Quabit Invests in New Sectors in Preparation for a Change in the Market Cycle

24 October 2019 – Félix Abánades, the head of Quabit Inmobiliaria, has been preparing his firm for a new cycle in the real estate market. The firm recently began investing in the residential rental market, acquired a construction company (Rayet Construcción), placed a portfolio of 1,300 homes currently under construction on sale and announced that it would invest in the cooperative management sector. In the latter, the firm is looking to develop a portfolio of approximately 1,000-1,500 homes, within two or three years, with a turnover of around 175 million euros, through its Style Cooperatives initiative.

Quabit’s entry into the cooperative management market comes at a time when the sector is suddenly back in vogue. Cooperatives are typically able to offer higher prices for developable land than comparable developers.  The firm is adding the new line of business to its existing operations in land and residential development, along with its foray into the rental housing market.

Increasing construction costs and the possibility of a change in the market cycle are leading Quabit and other developers to reduce their earnings forecasts along with estimates of the number of homes it will deliver in the coming years.

Original Story: El Confidencial – Elena Sanz

Adaptation/Translation: Richard D. K. Turner

Construction to Begin as Cuatro Caminos Receives Approval, Five Years On

20 July 2019 – Richard D. K. Turner

The City Council of Madrid will give its final approval for the plan to develop the Cuatro Caminos project.  Grupo Ibosa and 443 families purchased the land from Madrid Metro, for 88.3 million euros, in November 2014.

The site acquired by the cooperative, Residencial Metropolitan, has an area of ​​3.7 hectares, where the two groups plan to build a residential development, along with more than 17,000 square meters of parks and gardens.

The municipality’s approval will allow construction of more than 400 homes, 60 of which would be officially protected (subsidised), while transferring sufficient land for 70 more homes to the city council.

Original Story: El Confidencial – E. Sanz

Photo: Salvador Fenoll.

Valencia Transfers 8 Plots to Cooperatives for the Construction of 118 Social Housing Units

2 February 2019 – Valencia Plaza

On Friday at a meeting of the Local Government, the Property Department of the Town Hall of Valencia, led by María Oliver, approved the transfer of eight plots of land to cooperatives for the purpose of constructing 118 social housing units in several of the city’s neighbourhoods, in particular in the Nou Moles and Massarrojos areas, with 46 and 20 homes, respectively. The formula chosen by the Town Hall transfers the land for a period of between 50 and 75 years.

The councillor for Housing and Property, María Oliver, said that the objective is “to limit the capacity for speculation”. And in that same sense, she insisted that “people will no be allowed to be removed from their neighbourhoods” (…).

All of the publicly protected housing, known by their initials VPP (‘viviendas de protección pública’) will be distributed between the districts of l’Olivereta, Poblats Marítims, Quatre Carreres and los Pobles del Nord, Sud and Oest, and will comprise exactly 118 homes, according to the calculations performed by the Housing Department (…).

Original story: Valencia Plaza 

Translation: Carmel Drake

Sareb Holds Talks With Cooperatives To Accelerate Land Sales

25 January 2017 – El Independiente

Sareb is exploring ways of selling off millions of square metres of land that are currently sitting on its balance sheet. Whilst sales of properties by Sareb, the largest property developer in Spain, accounted for 97% of its portfolio in 2016, operations involving land accounted for just 3%.

One of the bad bank’s options for changing this trend in 2017 is to meet with cooperatives, one of the groups that most specialises in managing land, according to several institutional sources consulted.

Sareb, whose dissolution is scheduled for 2027, generated €1,500 million from the sale of real estate assets last year, primarily residential properties, but the sale of land by the so-called bad bank was purely symbolic, forming part of larger operations in many cases. For this reason, Sareb and several sector associations have begun a round of contact, confirm both parties. The first meeting was held last Friday.

“Officially, we are not doing anything with Sareb”, responded a spokesperson for Concovi, the cooperatives’ trade association, surprised that details of the meeting had been revealed. “We have not defined a model of cooperation”. The cooperatives point out that they account for approximately 10% of the housing sector and that they provide much more security than traditional housing developments. Sareb is calling for another meeting with the Community of Madrid’s Federation of Housing Cooperatives and Renovations

Sareb, created at the end of 2012, at the request of the Ministry of Finance to group together damaged assets from the banks – whereby avoiding their collapse – with the aim of subsequently selling them at aggressive discounts, owned 13 million m2 of land before its birth. Although this newspaper has not obtained updated data about the stock of land currently owned by this company, it is clear that it still has a lot to get rid of over the next ten years. One example is this website, where Sareb is selling off a huge volume of land.

The cooperatives are starting to get their strength back, one step at a time. Until now, they have had a very limited presence in the property developer sphere, primarily due to a lack of knowledge about their operations and due to the poor image that they are still struggling to shake following the scandals of the 1990s, such as the one involving the PSV cooperative.

Nevertheless, this method of collection development is set to record its first year of growth since 2012, in terms of the number of finished projects. Whilst in 2012, 700 buildings were certified, the following year that figure plummeted to 283. The number of certifications then fell further still to 217 in 2014 and 214 in 2015.

But, with the economic recovery and upturn in employment in 2014, new cooperative projects were launched and it is those that are now starting to bear fruit. 205 buildings were constructed through this method during the ten months to October 2016, a rate that, if maintained until December, would have given rise to around 250 finished buildings in 2016.

In parallel, the budget allocated to the construction of these properties rose by 62%in 2015 to €348 million. The cumulative figure as at October last year (€350 million) had already exceeded that amount. This means that 2016 looks set to be the year in which the cooperatives move the most money since 2011.

Original story: El Independiente (by David García-Maroto)

Translation: Carmel Drake

Valdebebas’ Legal Problems: The End Is In Sight

21 September 2016 – El Mundo

The capital’s residential sector has endured several months of uncertainty, awaiting the ruling from the Supreme Court (TS) regarding the appeals filed against the express review of Madrid’s Urban Planning General Plan, undertaken by the Town Hall of Madrid during Ana Botella’s mandate.

The ruling, which the Supreme Court finally published on Tuesday, validates the legality of the PGOUM and means that urban development can now resume in the capital with a sound legal base. The main beneficiary of this ruling is the area of Valdebebas, affected by a first instance judgement from the Dispute Tribunal number 24 in Madrid, which declared the economic urban planning project null and void in July.

As a result of this ruling, the Town Hall notified the Valdebebas Compensation Board at the beginning of August that “on criteria of prudence”, it would suspend the granting of all new construction permits until it was aware of the meaning of the ruling from the Supreme Court. This setback represented the latest obstacle in a long list of legal proceedings that Valdebebas has been involved in since 2012.

According to sources, this legal uncertainty and the questions regarding the meaning of the ruling from the Supreme Court have paralysed some important land purchase operations – they have been delayed until the contents of the ruling are known. Now, and after hearing the ruling from the Supreme Court, the Valdebebas Compensation Board believes that normality will return.

In this sense, according to a statement, the Board will request the Town Hall of Madrid for “its support to restore the urban planning instruments (that were recently cancelled) as soon as possible, so as to be able to offer all of the legal guarantees necessary to neighbours, cooperatives and property developers”. The Board says “that it does not see any reason for the Town Hall to maintain its recent stance of suspending the processing and granting of construction licences”.

“It is time to implement solutions and we are going to urgently seek the necessary collaboration with the Town Hall”, said Jorge Serrano, manager of the Valdebebas Compensation Board.

“Today we are all celebrating the support for the decisions and developments made and for the opportunities being presented to continue to respond in a normalised and sustainable way to the growing residential demand that Madrid is experiencing at the moment”, he added.

The ruling has partially upheld some of the appeals, annulling the Transitory Disposition of the Agreement dated 1 August 2013, which sought to provide retroactive effects, but has limited its annulling effects exclusively to three urban planning projects that were carried out following the ruling from the Supreme Court on 28 September 2012 and until the resolution to approve the general plan was agreed on 1 August 2013.

According to an explanation provided by the Compensation Board in a note, in the case of Valdebebas, the ruling affects only the construction licence granted in 2012 for plot 168 (Residencial Adhara), which has been cancelled, although that does not have any practical impact given that the building on that land is covered by a subsequent licence granted in 2014.

Original story: El Mundo (by Luis M. De Ciria)

Translation: Carmel Drake

Bank Of Spain: Default Rate Falls To 9.84% In May

19 July 2016 – Expansión

The default rate of loans granted by banks, savings banks and cooperatives to individuals and companies decreased to 9.84% in May, returning to a level not seen since July 2012, when it amounted to 9.86%, according to provisional data published on Monday by the Bank of Spain.

This figure includes a methodological change in the classification of Lending Institutions (Establecimientos Financieros de Crédito or EFCs), which are no longer considered within the same category as credit institutions.

The total doubtful debt figure fell to €126,152 million in May, down by €1,583 million from the previous month. In one year, the volume of doubtful loans has decreased by €27,999 million, equivalent to 18.16%.

In this way, the banks’ default rate has decreased by 3.76 percentage points with respect to the historical maximum recorded in December 2013, when it stood at 13.6%.

The decrease in the default rate has come about, in part, thanks to the continuation of the decline in the overall credit balance in the sector in May. Specifically, total loans decreased by €76,786 million, or 0.52%, to €1,281 billion. In YoY terms, overall credit has decreased by 5.06%.

If we exclude the methodological data, the NPL ratio stands at 10.04%, given that the loan balance in this scenario decreases to €1,256 billion.

In line with default rate, financial institutions have cut their provisions by €762 million with respect to the previous month, down to €74,664 million. A year ago, this “buffer” amounted to €91,836 million.

Original story: Expansión

Translation: Carmel Drake

Ministry Of Development: New Builds Up By 2% In YTD April

11 July 2016 – El Economista

Between January and April 2016, construction of 14,098 homes was completed in Spain, which represents an increase of 2% compared with the same period last year (13,818), according to data from the Ministry of Development, compiled by Servimedia.

In this way, the number of finished homes in Spain continued its positive trend during 2016, after eight consecutive years of decreases leading up to and including 2015. From its peak in 2007 (641,419 homes), the figure dropped by 93% in 2015 (to 45,152).

Of the total number of new homes completed during the fourth months to April, 98.6% (13,842) related to private developers and 1.4% (256) to public administrations.

The construction of homes has increased by 1.6% in the case of private developers compared to a year earlier and by 34.7% in the case of public administrations.

In the private sector, 8,118 of the homes were constructed by commercial companies, with a YoY increase of 9.6%; 5,415 corresponded to individuals and communities of owners (+9%) and 219 related to cooperatives (-62.2%). Moreover, 90 other work completion licences were associated with private developers. (…).

Original story: El Economista

Translation: Carmel Drake

International Funds Reactivate Residential Development Market

7 July 2016 – El Economista

After several years away, cranes are appearing on Spain’s landscape once again. Their return has come thanks to several large international funds, which have managed to reactivate the property developer market in record time and just at the right moment. Thanks to their presence, property developer activity in Spain grew by 30% last year, with 50,000 new construction permits; and the experts are certain that the residential business is now unstoppable.

The financial capacity of the new players is overwhelming in some cases. They have liquidity surpluses that the historical property developers would have envied, but, nevertheless, they do not know the ‘ins and outs’ of the local market, and their experience in terms of land is practically non-existent. For this reason, their entry into the Spanish market has been undertaken through the purchase of property developer platforms and through partnerships with local companies (…).

In light of the high profile partnerships that have been signed in the last two years, involving players such as Lone Star, Värde and Kennedy Wilson, the experts predict that the high level of activity will continue this year with the purchase of plots of land. In fact, they confirm that sales of non-developable land are starting to accelerate and that demand for land purchases will increase, especially those in the final stages of development, due to the high level of competition that has been generated between the key players in the sector – property developers, investment funds and cooperatives.

All of these players have realised that the opportunities that the residential development business is now offering “have yields that are considerably higher than those of other investments”, according to Solvia’s Market View report, which states that transactions have grown by 8.6% and prices have risen by around 4.5%. With these positive indicators, the development figures being talked about now include 150,000 new homes and 50,000 secondary residences per year until 2020.

Most of these homes will come onto the market thanks to Neinor Homes, which is looking to become the largest property developer in Spain. This company will be one of the most active over the next few years, given that according to its own forecasts, it expects to build between 2,500 and 3,000 homes per year. The firm, led by Juan Velayos – the former CEO of Renta Corporación – is the largest residential real estate company created in Spain following seven years of recession.

Its potential was proven last year, since between its creation, in May 2015, and the end of the year, it invested own funds amounting to €800 million on the purchase of land, on which it plans to construct 10,000 homes over the next few years, bringing together the largest bank of high-quality developable land in Spain (…).

But Lone Star is not the only fund that has made a long-term commitment to the Spanish residential market. The US fund has had a major competitor for several weeks now, in the form of Värde, which after acquiring 25% of the real estate arm of San José from Banco Popular, has now created a new property developer.

The company is called dospuntos and its Business Plan for 2016-2012 forecasts an investment of almost €2,000 million in the Spanish real estate market over the next six years, to complete the construction of 2,000 homes per year on average from 2019 onwards. For the time being, the group already owns a sizeable bank of land for the construction of more than 7,000 homes across Spain.

Inmobiliaria Habitat is another company with history in the sector, which in 2015, after finding itself in a very delicate financial situation and incapable of paying its debt, ended up in the hands of a group of funds – Bank of America Merril Lynch, SP101 Finance Ireland, Capstone and Goldman Sachs, amongst others. In this case, although the commitment by the funds has been key, it is nonetheless a temporary measure, given that they plan to exit the group within two or three years.

The latest residential report from the consultancy firm CBRE highlights other partnerships between international funds and domestic developers such as: Grupo Lar and Pimco; Renta Corporación and Kennedy Wilson; Momentum Real Estate and HMC; Aquila Capital and Inmoglaciar; Mina Inmobiliaria and Eurostone; Aelca and Värde; and Q21 Real Estate and Baupost. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Madrid’s City Centre Lacks New Homes & Land

11 May 2016 – Expansión

The reactivation of the real estate market is being hampered by two key problems: firstly, the lack of available land and secondly, the lack of definition surrounding the Town Hall’s urban planning policy.

