Ministry of Development: 100,733 New Build Permits were Granted in 2018

28 February 2019 – Idealista

In 2018, 100,722 building permits were granted to construct new homes, 25% more than a year earlier; a figure not seen since 2009, when 110,849 permits were granted, according to data from the Ministry of Development. Of the total figure, 79,453 were granted to build blocks of flats and 21,254 to build houses.

In this way, building permits have now recorded five consecutive years of increases. In 2013, they hit a historical low (34,288 units), a figure that represented a decline of 96% from the peak year of 2006 when 865,561 permits were granted.

Despite the good results in 2018, the construction sector considers that a healthy market is one that is capable of generating around 150,000 new work permits per year.

Why is it so hard to build 150,000 homes per year?

Daniel Cuervo, Director at Asprima, points to several factors:

– Building permits take a long time to be granted (…). In general, Town Halls take 14 months to grant a licence, on average (…).

– Financing has returned to the real estate sector, but it is not immediate (…).

– Urban planning in Spain is paralysed due to the high level of legal uncertainty (…).

Meanwhile, Daniel del Pozo, Director at Idealista/News, provides some additional explanations:

– Lack of awareness about how the market works and of the real demand by the Public Administration (…).

– The main land portfolios are owned by the banks, Sareb and the funds (…) which are all waiting for prices to rise before releasing the most sought-after plots.

– The political uncertainty, the threats of interventionalism and/or changes in regulation in the real estate market also play their role (…).

Original story: Idealista 

Translation: Carmel Drake

Madrid Accounts For 70% Of All New Housing Permits

10 October 2016 – Inmodiario

The Community of Madrid has been boasting to property developers that it represents the real driver of the growth currently being seen in the real estate sector in Spain.

In this way, at the opening of the National Real Estate Conference, the Director of Transport, Housing and Infrastructure, Pedro Rollán, commented on the statistics and highlighted that licences for new residential construction projects in the region increased by 66% during the first five months of 2016, well above the national average increase of 27%.

During his presentation at the conference, organised by the Association of Property Developers and Construction Companies in Spain (APCE), under the title “From recovery to innovation”, Rollán commented that real estate is a strategic sector, whose contribution to GDP is essential for economic growth.

And, to this end, he stated that the sector’s reactivation is necessary to consolidate and strengthen the (overall) recovery. He emphasised the importance of the need to continue working and adapting the (RE) sector to new times, and of innovating to achieve the most accessible, comfortable and least contaminated spaces.

In this sense, the regional Government is managing aid, which will serve to encourage the renovation of homes and the regeneration and refurbishment of urban spaces, thanks to the agreement signed with the Ministry of Development under the framework of the State Housing Plan.

Thus, this year, €14.4 million will be allocated to subsidies for building renovations and €29.8 million will be spent on aid for urban regeneration and renovation.

In the same way, the regional Government is working to create a Single Integrated Assessment Report Register for buildings in the Community of Madrid, which will contain all of the assessment reports relating to more than 40,000 buildings per year.

This register will enable the data obtained to be used to identify weaknesses and deficiencies in the building stock and will help to improve their quality and sustainability, as well as to obtain extensive information to allow policies to be directed appropriately in terms of architecture and housing. All types of buildings may be registered, regardless of their purpose (use) along with the mandatory registration of all buildings that are more than 30 years old.

Moreover, assessments of the degree of conservation of buildings (ITE) are going to be unified into a single document to ensure the safety of all of the buildings in the region; their basic conditions in terms of universal access, to encourage reasonable modifications in this regard; and energy efficiency certifications (CEE) to help achieve the commitment made in terms of energy savings and building sustainability.

Original story: Inmodiario

Translation: Carmel Drake

Property Developers Search For Buildings To Refurbish

3 May 2016 – Cinco Días

For the third year in a row, 2015 closed with an increase in the number of building permits, although the level of housing construction is still a long way below that recorded at the height of the boom. So great is demand in places like Madrid that investors/property developers are now allocating almost one out of every five euros to the acquisition of buildings in the centre of the capital for renovation and whereby bringing more new homes onto the market in prime areas.

The slight slowdown in construction detected by the Bank of Spain during the first quarter of the year does not seem to be affect real estate activity that much, but does affect other sub-sectors. In fact, the main market indicators show how the pull of demand for housing is continuing to strengthen and how that has driven the launch of new developments. Above all in places where most of the stock has now been absorbed and there is none left, or the surplus that remains unsold does not match what buyers are looking for.

A recent study compiled by the consultancy firm Knight Frank also shows how the recovery in housing has reduced auto-promotion, or the construction of homes by cooperatives, in favour of traditional property developers by 8%, and the banks have played an important role in the phenomenon as they have started to finance the most solvent developers with the most robust projects once again.

Nevertheless, although it might seem like the real estate business has returned to the high road once again, the fact is that the recovery has only fully arrived in certain, very specific enclaves and one of them is Madrid, and it has done so in a nuanced way and at different speeds.

“Madrid is the most sought-after area for investors in search of residential products, specifically, it receives 19% of all real estate investment. Andalucía, Valencia and Cataluña are the following most popular autonomous regions, accounting for 16%, 15% and 14% of total investment, respectively” says the report. (…).

And, in the meantime, the appetite to buy homes in the prime areas of the major cities is such that investors and property developers are starting to opt mainly to buy buildings that need refurbishing in the centre of cities, to then bring new homes onto the market that better suit the demands of buyers. In 2015, investment in entire buildings accounted for 19% of the total, whilst land purchases represented 81%.

Type of home

(…). In general, the typical buyer profile nowadays is a family with medium to medium-high purchasing power, looking for a home to reposition or improve the one they currently own “in locations with services, transport, urbanisations with common areas and quality in the design of the materials and finishes”. Thus, the most sought-after product is now a three-bedroom house, with an average price of between €230,000 and €450,000.

Does the market in Madrid offer that product in sufficient quantity so as to not generate perverse tensions in terms of prices? The conclusion of the study by the aforementioned consultancy firm is….that the supply is still insufficient. The municipality of Madrid has around 3,000 new homes registered as available. Only 30% of those are located inside the M-30, where the scarcity of land is most acute and prices are highest. 20% are located in the area between the two main ring roads (the M-30 and the M-40) and the remaining 50% are in the PAUs and new developments, some of which are located beyond the M-40. Demand for housing is distributed in a relatively similar way, which according to Knight Frank avoids major imbalances between supply and demand (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake