INE: House Prices Rose By 4% In Q3

9 December 2016 – Expansión

Madrid led the house price rises, with an increase of 7.8%; Cataluña recorded an increase of 6.6%. Price in the Balearic Islands rose by 5.4%.

House prices accelerated slightly during the third quarter of the year, but the differences between the two speeds in the market widened. In fact, only Madrid, Cataluña and the Balearic Islands saw higher than average price rises; house prices in the other fourteen autonomous regions grew by below average.

Specifically, house prices rose by 4% during the third quarter of the year, with respect to the same period last year, according to data published on Wednesday by Spain’s National Institute of Statistics (INE), based on signed house deed figures provided by the General Council of Notaries. As such, the indicator recorded ten consecutive quarters of increases, a trend that will be maintained over the next few months, according to experts.

INE’s data also showed a slight acceleration in prices, with the average rate increasing by one tenth of a percentage point, from 3.9% in Q2 to 4% in Q3. This figure is lower than that recorded during the first quarter of the year (6.3%) and slightly below that recorded during the last two quarters of 2015.

In the context of the overall recovery in the real estate market – which began in the second quarter of 2014 after six years of decreases – new house prices are rising at a rate of 7.3%, more than double the rate of second-hand home price increases (3.5%). That is because the supply of new homes in certain areas is now scarce, which is driving prices up. (…).

By autonomous region

Moreover, the data also showed that the recovery in the housing sector is happening at two speeds, driven primarily by the large urban centres and tourist housing segments. By autonomous region, Madrid led the price increases, with a rise of 7.8%, the same figure as last quarter. In second place, Cataluña accelerated its growth rate by 1.1 points, to reach 6.6%, whilst the Balearic Islands was ranked in third place, with an increase of 5.4%, four tenths higher than in Q2.

These three autonomous regions are the only ones that saw house price rises above the national average and they have one thing in common: they are all keeping their foot on the accelerator and some are even increasing the pressure. As such, the gap is widening between the recovery in the housing sector in the most sought-after areas and in other zones where stock is more abundant and demographic pressure is lower.

At the other extreme, we have Asturias, where house prices remained stable during Q3; Cantabria and Murcia, where prices rose by 0.7% in both cases; and Castilla y León (1.2%).

In summary, we are seeing quite generalised growth, in the sense that prices are rising in 16 regions and twelve of them have accelerated their rates with respect to the previous quarter. (…).

Forecasts

This data shows that house prices are continuing on their upwards trajectory but there is still “a long way to go”, said the Director of Research at Pisos.com, Manuel Gandarias.

In his opinion, the boost in the prices of homes under construction is a good sign, because it confirms the recovery phase. In 2017, we will see a recovery in house sales as well as “in new builds, after many years without any cranes on the horizon”. (…).

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake

KKR Defies Sovereign Fears & Teams Up With Catalan Property Developer Corp

24 June 2016 – El Confidencial

One of the largest private equity funds in the world has arrived with a bang in the Catalan real estate market. KKR is finalising an agreement with the property developer Corp to invest together in new developments, according to three sources familiar with the talks. The agreement is pending the final signature only.

The operation represents a breath of fresh air for the Catalan real estate market, which in recent times, due to the sovereign crisis and the triumph of Ada Colau in Barcelona, has seen several international funds start to regard the region with distrust and give orders to concentrate their investments in Madrid. However, that tension seems to have now diminished.

The importance of these types of funds for domestic property developers is crucial, given that in the face of the shortage of bank financing and the gradual recovery in demand, they are teaming up on a large scale with these types of vehicles, which inject the money they need to build homes.

Although both Corp and KKR declined to comment, the sources consulted confirmed that the US fund is handling this operation through its recently created Real Estate fund for Europe, which has raised $739 million (around €655 million).

As a result of this operation, the firm led in Spain by Jesús Olmos, is redoubling its commitment to the real estate business, where its largest operation to date had been the purchase of a 5.4% stake in another high-profile property developer, Quabit, one of the great survivors of the crisis, which has started to set up its cranes again to build 476 homes.

Moreover, KKR held negotiations with Acciona to strengthen the ties that already bind them in the energy business, by also acquiring a stake in its real estate division, but it seems that that operation has been ruled out in the end. Moreover, two years ago, the firm hired Alejo Vidal-Quadras de Caralt to lead its office in Madrid and join the wave of funds investing in the domestic real estate business.

Property developer of the moment in Cataluña

Grupo Corp is one of the property developers of the moment in the Catalan market. Created in 2008 by Pedro Molina and Pau Castro, the two businessmen knew how to detect business opportunities at the height of real estate crisis that decimated the sector.

Bearing in mind the maxim that from great crises arise great opportunities, Molina and Castro took the wise decision to target the middle-class public, with modern designs and sustainable, high-quality homes, at affordable prices.

In fact, a snapshot of their properties could be summarised as homes measuring around 100 m2, with between two and four bedrooms, located in middle-class neighbourhoods and marketed at prices that range between €170,000 and €370,000.

Original story: El Confidencial (by Ruth Ugalde)

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

Santander, BBVA & Sabadell Start To Build Homes Again

11 May 2015 – Expansión

Property development / The large financial institutions are constructing homes once again in light of the improved macroeconomic outlook, demand in certain areas and the aim of generating profits.

Real estate development is no longer a forbidden phrase in the world of banking. Several major banks have decided to resume the construction of new homes in light of the macroeconomic improvement and the need to capitalise on property inherited from the crisis.

Entities such as Santander, BBVA, Sabadell and Popular are now not only focusing on selling the homes that were foreclosed during the crisis, they have also started to construct new developments over the last few months. Most of these developments are located in Madrid, Barcelona and to a lesser extent, on the coast, where there is still a large stock of homes to sell.

Another catalyst of this new trend has been the reduction in the losses recorded by the real estate arms of these banks. During the first quarter, Santander’s real estate division lost €95 million, the smallest loss since it was created three years ago; and BBVA recorded a loss of €154 million, 37% lower than during the same period in 2014.

Thanks to this, the group chaired by Francisco González announced on Friday that it is studying 25 developments to construct 2,000 homes, and that it has already started another 12 developments to construct 630 million. This statement was made by Lorenzo Castilla, Commercial Director at BBVA Real Estate-Anida: “This is not about filling Spain with cranes, but rather about projects that make sense”, who spoke during Madrid’s International Real Estate Fair (Salón Inmobiliario Internacional de Madrid or SIMA).

(…)

Full balance sheets

As the BBVA director indicates, financial institutions still had more than €83,000 million foreclosed assets (on their balance sheets) at the end of 2014, of which more than €31,000 million related to land and €4,000 million to buildings under construction.

To reduce this burden, the entities are nowadopting two strategies: the sale of homes through their commercial networks, a channel that has accelerated over the last year; and the transfer of portfolios and joint ventures with institutional investors.

For the time being, the entity that has announced the most ambitious housing development plan has been Santander, which reported that it is developing 300 real estate developments, at its most recent results presentation.

Banco Sabadell is also stepping on the accelerator in this sense. Its real estate arm, Solvia, currently has 1,400 homes under construction, primarily in Madrid, Andalucía and Valencia.

Aliseda, the real estate company that renders services to Popular, has also announced an ambitious plan to enter the market for real estate development.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Housing: Completions Exceed New Starts For 7th Year

30 March 2015 – Cinco Días

It is not easy to measure how robust activity is in the real estate sector. But if there is one indicator that has been taken into account historically to assess the sector’s health, it has been the volume of housing starts. That is where the problems begin. The permits that developers have to obtain to enable them to begin construction work did not always used to correspond to the exact number of homes that were built in the end, and so the gross figure that was published, had to be carefully extracted.

And this market suffers from another peculiarity. Since house building is a slow process, which tends to take between 12 and 24 months, it is not easy to halt developments that are already underway, even once it has been established that most of the homes under construction may not be sold upon completion.

These two aspects help us to understand what has happened in recent years, when we analyse the data for housing starts and completions. If we take the year 2000 as a starting point, when nobody doubted that the real estate market was heading towards a boom of as yet unknown proportions, the number of house starts began to open up a sizeable gap over the number of completed homes, of more than 40%, approximately. The former moved in the vicinity of 500,000 homes, whilst the latter remained at just over 350,000.

Right after that, house production volumes climbed to more than 600,000 per year, spurred on by demand for a primary residence by one of the largest population cohorts in Spain’s recent history (the baby boomers), strong employment and the almost unlimited access to very cheap financing over almost “eternal periods”.

Thus, the gap between the two variables continued to grow until 2008, when everything came to an abrupt end. In fact, that year closed with 264,795 housing starts, when just a year before the figure had amounted to no fewer than 651,427. In 12 months, activity had collapsed by 59%, but the majority of the construction work underway continued to run its course (only a minority of developments were left unfinished even during the worst years of the crisis), which explains why since then, the number of finished homes has exceeded the number of house starts, year after year, for seven years in a row.

Shortage of new supply

In 2014, this trend was almost reversed, but in the end it was not. Last year, construction of 34,873 houses began, which represented a slight increase of 1.7% compared with the figure a year before, but still a long way below the 865,561 homes that developers began building in 2006, during the height of the boom. This means that today, the number of homes being constructed accounts for barely 4.02% of the volumes that were being constructed during the economic boom. Moreover, the figure is slightly lower than the number of homes that were completed last year (46,795), which in turn represented 7.29% of the number of homes that were finished in 2007 (the peak of the series), when 641,419 homes were completed.

All indications are that this year will be the first year that the two curves cross again, in such a way that more homes are started than are completed. In fact, if this does not happen, there could be problems due to a shortage of stock of new homes in places where the stock has already been absorbed and demand is beginning to intensify. Another important indicator for the sector, namely the consumption of cement, also indicates the same trend. During the first two months of this year, cement consumption has increased by 6.6%, to amount to almost 1.6 million tonnes, which corroborates the theory that the cranes are returning, albeit in a selective way.

Another business niche, which is key to the recovery of the construction sector, but which does not seem to stop decreasing is: refurbishments. According to figures from the Spanish Confederation of the Construction Product Manufacturers Association (Cepco), 2014 closed with 22,428 permits for the renovation or refurbishment of homes, down 0.80% on the previous year. And the number of building permits barely grew (rising by only 2.8%).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Britons Buy Homes In Spain, Driven By Strong Pound

5 March 2015 – El Economista

The strength of the British pound makes (house) purchases in Spain more affordable.

Low returns on deposits (at home) encourages Britons to seek alternative investments.

Sun, financial repression and low prices. This perfect cocktail is converting Britons into the main buyers of homes in Spain, especially in areas near the beach. That is because, in addition to the traditional appeal of the coast, Britons are now facing poor returns on their savings at home, due to measures taken by the Bank of England, and because they expect to see a recovery in the real estate sector in Spain. The appreciation of the pound against the euro makes the investment even more affordable for the average Brit, who is also seeing prices in his own country year on year.

An example is Londoner Barry Leverington, who thinks that his money is better off in a Spanish home than it would be earning next to nothing in a British savings account. The bank employee, aged 33 years old, is looking at properties in the Mazarrón Country Club, in Murcia, where two-bedroom villas cost as little as €75,000.

“Anyone who has some capital can buy in Spain, with almost no mortgage, and there is potential for prices to rise”, explains Mr Leverington in a telephone interview. “I grouped together some savings, and with the current low interest rates, I realised they were dormant, not doing anything”.

Foreigners return to Spain

Mr Leverington is not the only one. Foreigner buyers are returning to the Spanish real estate market, attracted by economic growth that exceeds the rates in most of the rest of Europe and by the signs that prices are bottoming out after years of decreases. In fact, sales of homes to foreigners accounted for 13.9% of total sales in the fourth quarter of 2014, a new record.

Britons are the biggest foreign investors, because the zero interest rates on savings accounts (at home) and the prospects for rising house prices in Spain mean that keeping their money in their own country is a much less attractive option.

In total, foreigners invested €6,050 million in Spanish properties during the first nine months of last year, 30% more than during the same period in 2013, according to data from the Ministry of Development. The 40,338 homes purchased represented an increase of 27% with respect to the same period a year before, with Valencia, Andalucía and Cataluña topping the list as the favourite destinations for foreign purchasers.

Interest from overseas investors is increasing after many left scarred, following the collapse of the Spanish real estate market with the onset of the global financial crisis and the burst of the local property bubble. The legacy from this collapse is a stock of more than 1 million homes, many of them in the South and East of the country, in areas very popular with Britons and Europeans.

House prices have also suffered a corresponding crash, having fallen by 42% since their peak in 2007, although in coastal areas, some properties have lost up to 50% of their value, according to estimates from the property appraiser, Tinsa. Nevertheless, it seems that the trend has changed, as the rate of decrease slowed from 9% in 2013 to 3% last year.

Deposits with no returns

The Bank of England has maintained interest rates at a historical low of 0.5% since 2009, which has impacted the interest rates offered by banks on British savings. A financial repression, which is making Britons look for alternatives for their savings, and from there Spanish property looks like a good option.

In addition, it is becoming increasingly expensive to invest in homes in the United Kingdom, where prices increased by 25% between December 2007 and December 2014, according to the Office for National Statistics, led by London, where prices increased by 18% last year alone.

Moreover, the recent increase in the value of the pound against the euro, which has appreciated by 13.5% in the last 12 months, means that homes in Spain are even cheaper for the Brits. This is an important effect to consider, according to the real estate expert José Luis Ruiz Bartolomé, “when something is gifted, it is even more attractive than when you purchase it with a strong currency”.

“People like me want to achieve some kind of return on their savings and they won’t get very far in the real estate market in the UK at the moment”, says Mr Leverington. “Properties in Spain are currently under-valued. It is a win-win situation for everyone”.

Spaniards are also returning to the market, although at a slower rate. The purchase of homes by Spaniards increased slightly by 2.2% in 2014 to reach 319,389 properties, the first increase since 2010, according to date from INE. A ray of light for the sector, although it is still a long way from the highs of 2006, when 955,186 homes changed hands.

Marbella, at its peak

Another symptom of the improvement is that despite the (housing) stock, cranes have reappeared in some areas of major cities and on the coast. Darío Fernández, from the consultancy Jones Lang LaSalle, explains that “we are seeing demand for primary residences from Spaniards in Madrid and Barcelona, and demand for second homes from foreigners in coastal regions. People are confident that the economic risks have disappeared, and see that prices are still very low”.

In fact, in some areas, such as Marbella, demand is so high that international funds are partnering up with local players to buy land and build new homes, adds Fernández. Currently, there are 400 homes under construction in the Malagan town, the highest number in the last six years.

Mr Leverington, the London bank employee, is going to travel to Murcia in June to get to know the area, and if he finds a property he likes, he will buy it. “I have already spoken to some estate agents, I don’t want to wait much longer, because as soon as there is any good news, the market will recover and I don’t want to miss out”.

Original story: El Economista

Translation: Carmel Drake

Spain’s New ‘Property Kings’

2 March 2015 – El Mundo

2006 was a key year for Fernando Martín. Not only did the Chairman of Martinsa hold the presidency of Real Madrid for a short time, he also acquired the real estate company Fadesa for €4,000 million. Two years later, the burst of the (real estate) bubble put an end to his reign. Since then, the businessman has tried to resist (his downfall) until this week, when the banks and Sareb put an end to his adventures, by plunging Martinsa into bankruptcy. His creditors say that throughout the bankruptcy negotiations, Martín has demanded that he continue in his role as Chairman of the company and also retain his company car, his secretary and his salary of around €1.5 million, even though the company’s activity has been minimal.

With this defeat falls the last of the property lords who led the Spanish economy’s most important sector during the boom years, with negotiation tactics that many associate with lobster lunches and (VIP) boxes at football matches.

However, Martín’s fall coincides with the rebirth of the empire. Last year, institutional investors closed transactions amounting to €14,000 million in Spain (a volume of activity that was only exceeded in 2006 and 2007) and data from the housing market also shows that the property sector has turned the corner towards recovery. In fact, in 2014, the number of new mortgages taken out increased for the first time, after six years in decline.

This rebirth is accompanied by new businessmen with profiles more akin to those of bankers than (property) developers. The property kings’ successors are more used to having canopes for lunch, in true British style, and many of the important decisions about the future developments that will see the return of cranes to Spain’s landscape, are no longer being made in (VIP) boxes at the Bernabéu, but instead in offices in Madrid, the City of London, Dallas, New York and Beijing.

Former developers, such as Fernando Martín, Enrique Bañuelos (Astroc) and Rafael Santamaría (Reyal Urbis) have now made way for Wang Jianlin (Wanda), Ismael Clemente (Merlin Properties), Juan Pepa (Lone Star) and Concha Osácar (Azora).

These are executives who no longer depend on the banks to finance their projects; instead they are backed by large insurance companies, sovereign funds and even highly qualified investors, such as George Soros and Carlos Slim.

“We are facing a paradigm shift. During the boom (years), developers wanted to make more than they were able to and they focused on stocking up on land, due to the peculiarities of that raw material. However, (property) development is like manufacturing and no manufacturer purchases (his) raw materials 10 years in advance. When we hit economic difficulties, that model collapsed. Now, we are seeing different management and development models exist side by side. We are moving towards a more professional model, in which fewer developers compete, with stronger brands”, explains Luis Ruiz Bartolomé, co-author of the book ‘Return, property, return’ (‘Vuelve, ladrillo, vuelve’).

Under this model, the large investors, cooperatives and local developers that have managed to survive the difficult years, are going to co-exist. All of them will compete with a different mentality and with new ways of managing assets.

“The new players in the real estate sector will have to analyse the current key factors (effectively) to enable them to have a more global profile through increased specialisation and professionalization”, says the partner responsible for Real Estate at KPMG, Javier López Torres.

Wang Jianlin (pictured above)

On his trips to Spain, the Chinese tycoon has enjoyed evenings at the Teatro Real, but he also likes football. In fact, his first investments in this country were in the Torre España – a building he bought from Santander – and a stake in Atletico de Madrid. Now, the owner of the Wanda Group wants to launch the development of the so-called Wang mega-complex, a residential and leisure park that may be constructed on land that used to house former barracks in Madrid. Nevertheless, to date, the Asian millionaire’s investments in Spain have merely represented a token gesture, in the context of the global figures for his real estate business. The Wanda Group is the largest land-owner in China and it is constructing the largest residential skyscraper in London, next to the Thames. According to the Chinese press, Jianlin is also considering the purchase of the AC Milan football team.

Jaime Echegoyen

It is likely that when the Chairman of Sareb was CEO at Bankinter and Head of Barclays in Spain, he never imagined that it would end up holding the reins of the bad bank. This banker, who always works with office door open, is responsible for managing the real estate giant that was created in 2012 with 200,000 assets (80% financial and 20% property) amounting to €50,781 million. Echegoyen’s team is working on the completion of 1,000 homes (which it received ‘unfinished’ from the banks) across 52 sites. In addition, it is studying the development of some of the 5,000 plots of land that it received as inheritance, to be able to better market them before 2027, when the semi-public company will have to be dissolved.

Juan Pepa

This Argentine, who lives in London, is the Managing Director of the North American fund Lone Star and in 2013, he managed to convince US investors to back Spanish property. When Pepa comes to Spain and announces that his is going to launch the largest developer in the country this Spring, he does so with a level of enthusiasm that may surprise (people) after the hard times experienced in recent years. “We are going to fill the country with cranes”, he likes to declare. In recent years, Lone Star has purchased the real estate company Neinor from Kutxabank and Eurohypo’s loan business (together with JP Morgan) to launch this project. With a financial background and an MBA, Pepa plays polo and is the patron of the Pro Alvear Foundation, which works to promote education and technology in the La Pampa province of Argentina. This executive, who is less than 40 years-old, does not like the press referring to his fund as a vulture; he assures them that he has not come to Spain with a short-term view and although, he does not provide any details about his project, he says that the proof will be in the fact that it will generate value for the Spanish economy.

Ismael Clemente

Also a banker by trade – he used to work at Deustche Bank for example – but more closely related to property than Echegoyen and Pepa, Clemente founded Magic Real Estate during the worst year of the crisis (2012) and now is the head of Merlin Properties, the Socimi that debuted on the stock exchange in an IPO that raised €1,250 million.

George Soros and Carlos Slim

The tycoon who devalued the pound in 1992 and the Mexican multi-millionaire represent the many international investors who want to get involved in the recovery of the (real estate) sector through their financial investments. Soros is one of Hispania’s shareholders, whilst Slim has taken a stake in FCC. From there, he wants to acquire Realia to complete his business empire, which includes valuable assets from around the world, in many different sectors; América Móvil is one of the jewels in his crown.

Leopoldo Moreno

In addition to the businesses of large investors, cooperatives are also proving themselves to be a successful formula for development, as banks have closed the (financing) taps. The CEO of Ibosa has known how to take advantage of this model with numerous developments in the Community of Madrid.

Santos Montoro

This businessman from Murcia is a good example of how a family developer can compete in the (new) real estate model that has been imposed by the investment funds. In fact, his company, Monthisa (which was created in 1968) has managed to reinvent itself during this crisis to form a partnership with the fund H.I.G. to manage the Bull portfolio, a batch of apartments and garages that the US vehicle purchased from Sareb.

Enrique Bañuelos

After the fiasco involving Astroc, this deposed king has resumed his activity in London. From the City he wants to develop (property) in Spain through his new company called Veremonte and participate in BCNWorld, the tourism and leisure macro project that the Catalan authorities are looking to build

Original story: El Mundo (by María Vega)

Translation: Carmel Drake

Investment In Housing Returns To Barcelona After 7 Years

18 February 2015 – El País

The housing market is the last sector to emerge from the crisis. Nevertheless, investment returned to the residential segment last year, after seven years of sluggishness towards undertaking significant projects in the Catalan capital. In addition to the purchase of portfolios by vulture funds, nine major acquisitions were also recorded in Barcelona, corresponding to 55,095 square metres, according to the real estate consultant CB Richard Ellis. These developments, most of which are aimed at high-end clients, showed a move away from the traditional prime (residential) area – Sarria-Sant Gervasi – towards the neighbourhoods of Eixample, Ciutat Vella and Diagonal Mar.

The Vice President of CB Richard Ellis, Enrique Martínez-Laguna, described 2014 as a “historical” year because the volumes of investment amounted to €10,463 million across the whole of Spain, even higher than the levels recorded in 2007, the year in which most capital was invested. The Director of the consultancy firm in Barcelona, Anna Esteban, highlighted that property prices have fallen since then, and so more transactions were recorded in 2014 than in 2007. The consultancy firm expects investors’ appetite to continue this year, to the extent that “we will begin to see cranes (appearing on the horizon)”, says Martínez-Laguna.

The Catalan capital destroyed 90,000 square metres of office space in 2014

But the map of the city has not only changed in terms of the construction of housing. In total, 90,000 square metres of office space were destroyed in the city centre in 2014 alone. Buildings were converted or will shortly be converted into hotels and homes.

Changing landscape

For example, the Paseo de Gracia, has now become a residential and retail area. And something similar may take place on the Diagonal following its renovation. “There are also two buildings, at number 10 Francesc Macia and number 111 Paseo de Gracia, whose premises could be converted into the entrance of what may become a new open-air shopping centre” says Martínez-Laguna. At the same time, some of the buildings in the 22@ district are generating very similar rents to those being paid for other properties in the traditional business district.

The current rental price in the best areas of Barcelona amounts to c.€17.75 per square metre, down from the peak of €28/m2 recorded in 2007. Moreover, the consultancy firm considers that these rents have now bottomed out and will grow by 30% over the next two to three years.

Original story: El País (by Lluís Pellicer)

Translation: Carmel Drake