Despite the political and economic uncertainty, the market for land in Madrid broke records in 2015, achieving investment volumes of €940 million, which represented an increase of almost 10% compared with the previous year, according to data from the real estate consultancy Knight Frank. This trend is similar to the pattern being observed across the sector as a whole.

The general feeling in the sector in Madrid is that investors are interested in undertaking operations, there are buyers waiting, but that the effort required to progress with any new property developments is enormous. Although in recent months, we have heard a lot about the fact that the recovery in the real estate sector is uneven and varies significantly  by area, in the case of Madrid, that description applies perfectly.

The municipality of Madrid currently has a stock of around 3,000 new homes (…). It is absolutely essential that more land is made available, say all of the stakeholders in the sector, to avoid an excessive hike in prices. But in certain areas, such as the north of Madrid, the supply has almost run out, despite recording higher demand and having a population with greater purchasing potential.

Property developers are back

Average operations involving investors and property developers range between €12 million and €15 million, whilst those involving cooperatives involve higher volumes, of €25 million, according to Knight Frank in its report about the land market in Madrid. And yet, if any sector has run into real problems with the new team at the Town Hall of Madrid then it has been the cooperatives. The most notorious cases were those involving Domo Gestora, with its plot on Raimundo Fernández Villaverde, and Ibosa, with its Metropolitan project in Cuatro Caminos. (…).

Property developers are continuing to request more land to enable them to work in a healthy way in this market. “For a long time, our land legislation has left a lot to be desired (…)” said Juan Antonio Gómez-Pintado – Chairman of the Association of Madrilenian Property Developers, Asprima. Although uncertainty has increased, with the change of party at the Town Hall of Madrid, slow urban planning is not a new phenomenon in the capital. In 2015, for example, the first occupancy licences were finally delivered for the first homes at El Cañaveral (Vicálvaro), almost 20 years after the agreement was signed between the Administration and the former owners.

In turn, future developments, such as Valdecarros, Los Ahijones and Berrocales are still in their very early stages. “To generate reasonable, sustainable and economically viable urban development, there needs to be a substantial modification of the current urban planning model, involving the phasing of developments, the streamlining of urban planning procedures and the resizing of certain areas to make them viable in the current market”, said Pablo Méndez, Head of Investment Madrid at Aguirre Newman. But, Méndez added, whilst working on new developments, we should also remember to focus on the three Rs: “Regeneration, refurbishment and renovation” from the exiting urban legislation.

Despite all this uncertainty, the outlook for 2016 is promising, according to Adolfo Ramírez Escudero, Chairman of CBRE España (…).

Original story: Expansión (by Loreto Ruiz-Ocaña)

Translation: Carmel Drake

Carmena Unblocks Construction Of 1,300 Homes In Arroyo Fresno

29 April 2016 – Cinco Días

Around 1,200 cooperative members can now see the way out of their housing investments in the new Madrilenian neighbourhood of Arroyo Fresno. Yesterday, at the meeting of the Governing Body, the Town Hall of Madrid approved the the plans to unblock the urban development of this new area in the north of the city, next to Herrera Oria.

According to a statement from the Town Hall, the team led by Manuela Carmena (Ahora Madrid) hereby “put an end to a long process”, which began in 1999. The new neighbourhood, which was divided into two sections, saw the completion of the construction of 1,957 homes in one section, and the paralysis of the construction of 1,283 homes in the other section, due to the absence of the necessary land subdivision plans. In this way, the uncertainty that was looming over 1,200 families, registered with the different cooperatives, has come to an end.

The paralysation of the project was caused in part by the fact that the Municipal Housing and Land Company (EMVS) had not paid off the debt that it owed to the Town Hall of Madrid, amounting to €29.7 million, according to sources at the Town Hall. Furthermore, the amount was not even recognised in the accounts of the municipal company. This has been now corrected, with the recognition of a liability by the current Board of Directors of the entity, a review of its accounting statements and a capital increase.

The affected area in Arroyo Fresno is located in the south west of the neighbourhood. With a surface area of 734,154 m2, the plots resulting from the plan that has been approved have a total buildable area of 23,087 m2 for residential use, allocated in its entirety for social housing, and 145,031 m2 for other uses (other housing, commercial and tertiary).

According to a study performed last year by the real estate consultancy firm Knight Frank and the Fundación Asprima, the land in this area has become the most expensive of all of the new urbanisations in the city, with prices ranging between €1,600/m2 and €1,800/m2.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake