Spain’s Property Developers Glimpse the First Signs of a Moderation in Prices

29 May 2019 – Expansión

Yesterday, several of the largest property developers in Spain met for a Medcap roundtable event moderated by Deloitte to discuss the outlook for the residential market.

Specifically, representatives from Metrovacesa, Aedas, Quabit, Insur and Lar participated in the discussions, during which they observed that house prices in Spain are starting to moderate in some of the more mature markets, although they acknowledged that there are still many secondary cities where the new (growth) cycle is just beginning.

In this context, the representatives identified a number of focuses and challenges facing the sector, namely:

Licences: All of the property developers are pushing for great agility from the public administrations when it comes to the granting of construction permits.

Construction: The labour shortage in the construction sector is pushing up prices and leading to delays in project finishes.

Concentration: Property developers are larger and more professionalised now than before the crisis; they require critical mass to be resilient to real estate cycles.

Industrialisation: Prefabricated homes allow construction periods to be shortened and for greater control over the processes.

Access: Young people are finding it increasingly difficult to afford to buy a home.

Overall, the experts consider that the residential sector is still immersed in the early stages of the new cycle, but only time will tell whether they are right.

Original story: Expansión (by Rebeca Arroyo)

Translation/Summary: Carmel Drake

Málaga has 3 Macro-Projects in the Pipeline for 2030

20 March 2019 – Eje Prime

Málaga is giving itself a makeover. It wants to be known as a smart city or the museum city, rather than the tourism hub for the Costa del Sol. To this end, the Town hall of Málaga is managing more than thirty projects to be launched over the next ten years. And the outlook is bright. The city offers high returns both on the high street, as well as in shopping centres and prime offices.

In this context, the Mediterranean city is working on three major projects. The first is a special plan for the port, which covers 1 million m2 of space, where a 37-storey hotel, three office buildings, a customs building and a large auditorium are going to be built if all of the relevant approvals are granted.

The second is the Los Martiricos development, a residential project on a site spanning 67,000 m2, where the plan is to build 220 social housing properties and 450 private homes. Offices and a commercial area will also be constructed if the corresponding building permits are approved.

The third major project is planned for the site of the former Repsol plant, where the Town Hall of Málaga wants to create an office area. Alternatively, it could build four blocks of social housing properties on that site.

The Andalucían city has many other projects underway. Most respond to the growth in residential demand, especially in the market for alternative assets, such as halls of residence for students and nursing homes for the elderly. But overall the real estate sector is booming. In fact, construction permits rose by 40% in 2018.

Original story: Eje Prime (by Marta Casado Pla)

Translation/Summary: Carmel Drake

Caledonian Plans to Double its Investments with New Projects Worth €150M

10 March 2019 – Expansión

The property developer Caledonian is planning to carry out projects worth more than €150 million in 2019, an investment that will double the amount of the projects announced by the firm to date.

The President of the company, Enrique López Granados (pictured above), highlighted that his firm’s most recent projects include the renovation of a complex of properties that are going to be dedicated to housing and which are located on Calle Javier Ferrero in Madrid, in which his firm has invested between €80 million and €90 million.

The company has also applied for a licence to build a luxury office building in the north of Madrid, next to the CNI’s headquarters, which will involve an investment of €20 million.

Meanwhile, the firm is currently working on a luxury development comprising 16 homes in Aravaca (Madrid), as well as on some smaller projects, for example, in Ibiza.

Despite Caledonian’s commitment to Spain, López Granados expressed concern regarding the impact of the political uncertainty in the country and criticised Town Halls for taking too long to process construction permits.

Original story: Expansión 

Translation/Summary: Carmel Drake

BBVA Research: Building Permits for New Homes Double in 3 Years

12 November 2018 – Cinco Días

The recovery is being boosted by construction activity in the real estate sector. 2018 is going to close with the granting of more than 100,000 permits for the construction of new homes, which represents twice the number of permits granted in 2015, according to estimates from BBVA Research. During that year, activity in the sector started to recover, after years in free fall. The real estate construction segment is whereby returning to six-digit figures, something that has not been seen for eight years.

Until August, the most recent data available from the Ministry of Development, just over 68,000 permits had been granted, up by 26% compared to the same period last year. The data from that month reflects that it was the best August on record since 2008.

