Tag: confidence

Residential Assets Displace Offices as the Leading Investment Choice for New Socimis

23 August 2018 – El Confidencial

The configuration of the investment map of the Socimis on the Alternative Investment Market (MAB) has changed drastically following the recent incorporation of the company owned by Santander, BBVA, Acciona and Merlin Properties. With a portfolio comprising 10,700 homes, Testa has placed the residential segment in first position on the investment ranking of new listed companies, relegating the office sector to third place.

In this way, of the 14 new joiners to the MAB so far this year, 30.8% have housing as the main or significant target of their investments, compared with 12.8% of the 20 new companies that made their MAB debuts in 2017. With this boost, offices, which had led the ranking until now, have been relegated to third place with 15%.

The weight of retail premises is also striking since they have increased from 6% to 23%, according to data from Armabex. Beyond specialisation, registered advisors also highlight the leading role of international investors, which account for 43% of the new listed companies.

“The rate of new joiners is expected to continue and this year, we are going to comfortably exceed the total figures recorded last year (44 companies), to more than 70”, said the President of Armabex, Antonio Fernández. Currently, there are 59 Socimis trading on the MAB, which account for 60% of the one hundred or so companies that participate in the Alternative Investment Market.

In terms of the upcoming debuts, the Socimi from Bankinter specialising in the hotel sector, Atom Hoteles, is planning its launch. Other examples include Haya Real Estate, Vía Célere and Azora, whose plans to debut on the stock market have been delayed due to the instability in the international financial markets, the political uncertainty in Spain and the evolution of the businesses themselves. The most recent to debut, at the beginning of August, was Mistral Patrimonio, whose activity focuses on rental homes.

“These companies have evolved towards greater specialisation. They started leading tertiary assets to move towards housing and, now, they are opening up to other segments such as hotels, residences, healthcare complexes, gas stations, etc.”, says Fernando Vives, Technical Director at Alia Tasaciones.

An annual valuation

To ensure transparency, the regulations require that these investment vehicles are listed on a regulated European market, be it the main stock market, the Euronext or the Alternative Investment Market, in a maximum period of two years following their constitution.

Nevertheless, the stock market listing is not the only method of transparency. The MAB has just introduced a new requirement that obliges companies to issue more reports. They will be obliged to undertake an annual valuation of their assets, beyond the initial assessment. (…). “The measure obliges Socimis to provide more information and to incur expenses, but it is very positive at the macroeconomic level and for investors”, says Antonio Fernández (…).

“The Socimis have brought confidence back to the real estate sector after the real estate bubble burst. They are here to stay, taking advantage of the upwards cycle and they will continue to activate the real estate market, above all for tertiary use until at least the end of the cycle (…)”, says Vives.

Original story: El Confidencial (by E. H.)

Translation: Carmel Drake

Quabit Conducts a €63M Capital Increase

18 May 2018 – Expansión

Quabit has completed, with an over-subscription, the €63 million capital increase through which it plans to raise funds to execute its Business Plan for 2022. The new shares are expected to start trading on 31 May.

The property developer received subscription orders for €62 million, more than 98% of the total, during the preferential subscription period. Moreover, during the period for the assignation of additional shares, requests were made for €53 million, which will be limited to just over €1 million on a pro-rata basis.

The property developer, which will increase its share capital by issuing 7 new shares for every 22 existing shares, has set the final subscription price at €1.80. The company’s shares closed trading yesterday at €2.095, 0.96% higher. “The excellent result confirms the confidence that the markets have in Quabit and is a resounding endorsement of our growth strategy”, said Félix Abánades, Chairman of Quabit (pictured above).

Quabit owns a portfolio of land spanning more than 1 million m2 for the construction of around 9,000 homes.

Original story: Expansión (by R. A.)

Translation: Carmel Drake

BBVA Research: Madrid & Balearics Led Spain’s House Price Rises in 2017

6 March 2018 – Expansión

House sales data for 2017 and the ongoing increases in house prices augur a year of consolidation for the real estate market in 2018, according to BBVA Research, which published its Real Estate Observatory report yesterday.

Nevertheless, this trend is happening with geographical variations. Madrid and the Balearic Islands are leading the price rises, with increases of 6.9% and 6.5%, respectively, to €2,355/m2 in the case of Madrid and €2,205/m2 in the case of the Balearic market. Those increases amounted to more than double the national average, of 3.1%, with the average price per square metre rising to €1,559/m2.

In 2017, Spain surpassed the symbolic barrier of 500,000 homes sold. Specifically, the year ended with 532,726 operations, according to data from the National Council of Notaries. That increase, of 15.6%, is even greater than the growth recorded in 2016 (14%) and is supported by: the confidence of households in the Spanish economy; the increase in rents thanks to the growth in employment; and the improvement in financing conditions.

The improvement in financing conditions is reflected in data for January when new loans for the acquisition of homes soared by 19.4%. “Thus, the market is expected to continue to perform positively over the next few months”, said the Research Department at BBVA.

But the market is still evolving at different speeds, depending on the autonomous region. In fact, only four regions have prices per square metre that exceed the national average. Besides Madrid and the Balearic Islands,  they are País Vasco, which has the most expensive average house price per square metre in Spain, exceeding even Madrid (€2,387/m2, up by 1.3%) and Cataluña (€1,892/m2), which occupies fourth place, after recording the third highest rise.

The increase in Cataluña was higher than the average, but “it was less intense than in the third quarter of 2017”, said BBVA Research. That circumstance coincides with the secessionist crisis, which has also led to a paralysis in terms of investment and a decrease in the number of tourist visits.

On the other hand, houses got cheaper during the last quarter of 2017 in La Rioja (-1.8%), Castilla y León (-1%), Castilla-La Mancha (-0.8%), Galicia (-0.4%) and Aragón (-0.1%). In some of those autonomous regions, the lowering of house prices may be influenced by the phenomenon of depopulation and the rising demand in large capitals and coastal areas.

Following an 11.6% decrease in the number of permits approved in November, the granting of permits to start new homes performed positively in December, with an increase of 5%, to 6,096 permits.

This increase favours the evolution of the real estate market in a scenario in which the large cities are facing demand that exceeds supply and there is a limitation on land development. In 2017, the number of new home permits amounted to 80,786, which represented an increase of 26.2% compared to 2016.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Why Are So Few New Homes Being Built In Spain?

20 October 2017 – Invertia

The construction of new homes is recovering very slowly and proof of that are the 65,000 new homes that were started in 2016; but whilst that figure exceeds the levels seen during the first few years of the crisis, it is still a long way below the 700,000-800,000 homes that were started each year during the real estate boom, which saw builders start work on 1,000,000 units at its peak. The question now is why are so few residential developments being started in Spain?

Paloma Taltavull gives some clues as to why so few homes are being built in her article “The housing sector: now and in the future”, published in the Economic Information Notebooks by the Foundation for Savings Banks, Funcas. In it, she analyses the current housing situation, paying special attention to prices and explaining the reasons why rental prices are growing significantly, even though house ownership prices are not. Ultimately, she concludes that “an increase in the supply of rental homes, or owned homes, is the element that could eliminate the tension in the residential markets in Spain”.

Taltavull, Professor of Applied Economics at the University of Alicante, considers that at the moment, sufficient demand exists to start building 200,000  new homes. She thinks that “the absence of sufficient property developers is slowing down the processes to build new homes, despite the recovery in demand”, given that “the sector suffered badly during the crisis, with a high proportion of construction and property developer companies being destroyed”.

“One of the effects of the crisis that still hasn’t been resolved is the destruction of the production fabric, which comprised a high percentage of small- and medium-sized companies, which gave the market a great deal of flexibility”, explains Taltavull (…).

The Funcas collaborator points out that, currently, there is an insufficient network of house builders because they have disappeared, stressing that the small property developers that remain have not yet recovered their confidence, whilst the medium-sized and large companies do not have the capacity to construct very much.

The professor also highlights that “the price incentive is not giving a strong enough push to the construction sector”, given that although “there is surplus demand”, “credit is not flowing” because of the labour market and the decrease in wages, which is a logical reaction by the financial institutions. Paloma Taltavull points out that this problem is particularly acute amongst young people, who “have been mistreated in terms of salaries for a decade”, given that they are the largest cohort demanding homes, but they do not have the ability to pay and the banks will not grant them loans”.

The expert warns that a lack of new housing in the ownership market and an insufficient supply in the rental sector is driving the significant rise in rental prices that are currently being recorded. She considers that a “mix” between the construction of new homes and other measures to promote rental at a break-even point would be ideal. She adds that the Administrations have an important role to play, given that public housing policy is “absolutely key both for revitalising developments in areas that need them and for avoiding poverty”.

The professor thinks that the public initiative could push the private one, especially in the construction of the type of housing that people need, given that they would be adapted to their ability to pay (…).

Original story: Invertia

Translation: Carmel Drake

Solvia: 71% Of Spaniards Think Now Is A “Good Time” To Buy A Home

19 April 2017 – El Mundo

71% of Spaniards think that now is a “good time” to buy a home, according to a study conducted by Solvia, a subsidiary of Banco Sabadell, and the research institute Kantar TNS, which have prepared a real estate confidence index to quantify the perception and expectations of Spaniards regarding buying a home.

According to the results of the index, which ranges between values of zero (for the most unfavourable perceptions) to 200 (for the most favourable), the situation in terms of real estate confidence amongst Spaniards is “positive”, since the index value currently stands at 112. The index, which has been prepared on the basis of interviews with 1,000 people, reveals that 71% of those surveyed believe that, in general, now is a “good time” to buy a home. The report’s authors highlight the following main arguments as justification for respondents’ answers: “the decrease in prices that the housing market has seen; the notion that buying is a good investment; and the fact that the market is currently offering some genuine opportunities”.

By contrast, the study adds that the interviewees’ perception changes when they are asked about their personal circumstances. In this sense, 61% of Spaniards consider that from their own individual perspective, now is a “bad time” to buy a home.

In this regard, employment conditions and the limited capacity to save, with the consequent difficulties involved in accessing financing, explain the negative perception held by Spaniards when it comes to acquiring a home now. Nevertheless, the people interviewed hope that, within two years, they will be in a better position financially to buy a home, thanks to improvements in their employment conditions.

In terms of the evolution of house prices over the last year, 35% of Spaniards think that prices have risen, compared with 43% who believe that house prices have remained stable and 22% who consider that they have decreased.

Finally, buying a home is the option that the majority of those interviewed (55% of the total) would recommend to family and friends thinking about their primary residence.

Original story: El Mundo

Translation: Carmel Drake

ST: House Prices Rose By 2.5% In 2016

4 April 2017 – El Mundo

The average price of housing in Spain experienced an average annual increase of 2.5%, to reach €1,469/m2, according to the Real Estate Sector Trend Report from ST Sociedad de Tasación. In the second half of 2016 alone, house prices rose by 1.5%. Despite this YoY increase, the average salary required to acquire a home remained stable at 7.4 years.

According to Juan Fernández-Aceytuno, Director General of the appraisal company, “the positive variation experienced over the last 18 months confirms the recovery that we have been predicting since 2015”. “Nevertheless”, he clarified, “the average behaviour of prices is not the same across every province”.

In this way, by province, Barcelona experienced an annual increase of 5.5%, followed by the Balearic Islands, with an increase of 4.6% and Madrid, 4.4%. By contrast, Teruel with a reduction of -2.1% and Álava with a fall of -1.6% experienced the highest price decreases, followed by Pontevedra (-1.4%), Zamora (-1.3%) and Burgos (-1.1%).

By autonomous region, the price of new and second-hand homes are still decreasing in some areas, led by Asturias with a decrease of -0.5%, followed by La Rioja (-0.4%) and Castilla y León (-0.3%). Meanwhile, Cataluña (4.8%), the Balearic Islands (4.6%), Madrid (4.4%) and Melilla (3.3%) recorded the highest annual increases.

7.4 years of salary to buy a home

ST Sociedad de Tasación’s Real Estate Effort Index, which defines the number of years of full pay that an average citizen needs to buy an average home, did not change, remaining stable at 7.4 years in the first quarter of 2017.

The Balearic Islands continued to be the region where it takes the longest to acquire a home (14.4 years), although that figure has decreased with respect to 2016. By contrast, La Rioja is the region where it is easiest to access housing (4.9 years), followed by Murcia, where it takes 5.1 years of full pay to buy a home.

Meanwhile, the Accessibility Index prepared by ST Sociedad de Tasación reflects a slight improvement at the state level for the third consecutive quarter. Based on a benchmark of 100 points for those cases in which the capacity for indebtedness is sufficient, the average level in Spain in the first quarter of 2017 amounted to 107 points, three points above the level in the previous quarter. The state average remained above the minimum salary level for the acquisition of an average home for the fifth consecutive quarter.

By autonomous region, Madrid, Cataluña and the Balearic Islands continued to register insufficient levels for the acquisition of a home, with Cantabria moving into positive territory.

Confidence increases in the real estate sector

ST Sociedad de Tasación’s Real Estate Confidence Index continued its upward trend during the first quarter of 2017, registering an increase of 0.9 points, to reach 55.4 points, out of a total of 100. The index hit its lowest ever value in December 2012, at 30.6 points.

By autonomous region, La Rioja exceeds sixty points, with 60.2, followed by Madrid (58.4) and the Balearic Islands (57.6), which reported the highest confidence indices. By contrast, Castilla y León (50.7), País Vasco (51) and Murcia (51.2) recorded the lowest levels.

Original story: El Mundo

Translation: Carmel Drake

Oak Hill Grants €66M Loan To Construction Firm Murias

6 June 2016 – Expansión

The US fund Oak Hill Advisors has granted a direct loan (direct lending) to the Basque construction company Murias. The operation is significant, not only because it is the largest financing agreement of its type to be granted in Spain during the year to date, but also because it shows that major international investors on the other side of the Atlantic are regaining confidence in a sector that had been completely stigmatised, namely construction.

Murias Grupo Empresarial, founded in 1973, comprises 25 companies. As well as participating in several public and private construction projects, such as the construction of the new San Mamés football stadium (in Bilbao), the Group has also built several retail parks: the Gorbeia in Vitoria (pictured above); the Abadía in Tolego; Las Cañas in Viana (Navarra) and the Niessen in Rentería (Guipúzcoa). According to market sources, the €66 million that the Group has just borrowed will be used to develop and then manage a shopping centre in Melilla.

The numbers

The Group recorded revenues of €71.8 million in 2013, according to its most recent set of consolidated annual accounts filed in the commercial registry. Its attributable net profit amounted to €1.2 million and it employed a workforce of 296.

The company has been advised by N+1 Debt Capital markets, a division of the boutique Spanish consultancy firm N+1, regarding the structuring and placing of this operation. The loan has been structured through a single-tranche loan, with a single international investor and a term of 5 years. The funds afford the company complete flexibility to undertake the project to construct a shopping centre in Melilla, as well as to finance new projects in the new future.

The investor, Oak Hill, is a giant in the world of investment, with assets under management amounting to more than $27,000 million (equivalent to around €24,200 million). The fund participated alongside other investors in a recent injection of liquidity into Abengoa, as part of its debt restructuring process. In fact, it may take control of the Spanish company. On the other hand, Oak Hill injected €100 million into the car park subsidiary of Isolux. In exchange, Isolux granted Oak Hill an option to acquire the car park subsidiary from 2019 onwards.

Original story: Expansión (by D.B, I.A and M.F.)

Translation: Carmel Drake

Bankinter: 53,000 More Homes Will Be Sold In 2016

22 February 2016 – Expansión

The recovery of the real estate market is growing from strength to strength and according to Bankinter, in its latest report about the sector, around 420,000 homes will be sold this year, in other words, 53,000 more than in 2015. But, what is driving this growth spurt?

The entity’s analysis predicts that the upswing will continue into 2017, when it forecasts that 450,000 operations will be closed.

Above all, demand for homes is going to be driven by the “improvement in employment, reduced financing costs and the increasing attractiveness of homes as investments”, says the report.

Moreover, “the combination of higher demand and a limited supply in the major cities will result in an increase in average prices in 2016 and 2017 of almost 3% p.a., a figure that could reach 5% in prime areas”, predict the experts at Bankinter.

A new feature of the real estate sector compared with 2015, will be the increase in number of new homes, in light of the upturn in new housing permits registered last year”. However, the analysis warns that this improvement will only happen “provided the political context does not result in a loss of confidence”.

Below, we detail the factors that are expected to drive house sales this year:

1 – Economic growth and an improvement in employment

Bankinter highlights that the Spanish economy is going to grow by more than 2.5% in 2016, a rate that will facilitate the continuation of the positive trend in the labour market over the next few quarters. And it adds that “the increase in the number of people in work (by 525,000, of whom 171,000 have permanent contracts) may represent a catalyst in terms of the demand for housing”.

2 – Low financing costs

Another factor…is the low rates of interest, a scenario that the bank expects to continue until the end of 2017. “12-month Euribor will remain close to 0% in 2016 and the conditions for accessing credit will continue to improve”, according to its forecasts. (…).

3 – Favourable yields compared with alternative investments

The report argues that the gross yield from housing rentals compares favourably to other investment alternatives, such as long-term deposits and fixed income securities, which are currently offering yields of around 0%. (…) …. meanwhile, “gross yields on residential investments may reach 4.0%…”.

4 – “Cultural” trend towards buying homes

The culture of ownership versus renting has survived the crisis in Spain. In fact, despite the fact that demand and the possibilities for accessing housing reduced significantly during the recession, “the percentage of rental homes still remains low (compared with the European average) and has barely increased in recent years (the current rate stands at 21%, up from 17.2% in 2011)”, explains the document. (…).

5– Market outlook

Bankinter also highlights the positive influence of the strong outlook for the market. Specifically, the entity forecasts that housing sales will grow by 6.5% this year and that the favourable conditions in the real estate market will continue into 2017. (…).

No chance of a return to the boom figures

Nevertheless, Bankinter also stresses that, despite the good times being enjoyed by the property sector at the moment, the recovery “does not represent a return, in any way, to the levels of demand seen during the real estate boom years”. The study points to various factors to explain this, such as the declining population (due to the negative migration balance), the awareness that property prices may indeed decrease and, in particular, the fact that the unemployment rate will remain above 17.5% until the end of 2017. These aspects “represent structural changes in the market, which mean that levels of demand exceeding 900,000 homes per year are no longer attainable”.

Original story: Expansión (by B. Amigot)

Translation: Carmel Drake

Home Sales Will Reach 420,000 Units In 2016

10 February 2016 – El Mundo

Housing demand will continue to grow in Spain to reach 420,000 properties sold in 2016 and 450,000 in 2017, according to a report of Bankinter, which indicates that nonetheless the price increase will not exceed 3% in average or 5% in the case of the best locations.

These transaction figures mean an increase by around 20% with respect to the 354.100 homes sold along 2015, according to National Statistics Institute (INE) data In addition, the report points out that second-hand homes will continue to be the dominant alternative in a scenario of economic recovery, with over 85% of all transactions in the coming quarters.

As properties which have started to be built from the second half of 2015 are put for sale, says Bankinter, new home sales should increase, reaching rates above 15%,so that these transactions could reach 60,000 or 70,000 units per year.

The financial institution says that this increase in demand is explained by the predictable improvement in employment, low interest rates and higher attractiveness of housing as investment.

On the price side, the report notes that the residential market is heterogeneous, but it will increase in average, driven by the lack of supply in places like Madrid or Barcelona. In this regard, it also notes that the first increases in land value could begin to affect the final price of housing.

However, Bankinter states that price increases will not be “substantial”, partly because the purchases will come in part from the process of marketing of homes awarded to banks, which have heavily discounted prices.

On the other hand, as a result of these market developments, the ‘stock’ of unsold homes could be reach levels below 500,000 homes in 2016

New housing will advance if there is political stability

At the same time, Bankinter points out that the improved outlook of the sector will extend to the promotion of new housing, which “will experience a new awakening in 2016 under the increase of work certifications in 2015, provided the political context does not result in a loss of confidence.”

“Promoter activity is currently going through a turning point and it will emerge over the next two years “, the financial institution ends with.

Recovery is already being talked of

For all those reasons, Bankinter says that “the consolidation of the recovery cycle in the residential property sector it is a reality “. It also notes that the commercial sector is already in a “clear upturn”.

Thus, the report indicates that the commercial sector will strengthen in 2016 and 2017 the positive trend of income, occupancy rates and revaluation improvement of the assets.

Again, Bankinter warns that the investment boom experienced in 2015 “will be slowed down by the lower number of large transactions and a situation of uncertainty that can postpone or cancel the launch of new projects.

Original story: El Mundo

Translation: Aura Ree

ACI: RE Inv’t Will Exceed €13,000M In 2015

12 November 2015 – Expansión

The Association of Real Estate Consultants (‘Asociación de Consulturas Inmobiliarias’ or ACI) forecasts that total investment in 2015 will fall below the maximum levels achieved in 2007.

The real estate sector will close 2015 with investment amounting to almost €13,000 million, which represents an increase of around 6-7% with respect to 2014, but still falls short of the maximums recorded in 2007, according to forecasts from the Association of Real Estate Consultants.

In fact, ACI expects that real estate investment will increase again in 2016, as a result of the continuing capital flows. According to the President of ACI, Ricardo Martí-Fluxá, investment in the sector during the first nine months of the year amounted to €10,800 million, which exceeds the total amount spent in 2014 as a whole.

In this sense, ACI considers that the real estate sector is going through a period of boom and consolidation, supported by, amongst other factors: the increase in business confidence, the creation of jobs, financing, low rates of interest and liquidity in the market, mainly thanks to foreign investors.

House prices in Madrid will increase by 3%

In this context, the association forecasts that house prices in the municipality of Madrid will grow by almost 3% by the end of 2015, an estimate that Martí-Fluxá acknowledges “falls short”, given that prices are likely to rise again between 2015 and 2016.

ACI also predicts an increase in the number of transactions in 2016, given the scarce supply of quality properties and an improvement in project financing in the future.

Within the residential segment, 128 property developments (7,000 m2) have been sold in the city of Madrid and prices have varied the most in the districts of Retiro and Tetuán since 2014, with increases of more than 4%. At the opposite end of the spectrum, Moncloa and Chamartín have recorded decreases of 3% and 2%, respectively.

When asked about the situation in Cataluña, the association says that international investors are not really worried about the political uncertainty and although some hotel projects in Barcelona have been put on hold, the ACI members (which include Aguirre Newman, CBRE, JLL, Knight Frank, BNP Paribas Real Estate, Cushman & Wakefield and Savills) are not overly concerned.

Offices and shopping centres

By segment, ACI expects average office rental costs in prime locations to increase by 6.5% between 2015 and 2019. It also expects the shortage of prime products to continue next year and for demand to increase, driven by growth in PIB and employment. In fact, the quarterly volume of new office rentals has exceeded 111,500 m2 in Madrid for the first time since 2008 and 315,000 m2 in Barcelona.

In terms of shopping centres, supply remains very limited and ACI expects 630,000 m2 of new gross leasable space to come onto the market between 2015 and 2016. In 2016, investors’ interest in the shopping centre market will remain high and institutional investors will continue to participate. Socimis and new investment funds are expected to be very active, as are “family offices”, with the notable presence of Brazilian and Venezuelan families. (…).

Original story: Expansión

Translation: Carmel Drake