estate properties, agents, managers and administrators of real estate have also been affected; they saw a monthly drop of 2.3%. Nevertheless, that was one of the most moderate falls in the Spanish job market where the average reduction between February and March was 6.5%. In absolute terms, 836 companies and almost 3,789 workers ceased being registered for Social Security purposes last month.

Decreases in other sectors

Apart from the direct impact on the construction sector and real estate activities, other sectors linked to real estate have also been affected by the Covid-19 crisis. In this way, the hotel/hospitality industry registered an 11.6% drop in the creation of new companies during March, in other words, it lost more than 20,000 companies and almost 185,000 employees.

Transport and storage suffered a 7.7% decrease in March, with the loss of more than 5,000 companies and more than 35,000 employees. In commerce, the decrease in March was 4.9% with the loss of more than 14,000 companies and more than 86,000 employees.

SMEs and medium-sized companies, the most affected

Within the construction sector, which has gone from having more than 130,000 registered companies for Social Security purposes to having less than 115,000 in a month, the most affected companies have been small and medium-sized companies (those with fewer than 250 workers). There has been a special incidence of companies with between 3 and 250 employees, which have suffered a decrease of between 15% and 21% in their Social Security enrolments, for both companies and workers, accounting for 85% of the jobs lost in the construction sector in March.

In the real estate business, which has gone from having 35,862 registered companies for Social Security purposes to having less than 35,026 in a month, the most affected companies have also been small and medium-sized companies (those with fewer than 250 workers). There has also been a special incidence of companies with between 3 and 250 employees, which have suffered a decrease of between 4% and 10% in their Social Security enrolments, with those companies employing between 50 and 250 workers being the most severely affected.

The same has happened with employment, where companies with between 3 and 250 workers have also been those that have seen the most jobs destroyed during the first month of the coronavirus crisis in Spain, with between 4% and 7% of employees no longer registered.

Andalucía loses 26% of its business fabric

By region, the autonomous community that has seen the greatest impact due to the decline in the number of construction companies has been Andalucía, which has lost 26% of its companies in a month, and 31% of its jobs, with 5,550 fewer companies and 45,198 fewer workers in March.

Other communities severely affected by the Covid-19 crisis include Extremadura, with 22% fewer companies and 28% fewer workers; Castilla La Mancha, where the number of companies has decreased by 19% and the number of workers by 21%; Murcia, with 15% fewer companies and 17% fewer workers; and the Canary Islands, with 13% fewer companies and 17% fewer workers.

In absolute terms, Andalucía is also the region that has lost the most companies and workers in March 2020, having gone from having 20,975 registered companies for Social Security purposes in February to having 15,425 in March and from having 143,808 construction employees registered for Social Security purposes in February to having 98,610 in March.

At the provincial level, 25 provinces have seen a fall of more than 10% of the number of companies registered for Social Security purposes.

That ranking is mainly led by provinces in Andalucía such as Jaén, Córdoba, Granada, Huelva and Sevilla, all of which have been affected by a loss of more than 28% of the companies of this sector. In absolute terms, Madrid is the province that lost the most construction companies in March, 1,703 to be precise; it was followed by Malaga and Seville with 1,337 and 1,293 companies, respectively.

By number of workers, nationwide, the drop amounted to 17% in March compared to the previous month. The five most affected provinces in the sector were again all Andalucían: Cádiz (39%), Jaén (-37%), Córdoba (-35%), Huelva (-35%), Sevilla (-34%).

The least affected cities were Guipúzcoa, Lugo and León. However, in absolute terms, Madrid was the province that lost the most construction jobs in March: 18,108 to be precise; followed by Sevilla and Malaga, which lost 11,504 and 11,465 positions, respectively.

Laborde-Marcet: Inv’t in Tertiary Assets Amounted to €8.5bn to September

12 November 2018 – Eje Prime

Non-residential assets are proving themselves to be another driver of the Spanish real estate sector. The retail, hotel, logistics and office segments received investment of €8.5 billion between January and September, according to the latest report published by Laborde-Marcet. If that pace is maintained, the tertiary real estate sector will achieve an investment figure of almost €11.3 billion by the end of 2018.

The third quarter has been the most significant of the year in terms of registered investments, with €3.8 billion in total. By segment, between July and September, retail accounted for 34% of total investment (€1.3 billion), ahead of offices, which accounted for 29% (€1.1 billion). Meanwhile, the hotel segment accounted for 24% of the market (€912 million) and logistics the remaining 13% (€494 million).

According to the study, the market is dominated by a large variety of players: private equity funds, Socimis, companies and local family offices. Despite the large presence of domestic and international capital, the investment recorded between January and September 2018 was 11.5% lower than during the same period in the previous year, a record year when real estate investment amounted to €9.6 billion.

If this trend continues until the end of the year, the Spanish tertiary real estate sector will reach a total real estate investment figure of around €11.3 billion, which would represent a decrease of 6.6% with respect to 2017 (€12.1 billion), but an increase of 1.5% with respect to 2016 (€11.1 billion).

For Gerard Marcet, the founding partner of Laborde-Marcet, “the fact that these kinds of real estate projects are happening in our country is very good news for the economy in general and for the real estate sector in particular”.

Original story: Eje Prime 

Translation: Carmel Drake

Santander & Blackstone Sign €7.3bn Loan for their Joint Venture

19 March 2018 – Expansión

Santander and Blackstone are moving forward with the creation of the joint venture that is going to hold the former real estate portfolio of Popular. The US firm controls 51% of the company’s share capital and also manages the assets, for which it has paid around €5 billion. Meanwhile, Santander retains 49% of the shares.

The joint venture is going to group together assets with a gross value of €30 billion. Within the framework of the agreement, the assets were appraised at €10 billion, the book value at which they are recorded on Popular’s balance sheet following the clean up applied by Santander.

The balance sheet of the joint venture, known as Project Quasar, is going to be backed by around €3 billion in capital to be contributed by the two partners and debt. In this sense, the company owned by Santander and Blackstone has just closed a syndicated loan agreement led by Morgan Stanley and Deutsche Bank amounting to €7.3 billion. Blackstone is also participating in the syndicate, through one of its companies, and will contribute €1 billion, equivalent to 14% of the total financing.

Conditions

The loan has been signed for a five-year term and is due to mature on 15 May 2023. The interest rate has been fixed at 1-month Euribor, with a floor of 0% and a spread of 3.15% for the first three years. From the fourth year onwards, the differential will increase to 3.25%. 1-month Euribor currently stands at -0.371%.

The loan has an initial commission of 0.8%. In turn, Santander and Blackstone must allocate 70% of their joint company’s net income to repaying the debt. According to financial sources, the price of the loan is in line with the conditions of the assets owned by Blackstone and Santander’s company. Although the joint venture’s portfolio comprises foreclosed assets and non-performing loans, the transfer of those assets to the new firm has been performed at around one-third of their nominal value; moreover, the assets have mortgage guarantees, which has allowed Santander and Blackstone to reduce the cost of its financing.

It is also worth noting the ranking that the loan has in the debt structure of the company. It is a senior liability, which means that it has collection preference over other claims. Ultimately, add the sources, it is the owners and not the banks who are going to be left with the asset risk (…).

Popular’s package of assets, included in the agreement with Blackstone is broken down as follows: €1.9 billion in properties; almost €3.2 billion in loans proceeding from real estate activity; and €4.3 billion in other types of assets linked to the property development sector, including deferred tax assets (…).

If the operation is not completely finalised by 31 March, the agreement for the joint venture may be terminated at the behest of either partner.

Original story: Expansión (by M. Martínez & I. Abril)

Translation: Carmel Drake

Footballer Andrés Iniesta Buys Land in Mataró for €11.5M

15 March 2018 – Expansión

On 23 March, the FC Barcelona midfielder Andrés Iniesta is going to formalise the purchase of 30,642 m2 of land in Mataró (Barcelona) for €11.5 million. The operation is going to be carried out through the company Maresyterey. It is a surface area that is going to be allocated to housing (70%) and to companies, offices and businesses (30%). The vendor is the company Porta Laietana, which was jointly owned in equal parts by the Town Hall of Mataró – which has recorded a gain of €5.1 million – and the Catalan construction company Copcisa, owned by Eloi Carbonell.

Original story: Expansión

Translation: Carmel Drake

Tinsa: House Prices Rise By Most In Madrid & Barcelona

18 July 2016 – Expansión

The Balearic and Canary Islands are featuring in the housing recovery, but Madrid and Barcelona are leading the way; there, the number of transactions has picked up pace and prices are growing strongly once again. Most of these increases are due to the economic recovery, but the savings factor is also playing a major part.

In fact, the influence of private investors is still playing a crucial role in the strengthening of the two major real estate regions, whose central districts are the most sought-after by companies and individuals, both Spanish and foreign.

It is precisely the influence of these investors that boosted property prices in both capitals in the first place, firing the starting gun for the reactivation of the sector, as they committed to the prime areas before anyone else. These central districts, which are well-connected and offer good services, used to offer a certain degree of security for investors, and a great deal of potential for appreciation, even when everyone in the market was still searching for land.

Both cities were amongst the leaders of the increase in house prices during the second quarter of the year, according to data from the appraisal company Tinsa, published recently. Nevertheless, these increases were concentrated in some of the most expensive areas, as shown by the analysis by district of the local markets. Specifically, many of the neighbourhoods where prices stand at around €3,000/sqm in Madrid and Barcelona are also those where prices have risen by the most in the last year, whereas prices in those neighbourhoods that fall below the average have grown more moderately.

For example, prices in the Madrilenian neighbourhood of Salamanca have risen by 9.8% in the last year, whilst in Chamberí they have increased by 8.9%. Meanwhile, in Barcelona, the following districts stand out: Gràcia (where prices have risen by 12.7%), El Eixample (10.9%) and Les Corts (8.1%). These statistics show that the prime areas are recovering better than the rest. They are central, well-connected areas with very solvent demand, where returns are high and there is significant retail activity, which means they have significant potential for appreciation both for those buying to invest as well as those looking to put their properties up for rent. As with everything, there are notable exceptions, such as the Retiro area in Madrid and Sarrià-Sant Gervasi in Barcelona, which are increasing by below the average.

Other areas

Nevertheless, the real estate expert José Luis Ruiz Bartolomé indicates that the real estate market has now entered a new phase, in which the recovery is spreading to more and more areas. “Before, properties were only being sold in the best districts, but now the increases have spread to the most popular areas, as supply is limited and there are increasingly more buyers looking for homes to live in, rather than to buy as investments”, he explains.

For this reason, the most popular neighbourhoods have become more attractive with the recovery of the labour market and the opening of the bank financing tap. In this way, house prices in the Madrilenian neighbourhood of San Blas have risen by 9.9%, making it the second highest price rise district in the capital; meanwhile, Sant Andreu is also boosting prices in Cataluña, with an increase of 8.2%. Similarly, prices in all of the districts of Madrid that cost less than €2,000/sqm have increased by more than the average, with the exception of Villaverde, the cheapest of all, where prices have remained stable. Something similar is happening in Barcelona where the most popular areas, such as Nou Barris and Sants-Montjuïc, also grew by more than average. (…).

Moreover, Tasaciones CBRE indicates that the profile of investments funds “has evolved rapidly from being opportunistic to value-added, choosing instead to back development, the renovation of properties and, given that they have perceived the potential for refurbishments, they will gradually start managing plots of land in urban areas, with the aim of obtaining higher returns”. With this, the increase in demand and prices will increasingly move to more remote areas. (…).

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake

Banks Still Own Problem Assets Amounting To €213,000M

5 May 2016 – Cinco Días

Spain’s banks still have a heavy burden weighing down on them following the burst of the real estate bubble: they now own foreclosed assets worth €84,000 million, taken on since the start of the crisis.

According to the Bank of Spain in its financial stability report, published on Wednesday, that figure “has remained stable since December 2012, always ranging between €75,000 million and €84,000 million”.

Of that amount, 37.6% relates to land, 25% to finished buildings, 22.3% are foreclosed assets resulting from the acquisition of homes, and 5% are buildings under construction.

In the last year, land has decreased by 0.5 points, finished buildings have dropped by 0.43 points, homes have increased by 1.8 points and buildings under construction have remained stable.

But beyond these properties, the banks’ exposure to non-performing assets and problem loans amount to almost €213,000 million in Spain’s financial sector as a holw.

The banks have lots of “non-performing assets on their balance sheets, which do not generate any revenues for the income statement, but which do require financing”, said the financial supervisor, which has published data relating to 2015 year-end.

“A hindrance to solvency”

The Bank of Spain also warns that “although these two indicators have decreased, by 14.5% as a whole, over the last year, they still represent a significant percentage of the total assets of the banks in their business in Spain and they place negative pressure on the income statements of the entities, reducing their profit generation capability and therefore, representing a hindrance to increasing the solvency of the institutions”.

In terms of total loans that have been refinanced or restructured, that balance amounted to €205,000 million at the end of last year, which represents a YoY decrease of 6.4% compared with the end of 2014.

Of the total amount of loans whose initial terms have been adjusted, “51.5% relate to non-financial companies and 46.2% to households”, said the Bank of Spain.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Spaniards Keep The Same Home For 12 Years On Average

26 April 2016 – Cinco Días

Yesterday, Spain’s Association of Property Registrars published the Yearbook of Property Registry Statistics, which analyses aspects such as the use that Spaniards make of their homes, amongst other factors. This use is deduced from the average period of ownership of each home, a very valuable piece of information that is only recorded by the registrars. In 2015, that average period amounted to 12 years and seven months, whilst in 2008, the figure amounted to just seven years and 10 months.

Thus, although this conclusion is not foolproof, the Treasury has already stipulated that during the recent boom, if a home was owned for less than five years then it may indicate that the property was acquired as an investment, whereas properties owned beyond that period, are likely to be used as residences.

The numbers published yesterday show once again that, since the bubble burst and the serious problems being faced by many citizens and companies when it comes to selling their homes emerged, operations involving properties that have been owned for more than five years have gained ground.

In fact, those operations went from representing barely 43.7% of all transactions in 2007 (in other words, less than half of the homes that were bought and sold during the last year of the boom were residences) to 80.7% last year, which the experts describe as a much more balanced figure. By contrast, those operations involving properties owned for less than five years went from accounting for 56.3% of all sales and purchases in 2007 to 19.3% last year.

Another significant finding relates to who participated in the majority of sales and purchases. In 2015, 87.3% of transactions were carried out by families, which represented the second consecutive increase since 2013. Companies, by contrast, continued to lose weight, accounting for just 12.7% of operations, compared with 15.3% in 2014 and 21.9% in 2013. Nevertheless, the figures are still a long way from the minimum of 5.1% recorded in 2007.

House purchases by foreigners accounted for 13.2% of the total and that figure has now been growing for seven years. In the Balearic Islands, that percentage amounted to 35.6%. Moreover, 5.2% of all operations completed by foreigners involved properties costing more than €500,000.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Opposition Parties Force Carmena To Reduce Business IBI

1 October 2015 – Expansión

The opposition parties in the Town Hall of Madrid (namely, the Partido Popular, PSOE and Ciudadanos) have put paid to the plans of the mayoress, Manuela Carmena, to increase the IBI rate for businesses and companies to 10%. In fact, they forced an agreement for it to be decreased by 2%. (Earlier in the week), all of the political parties, including Ahora Madrid, approved a 7% reduction in the residential IBI rate, and now, the opposition parties have forced a 2% decrease in the business rate.

The agreement by the plenary session represents an overall decrease of 100% for residential properties, as well as for the vast majority of non-residential properties. The 7% reduction in the property tax, will decrease the tax from its current rate of 0.548% to 0.51%.

Moreover, the majority – the result of the vote went against Ahora Madrid – approved a commitment to continue to reduce the rate of IBI for residential properties to 0.4%, the minimum rate set by law, “respecting the payment of expenses approved by the government, as well as sustainability”.

Meanwhile, the PP congratulated itself after some of the proposals it had presented to the plenary session were approved, including: zero taxes for entrepreneurs for the first two years (…).

In the same way, it indicated that large companies should not have to pay taxes for having “larger” buildings since “the rate of IBI is progressive and so it does not make sense for smaller clinics to pay a lower rate of IBI than public hospitals”.

Begoña Villacís, from Ciudadanos, said that the Town Hall should have a “single discourse” regarding the payment of debt, and the tourist tax. Moreover, she said that her party proposes a reduction in taxes and that the Town Hall should support the cadastral review plan.

The socialist Ransés Pérez Boga pointed out that on 22 July the plenary session approved a decrease in the rate of IBI, after it had been proposed by his party. He advocated a decrease in the rate of business IBI “to maintain the social progressive nature of the tax charge”. In his judgement, the reduction will allow companies to retain their employees.

Original story: Expansión (by Mercedes Serraller).

Translation: Carmel Drake