The sector may be recovering but it is still light years away from the property fever experienced a decade ago. To give some perspective, the 100,000 new build permits that are going to be granted this year are eight times fewer than the figure recorded in 2006, when the highest ever number of permits was issued (865,561). In April of that year alone, 126,753 permits were granted, a figure that comfortably exceeded the number expected to be issued during 2018 as a whole.

The exact opposite was seen in 2013, when the number of permits hit rock bottom: during that year, just 34,288 permits were granted, the absolute minimum in the whole historical series (whose data goes back to 1992). The following year, there was a slight increase in permits (of 2%) but it was not really until 2015 when the figures started to recover with any strength, up by 43% that year. Since then, the number of construction permits granted has followed a stable growth path, with YoY increases of around 25%.

According to the research from BBVA, the increase in permits forms part of the favourable context in which the market is developing. During the third quarter of the year, employment in the construction sector grew by 1.3%, loans for home purchases increased by 16.8% YoY and house sales in August were almost 10% higher than during the same month last year.

A large part of the still moderate and stepped growth in terms of construction permits is due to the fact that the number of leftover homes constructed during the bubble, which still have not been sold, is still “high and disproportionate for the levels of demand in six out of every ten provinces”. There are 1.2 million leftover homes in total, according to the statistical yearbook for the real estate market compiled by the consultancy firm Acuña & Asociados.

Nevertheless, that stock of homes is very dispersed throughout the country: the consultancy firm calculates that one third of those homes are located in areas with zero or very low demand, whereas in the main cities, new build homes are needed, something that is being confirmed by the significant increases in house prices.

Madrid is the city that accounts for the most building permits (both for new construction and renovation or refurbishment). So far this year, work has started to build or renovate 7,000 homes in the Spanish capital. It is followed, at a distance, by Barcelona, with just over 2,200 homes. Next in the ranking are Valencia (1,640), Málaga (1,400), Zaragoza (1,060), and Sevilla ( 830). Those six cities – which account for almost 20% of the population – account for 17% of all of the permits granted so far this year (…).

Original story: Cinco Días

Translation: Carmel Drake

Permits for New Construction Grow by 8% in January

28 March 2018

During the first month of the year, 6,694 applications were registered for the construction of new homes, the highest figure for January since 2011.

The issuance of construction permits is continuing to grow robustly in Spain. In January, 6,694 applications were submitted for the construction of new homes, an annual increase of 7.3%. The Ministry of Development reported that it was the highest figure for the month of January in the last seven years.

The pace of new applications is thus continuing the trend seen over recent years. In 2017, Spain recorded its fourth year of growth, with a year-on-year increase of 26.1% in the number of submitted applications to 80,786.

When broken down by the type of applications, there 5,054 requests for flats within apartment blocks, accounting for 75.5% of the total number of authorisations. Also, permits for single-family homes grew by 8.25% in January, compared to the same month in 2017, to 1,640 applications.

Another trend that is being seen in the Spanish residential market is seeing a marked growth in housing rehabilitation. 2,175 visas were requested in January for home extensions and reform, an increase of 9.7% over the same month last year.

Original Story: EjePrime

Translation: Richard Turner

 

Ministry of Development: Building Permits up by 26% in YTD Sept

30 November 2017 – Eje Prime

Permits for the construction of new homes are soaring. The number of permits granted by the Colleges of Technical Architects for the construction of homes amounted to 60,695 during the first nine months of the year, up by 26.8% compared to the same period in 2016, according to data from the Ministry of Development.

In September alone, the number of permits amounted to 6,718, up by 35.2% compared to the 4,968 granted during the ninth month of last year. If we also include the permits granted for extensions, renovations and restorations, the total figure between January and September amounts to 82,262, up by 19.5% compared to a year earlier.

In September, the total number of permits amounted to 9,038 compared to the 7,378 granted during the same month last year, according to the same source.

Original story: Eje Prime

Translation: Carmel Drake

New Permits for Construction Up by 26% to August

31 October 2017

New approvals reach 53,977 units and point to three consecutive years of growth

New construction permits authorised for residential use in Spain stood at 53,977 units in the first eight months of 2017, an increase of 26% compared to the same period in 2016 period (42,869 units). Thus, the increase in permits to build homes maintain its upwards trend in 2017, consolidating three consecutive years of growth, according to data from the Ministry of Development.

Of the total number of approvals granted up to August 2017, 40,773 were for apartment blocks (with a year-on-year rise of 28.4%), and 13,178 were for single-family homes, an annual increase of 18.6%. In addition, 26 permits were requested for other types of buildings not intended for family homes.

In 2016, approvals increased by 28.9% after rising by 42.5% in 2015, consolidating the recovery that began in 2014, a year in which brought seven consecutive years of negative growth to an end with an increase of 1.7%. The real estate market indicator reached a historic low in 2013 (34,288 units), down from the maximum reached in 2006 (865,561 permits), a collapse of 96%.

Original Story: El País – Agência Servimedia

Translation: Richard Turner

Ministry Of Development: Finished Homes Fell By 4.9% In Jan

30 April 2017 – El Mundo

In January 2017, construction of 2,973 homes was completed in Spain, which represented a decrease of 4.9% compared to the same month in 2016, according to data from the Ministry of Development.

In this way, the number of finished homes in Spain began 2017 on a negative note, after recording nine consecutive years of decreases in 2016. Since the peak of 2007 (641,419 homes), the figure decreased by 94% with respect to the end of 2016.

Of all of the homes completed in January 2017, 99% (2,945) corresponded to private developments and 1% (28) to Public Administrations.

In comparison with the figures recorded in the same month in 2016, the construction of homes by private developers decreased by 5.3%, whilst the number increased in the case of Administrations from 16 to 28 constructed homes.

In the private segment, 1,918 homes were constructed by companies, representing a YoY increase of 5.3%; 956 were built by individuals and communities of owners (-21.2%) and 26 by cooperatives (-59.4%). In addition, there were 45 construction completion visas relating to another type of private developer.

Meanwhile, the liquidation value of the material execution of the construction work rose by 27.86% in January, to €444.7 million.

Renovations rose by 4.7%.

Permits to renovate or restore homes in Spain amounted to 1,785 units in Spain in January 2017, which represented an increase of 4.7% with respect to the same month in 2016 (1,705 permits).

In this way, permits to renovate homes began 2017 on a positive note, after recording two consecutive years of increases, although the rise in 2016 (2.7%) was more moderate than in 2015 (13.4%).

In 2014, permits to renovate homes recorded four consecutive years of decreases and dipped to a minimum in the historical series prepared by the Ministry of Development, but that trend was broken in 2015, and the new trend was consolidated in 2016 and maintained at the beginning of 2017.

Meanwhile, permits to expand properties doubled in January, from 89 during the first month of 2016 to 197 in 2017.

Original story: El Mundo

Translation: Carmel Drake

Aguirre Newman: RE Inv’t In Barcelona Amounts To €2,500M In 2016

19 December 2016 – La Vanguardia

The real estate market in Barcelona is on course to break records again this year. It is expected to end 2016 with total investment operations amounting to €2,500 million, compared with €1,978 million last year, according to data presented by the real estate consultant Aguirre Newman on Thursday.

2016 will also be a “historical” year for Spain as a whole, with investment figures once again exceeding the level recorded in 2007, the year before the outbreak of the crisis. Investment operations worth almost €14,000 million are forecast to be closed.

Cataluña accounts for 20% of Spain’s total investment in this sector, although that figure is set to increase to 25% in 2017, given the significant potential of Barcelona.

The Director General of Aguirre Newman in Barcelona, Anna Gener, explained that; demand in Barcelona is still very active; there is still a lack of available land for sale; international demand is very active; and the real estate market is regarded as an attractive sector for investment.

Of the total investment volume expected this year, €860 million correspond to offices, down by 2.8% compared to last year, given that 2015 was a year of “blossoming”, when several major corporate operations were recorded after years of crisis.

The residential market will reach €120 million this year, shopping centre investment will amount to €865 million, retail investment will reach €100 million and investment in the industrial sector will amount to €144.1 million, up by 61%, due to the scarcity of land.

Around 80% of the investment volume has been made by international buyers; and domestic investors “are back again” after years away, according to Hipólito Sánchez, Director of Investments.

57% of the investments were made by funds, 26% by Socimis, 10% by private equity firms, 3% by institutional investors and 2% by insurance companies.

The leasing of office space continues to be a very active market; the availability rate has been decreasing since 2012 and now stands at 9.9%.

Construction activity is continuing to recover, with a 40% increase in the number of new construction permits compared to 2016.

The average price of free (unsubsidised) housing increased by 9% in Barcelona this year and by 4.5% across Cataluña. There was also a great deal of interest in renovation projects and in changes of building use status towards high standing residential properties in the centre of Barcelona, where more than 60% of buyers are foreign. (…).

The retail sector has continued to receive interest from investment funds and private equity firms in the main areas of the centre of Barcelona.

La Diagonal has established itself as an area of expansion following its renovation, with a 30% increase in rental income in just two years and the opening of megastores by certain brands, such as Massimo Dutti, Zara, Uniqlo and H&M.

The most important operation in the shopping centre sector was the sale of Diagonal Mar to Deutsche Bank for €495 million.

Another sector that continued to attract investors was logistics, whose investment volume increased by 60% with respect to last year, due to the shortage of land. (…).

The hotel sector has also continued to perform very well, given that prices per room have increased, thanks in part to the fact that there are no new competitors.

The forecasts for 2017 indicate that the real estate sector will continue to attract international investors, demand will continue to be very active, and products will continue to be scarce, although prices are not predicted to rise by very much.

Original story: La Vanguardia

Translation: Carmel Drake

Boadilla del Monte Sees A Flurry Of House Construction & Price Rises

13 June 2016 – El Confidencial

It’s been just over six months since, in October 2015, the Community of Madrid approved the General Urban Plan for Boadilla del Monte. The decision by Cristina Cifuentes released all of the construction permits that had been pending approval and gave the green light, once again, to the sale of land in one of the richest municipalities in Spain. It also marked the end of the development plans designed by the former mayor of Boadilla, Arturo González Panero, “the Albondiguilla”, imputed for the Gürtel case and against whom the prosecutor has just ordered 40 years in prison.

Since that Wednesday in October (28 October 2015), Boadilla del Monte has been a genuine real estate hotbed. Land sales have multiplied and the cranes have arrived in abundance. Buyers’ appetites have been so great that off-plan sales are practically covered and the first price rises have started to be seen – in some cases, close to double digits – for the new projects that are coming onto the market.

“The stars have aligned positively in Boadilla del Monte. Land there had been consolidated and developed and the only outstanding item was the approval of the General Plan, which was delayed due to the General Election. Once that had been ratified and blessed by the Community of Madrid, the new developments had the legal security to start without any problems”, explained Luis Corral, CEO of Foro Consultores.

The expert also thinks that the appeal of Boadilla has benefitted from the paralysis that, by contrast, its neighbour Pozuelo de Alarcón is experiencing. There, the new areas of development are currently awaiting the approval of a series of municipal infrastructures, such as the famous rain water collector, which is essential to meet the needs of the new neighbours. The infrastructure requires an investment of almost €60 million – double the amount predicted in 2007 –the cooperative owners that bought the land have to cover around €30 million and the other owners of the land and the Town Hall have to cover the remaining €25 million.

“The suspension of the largest development in Pozuelo has meant that much of the demand with medium-high purchasing power is moving to neighbouring towns such as Majadahonda and Boadilla del Monte”, said Samuel Población, the National Director of Residential and Land at the consultancy CBRE.

Price rises

(…). According to Luis Corral…”a family home or chalet in Boadilla costs around €450,000, on average, compared with between €700,000 and €1,000,000 in Pozuelo…”.

Although the supply of land is greater, the pressure from buyers due to the natural demand in Boadilla del Monte and the unmet demand in Pozuelo, will start to have an impact on prices. According to data from Foro Consultores, less than a year ago, in July 2015, the average price for chalets under cooperative regimes amounted to around €1,400 /sqm, whereas now the price has increased by around 7% to €1,500/sqm.

The same has happened with direct promotions. In July 2015, the price per sqm amounted to around €1,500 and now, it has increased to €1,600/sqm. In other words, prices have risen by 6%. At first sight, these prices do not seem at all exorbitant, however the homes are all very large and so the final price is not suitable for all budgets.

Four hot spots in Boadilla

In this Madrilenian municipality, one of the richest in Spain, there are four hot spots where all of the real estate activity is happening: El Pastel, Las Cárcavas, Cortijo Sur and Cortijo Norte. (…).

“El Pastel has been completely urbanised, it is full of cranes and families are already living there. Las Cárcavas is slightly behind, but the first homes are already being handed over and there are also a few people living there, whilst Cortijo Sur is also urbanised and under construction and the first homes will be handed over within the next few weeks. Cortijo Norte is the most delayed, it has not been urbanised yet, although work has begun on the urbanisation project. Family homes are being constructed in every area”, explained Luis Corral. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake