The 2008 Crash Lasted 7 Years and Industrial Property Prices Fell by 40%: What will Happen in this Crisis?

By last year, industrial assets had recovered only 17.5% of the value that they lost during the 2008 real estate crash, after dipping to minimum levels in 2014. According to the College of Registrars, the average transaction price was €527/m2 at the end of 2019.

By last year, industrial assets had recovered only 17.5% of the value that they lost during the 2008 real estate crash, after dipping to minimum levels in 2014. According to the College of Registrars, the average transaction price was €527/m2 at the end of 2019.

Like other asset segments, the 2008 financial and real estate crisis hit the industrial market hard. The average transaction price of industrial assets went from €792/m2 to €471/m2, whereby losing 40.5% of their value.

The decrease in prices lasted 7 years, from their peak in the fourth quarter of 2007, to when they bottomed out in the third quarter of 2014. “From that moment, transaction values ​​remained stable for two and a half years, until in the second quarter of 2017, when they began to rise slowly at a rate of between 5% and 6% year-on-year,” says Antonio Ramudo, Data Scientist at Brainsre.

Thus, by the end of 2019, according to the Registrars, with respect to the minimum levels reached in 2014, only 17.5% of the value lost during the crisis had been recovered, with an average price of €527/m2. The current crisis is showing signs of exceptional severity throughout the world, but it is true that the industrial segment is being hit less hard thanks to the dynamism of e-commerce during this time of lockdown.

Variation in prices

The autonomous regions with the most expensive industrial products are also those that suffered the greatest decreases in absolute values. As such, the gap between the maximum prices of 2008-2009 and the minimum prices reached after the fall was greater.

In this way, the regions with the highest average transaction value at present are the Balearic Islands (€1,513/m2), the Community of Madrid (€1,371/m2), País Vasco (€1,263/m2), the Canary Islands (€1,190/m2) and Cataluña (€1,111/m2).

They represent the three most important industrial centres in the country plus the islands, which due to the scarcity of this type of product tend to have more expensive prices. All regions are currently well below the maximum values ​​they reached before the bubble burst in 2008.

Impact of the fall and recovery

With a 61% loss in value, the Canary Islands was the region that suffered the largest drop in prices during the last crisis. Aragón, Cantabria, Galicia and the Balearic Islands were the other autonomous regions that suffered the greatest price decreases, with more than 55% being knocked off their value”, says Antonio Ramudo.

Pontevedra was the province whose prices suffered the most as a result of the 2008 crisis, with a decrease of 70%, from €809/m2 in the third quarter of 2008 to €243 euros/m2 in the first quarter of 2014. Many industrial estates along the Vigo – O Porriño axis witnessed that fall, which lasted for more than 5 years. Huesca was another province that suffered badly during the previous crisis, and with minimum and maximum prices similar to those of Pontevedra, it suffered a 69% decline in transaction values.

50% decreases in Madrid and Cataluña

Nor were the large capitals spared from the crisis. Prices in Madrid fell by 50%, in Barcelona by 52% and Sevilla, which suffered the most, by 66%.

After the 2008 crisis, “36 of the 52 provinces that make up Spain saw a decrease in their average transaction prices of more than 50%. Extremadura was the autonomous region that got off the lightest, although transaction values there still fell by 40%. Nevertheless, it is worth noting that it has always been the region with the lowest prices, so the margin for loss was also lower”, says the Data Scientist.

And amongst the provinces, those that fell by the least were the ones that reached the lowest maximum prices, and therefore had the least to lose: Jaén, Granada, Cáceres, Albacete and Palencia all suffered decreases of less than 40%.

“It is interesting to see also how the various regions have been recovering after leaving behind the crisis of 2008. The islands are the regions that have recovered the best thanks in part to the shortage of product there. In the Balearic Islands and the Canary Islands, 27% and 30% of the value lost has been recovered, respectively”, says Ramudo.

Recovery

Murcia is the mainland region where prices have recovered the most, with 28% of the value recovered with respect to their maximum prices. Madrid has recovered by 22% and Barcelona by 11%. Up to 21 provinces have recovered by less than 20%.

Some regions have recovered almost none of their value: Castilla-La Mancha is currently at values ​​close to the minimums reached in 2015, and prices in Castilla y León are now the lowest they have been for the last 15 years.

“In general, it could be said that since the falls after the crisis slowed down in 2014 and 2015, transaction values ​​have remained fairly stable in almost all regions. Although, there has been some slight price growth since 2017 in places with more demand, thanks in part to the boom in the logistics segment, a leading product in the sector in recent years”, concludes the analyst.

Duration of the fall

Unlike the coronavirus crisis, the 2008 crisis reached different regions in Spain at different times; maximum prices were reached in Cataluña, Aragón, Castilla-La Mancha and Castilla y León in 2007, with the Aragonese region peaking first, in the first quarter of 2007, before starting a prolonged 10-year price drop.

Most regions began to register price decreases between 2008 and 2009, with the tardiest ones, Galicia and País Vasco, seeing their prices fall in 2010. Extremadura was the territory where the recovery after the crisis began first, since during the third quarter of 2012, after three years of decline, prices there bottomed out and began to rise. Prices in the Balearic Islands and La Rioja bottomed out in 2013, and in the rest of the regions between 2014 and 2015.

If we talk about the duration of this crisis, from the beginning and until the end of the price decreases, we see significant asymmetry between regions, from the shortest, less than 4 years, in Extremadura, Balearic Islands, La Rioja and Galicia, to the longest, 8 years, in Andalucía and, 10 years, in Aragon.

Madrid and the País Vasco, regions with important industrial centres, suffered falls that lasted 5 years, while Cataluña took almost 7 years to stop its fall.

The end of 2019

The provinces that closed last year (2019) with the highest average transaction values were the Balearic Islands (€909/m2, although that figure represents a recovery of only 7%), Bizkaia (€827/m2), Madrid (€837/m2) and Santa Cruz de Tenerife (€773/m2).

“The reason why these provinces recorded the highest average transaction values is due to factors such as scarcity and the limited nature of the industrial product, such as in the Balearic and Canary Islands, the long industrial history and constant demand in País Vasco and the importance of Madrid as a logistics centre”, describes Ramudo.

By contrast, the provinces that ended 2019 with the lowest average transaction values were Cáceres (€252/m2), Ciudad Real (€260/m2), Jaén (€261/m2) and Palencia (€262/m2). The lack of demand and their isolation, since they are located far away from the major industrial centres, make industrial assets unattractive products in these provinces.

The Crisis will Cause GDP to Fall by More than 10% in the Islands and by 8% along the Mediterranean Coast, but those Areas will Lead the Recovery in 2021

The Balearic Islands (-17%) and the Canary Islands (-13%), as well as the entire Mediterranean coast (-8%), are leading the falls in GDP during this crisis but are expected to recover more quickly in 2021.

The Balearic Islands (-17%) and the Canary Islands (-13%), as well as the entire Mediterranean coast (-8%), are leading the falls in GDP during this crisis but are expected to recover more quickly in 2021, boosted by the engine of the Spanish economy but also the sector most affected by the crisis, tourism.

BBVA Research’s Regional Observatory estimates that the recovery this year will depend on “the duration of the restrictions, how they impact the capacity used and the public policies to mitigate them.” In this way, after the strong GDP contractions of 2020, the Balearic Islands and the Canary Islands will be the autonomous regions with the highest growth rates, of 9.6% and 7.8%, respectively. However, their absolute GDPs will still be 5% below the levels reached in 2019.

The Previous Recession Lasted 6 Years and House Prices Fell by 30%: What will Happen in this Crisis?

During the crisis that started in 2008, the País Vasco was home to the most expensive house prices, but Madrid saw a better recovery; meanwhile, Guadalajara and Toledo registered the greatest price decreases.

In 2008, the housing bubble that had been growing for almost a decade in Spain, driven by the heat of the country’s economic boom, burst. Then, a period of falling prices and declining sales began in the residential market; at the national level, the market had not yet recovered by the time the coronavirus crisis hit earlier this year.

Last time, the fall in prices lasted 6 years, from the first quarter of 2008, when they peaked, to the first quarter of 2014, when they bottomed out. “Between the period just before the real estate bubble burst in 2008 and the moment just before the recovery, average sales prices fell from €2,017 per square metre to €1,414 per square metre, whereby losing 30% of their value“, explains Antonio Ramudo, Data Scientist at Brainsre.

At the end of 2019, according to the Ministry of Development, only 53% of the value lost during the crisis had been recovered, with the average price reaching €1,734 per square metre.

In terms of sales, the volume of homes bought and sold per year went from 952,805 in 2016 to just 299,953 in 2013, representing a collapse of 68.5%. By 2019, when 567,753 sales were registered, only 41% of the transaction volume executed at the height of the boom had been recovered.

Although the peak in terms of the volume of house sales in Spain occurred in 2006, when almost a million homes were sold, the maximum average transaction price (€2,017 per square metres) was not reached until the first quarter of 2008. “This shows that fewer transactions were being registered before prices started to drop,” says the Data Scientist at Brainsre.

Likewise, the data reveals that, after the 2008 economic crisis, the minimum number of house sales was recorded in 2013, when 299,953 units were sold; meanwhile, the value of those transactions continued to decline until 2014, when in the first quarter the minimum average transaction price (€1,414 per square metre) was reached, a value that had not been recorded since 2004.

In other words, before prices began to increase, the number of transactions began to rise. “An uptick in demand produced an initial increase in transactions and a subsequent rise in prices and, vice versa, the decrease in demand led to fewer transactions being registered and, subsequently, to a decrease in prices,” explains Ramudo.

Madrid and País Vasco, the most expensive regions

The regions with the most expensive residential product are also those that suffered the largest decreases in absolute values. In this way, the range between the maximum prices in 2008 and 2009 and the minimum prices reached after the crisis is greater. Such is the case of Madrid, País Vasco and Cataluña.

When the previous crisis began in 2008, the País Vasco was home to the most expensive house prices, but Madrid saw a better recovery, and thus, according to the latest available sales prices, the Community of Madrid leads the ranking. On the other hand, the Canary Islands and the Balearic Islands – regions with the next highest prices after Madrid and País Vasco – have smaller ranges between their maximum and minimum prices, and in both cases, current prices already exceed the peaks seen just before the 2008 crisis.

Where did prices fall by the most last time?

The Autonomous Regions that recorded the greatest drop in prices were La Rioja, Castilla-La Mancha, Aragón and Cataluña, where house prices decreased by more than 40%. Meanwhile, Guadalajara and Toledo were the provinces where prices suffered the largest decreases last time, with collapses of 54% and 53%, respectively. “The large urbanisations of Guadalajara, around the Henares corridor, and Seseña (Toledo) were victims of these sharp price reductions caused by the sudden lack of demand,” says the Data Scientist.

The autonomous cities of Ceuta and Melilla and the Balearic Islands recorded more moderate price drops, with a loss in value of 20% or less.

Andalucía was the mainland region that registered the lowest price drop, with a decrease of only 25% compared to the peaks of 2009.

In terms of the recovery, the islands have performed the best thanks to tourism, second homes and international clients. In both the Balearic Islands and the Canary Islands, current prices are at all-time highs.

On the other hand, Madrid is the mainland region where prices have recovered by the most, with almost 66% of their value now restored compared to the maximum pre-crisis prices. Andalucía is the second region in terms of the recovery of prices, with almost 49% of their value now restored. In this sense, Málaga is the mainland province that has performed the best since the fall, as it has now recovered 85% of the value lost during the previous crisis.

The duration of the fall

Unlike the coronavirus crisis, the crisis that began in 2008 reached different Spanish regions at different times. Then, Aragón was the first region to see a decrease in house prices, specifically, during the third quarter of 2007; and Extremadura was the last to suffer, specifically, during the second quarter of 2011, almost four years later.

In terms of the regions with the most activity, Madrid was the market that began to suffer first, since house prices started to fall there in the first quarter of 2008; it was quickly followed by Cataluña and País Vasco in the second quarter of that same year.

After Ceuta and Melilla, the Canary Islands was the region where the recovery from the crisis began first; there, values bottomed out and began to rise in the third quarter of 2013 – four and a half years after prices first started to fall. In this context, Cataluña and the Community of Valencia were the regions that started to recover next; they began to record price increases in the second quarter of 2014.

Madrid, meanwhile, did not begin its recovery until the third quarter of 2015, almost eight years after the first decreases, from an average of €3,045 per square metre -registered at the end of 2007- to €2,029 per square meter in 2015. Extremadura, the region that was hit the latest, was also the one whose recovery started last. It was not until the second quarter of 2017, when prices there stopped falling and began to grow.

In terms of the duration of the crisis, from the beginning until the end of the price decreases, there was also considerable asymmetry between the different regions: from 4 and a half years in the Canary Islands to eight years in Aragon.

The highest prices, which exceeded €3,000 per square metre, were reached in Madrid and País Vasco in 2008. Those two regions saw the lengthiest decreases, since the price falls -of 33% and 31%, respectively- took seven and a half years in total. Meanwhile, in Cataluña, the decrease in prices was greater, 43% of the peak values reached in 2008, but it was faster, with prices bottoming out there after six years. By province, there was even more variation, since in Álava and Zaragoza the price decreases lasted 10 years, whereas in Santa Cruz de Tenerife, Cáceres and Jaén, they barely lasted four years.

No-one knows how long this crisis will last and many indicators are showing that the regions where coronavirus will have the greatest economic impact are those that are the most dependent on tourism, especially in the short term. “Although that may be true, if the experience of the crisis that began in 2008 has taught us anything, it’s that the regions that recover first and best are the important tourist centres, such as the Balearic Islands, the Canary Islands, Málaga and Alicante,” explains Ramudo.

Prices in the major cities

In the seven most populated municipalities in Spain, the behaviour of the housing market after the bubble burst was relatively similar. Madrid reached its maximum average transaction price earlier than the rest of Spain, in the third quarter of 2007; whereas the Spanish average for that milestone was the first quarter of 2008. Naturally, in other places it was reached later: Valencia, Murcia and Sevilla recorded their peaks in late 2008 and in Malaga the peak was not reached until 2009.

On the other hand, the minimum values were reached between 2013 and 2014 in most regions and since then prices have been rising consistently in the main municipalities.

Strong increase in the sale of new build homes

The years 2007 and 2008 were when the most new-build homes were sold in Spain, with 411,726 such homes transacted. That was also when the percentage of new build sales over total registered transactions reached its peak. Between 2008 and 2009, more than 50% of all sales involved new build homes, a percentage that has gradually decreased until the Covid-19 crisis, although it has remained relatively stable at around 10% since 2016.

In 2016, the new home market bottomed out with just 46,927 transactions registered, representing 11.5% of the more than 409,760 homes that were sold in total (new and second hand). Since then, the number of new homes sold has been increasing slightly, to reach 56,195 operations in 2019.

Had Madrid and Barcelona reached their peaks again?

If we focus on the most important markets, Madrid and Barcelona, we see that in the city of Barcelona, prices reached their peak in mid-2019, at €4,162 per square metre; there, average house prices fell in the last quarter of 2019 to reach €4,131 per square metre. In addition, the volume of transactions has decreased progressively over the last two years – just like in 2008, when prices reached their peak, the number of transactions began to decrease two years earlier.

Furthermore, sales values ​​in Madrid also seem to have peaked, regardless of the health crisis. There, house prices reached €3,362 per square metre during the last quarter of 2019, which was lower than those seen in the previous quarter. Also, the number of transactions registered in 2019 reflected a decrease of 8% compared with 2018.

As we wait for the Ministry of Development to publish data for the first quarter of 2020, and based on the data that does exist, “we observe a slight contraction in transaction values ​​in the main urban centres, which could indicate (leaving aside the consequences of the crisis) a hypothetical fall in prices or at least the stabilisation of them”, says Ramudo.

Ismael Clemente: “This Crisis is Much Deeper but we are Better Prepared for it”

The Chief Executive of Merlin, Ismael Clemente, highlights the differences between the crisis sparked by Covid-19 and the previous recession; and advocates a speedy recovery if the appropriate measures are taken.

A much deeper crisis but one we face with invaluable experience from the past. That is how Ismael Clemente, CEO of Merlin Properties, is defining the impact that Covid-19 is having on the Spanish economy and, consequently, on real estate. The sector is using what it learned after the bubble burst in 2008 to face the pandemic now.

“This crisis is different from the previous one. The recession of 2008 was based on hyper-indebtedness and it was triggered by the real estate sector itself. This crisis has been caused by an exogenous factor, which has devastated demand and which has had a sharp negative impact on GDP, with significantly more job losses in the United States”, explained Ismael Clemente during the sectoral meeting organised by SimaPro and attended by Brainsre.news.

Bank of Spain: Spain’s Housing Market is Not Overvalued

9 June 2019 – Eje Prime

The Bank of Spain does not think that a real estate bubble exists. The institution’s Director General of Economics and Statistics, Óscar Arce, has assured that the bank does not consider that the housing market is “overvalued in general”. Nevertheless, he is following the sector “very closely” given its history.

Arce highlighted several differences between the current climate and the previous cycle including the fact that price rises now are not uniform across all regions or cities. In fact, according to the latest data published by the Bank of Spain, average house prices rose by 6.8% YoY during Q1 2019, driven by Madrid, Barcelona, some parts of the coast and the islands.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Global Geopolitics Fuels Demand for Luxury Homes in Madrid

12 May 2019 – El Confidencial

Wealthy investors and families from China, Russia, Venezuela and Mexico are particularly active in the luxury home segment in Madrid, in particular in the districts of Salamanca, Chamberí, Retiro and Moncloa-Aravaca.

According to the College of Property Registrars, foreigners accounted for 6.7% of all residential purchases over €500,000 in the Community of Madrid in 2017, a figure that rose to 8.4% in 2018.

There are several pull-factors motivating these buyers including tax exemptions, golden visas (thanks to Law 14/2013), (relative) legal certainty, low rates of crime and affordable prices, compared to Miami and other European capitals. The language, climate and excellent transport infrastructure also play their role, as do the world-class universities and business schools in the Spanish capital.

A number of push-factors are also evident, which is where the geopolitical developments come into play. The political and economic crisis in Venezuela, the election of Andrés Manuel López Obrador as the President of Mexico in December, the political uncertainty in Cataluña and even the on-going Brexit saga, are all important reasons for wealthy buyers to turn their backs on their home countries in favour of Madrid when it comes to buying a property.

To date, since they were introduced in 2014, 2,948 golden visas have been granted for the purchase of luxury homes, with half going to Chinese citizens (1,476) and a fifth going to Russians (621).

Moreover, according to official statistics from Spain’s National Institute for Statistics, the number of Mexican residents in Spain has risen from just over 20,000 in 2014 to more than 25,200 by the end of 2018, of whom one third live in Madrid.

Meanwhile, the number of Venezuelan residents has increased from just over 32,000 five years ago to 57,120 in 2018. Nevertheless, in both cases, the real number of arrivals is higher since many move to Spain through family links making them entitled to Spanish passports.

Original story: El Confidencial (by Marcos García)

Translation/Summary: Carmel Drake

Ghost Towns Still Haunt Spain in Property Rebound a Decade After

25 November 2018 – Bloomberg

Juan Velayos’s biggest headache these days is getting licenses fast enough to hand over new homes such as the upscale condos his company is building in the northern suburbs of Madrid.

Less than 60 miles away, Ricardo Alba’s neighborhood tells a different story about Spain’s property market. The fencing instructor is one of only two occupants at a block of apartments whose development was frozen in its tracks when banks pulled the plug on credit.

“The real estate sector’s recovery in Spain is developing at two clearly different speeds,” said Fernando Rodriguez de Acuna, director of Madrid-based real-estate consultancy R.R. de Acuna & Asociados. “While one part of the country is consolidating the recovery of the sector and even expanding, another part of the country is stagnating and is showing few signs of returning to pre-crisis levels in the medium- and long-term.”

A decade after the financial crisis hit, Spain’s real estate recovery is a tale of two markets. Key cities and tourism hot spots are enjoying a fresh boom, fueled by interest rates that are still near historic lows, an economic recovery and a banking system that’s finally cleaning up its act. Private equity firms such as Blackstone Group LP are picking up once-toxic assets worth tens of billions of dollars and parsing out what’s still of value, often using their playbook from the U.S. real estate recovery to convert properties into rentals.

But travel a little beyond the bustling centers, to the outskirts of smaller villages, and ghost towns still litter the landscape — once ambitious developments, often started on agricultural land that was converted into building lots just before the crisis hit. They still stand half-finished, unable to find a buyer.

The “Bioclimatic City La Encina” where Alba began renting an apartment two months ago is one such development. Situated on the edge of the village of Bernuy de Porreros, about 10 kilometers (6 miles) from Segovia, it promised to be Spain’s first environmentally-friendly town, providing solar energy and recycled water for 267 homes, comprised of two-, three-, and four-bedroom chalets and apartments. A faded billboard speaks of the dreams that were sold, including communal swimming pools and gardens for residents who would “live… naturally.”

Today, only about a dozen of the homes are occupied. One street has finished homes but half have their windows bricked up to discourage break-ins, locals said. Alba does have solar panels heating his water, but his electricity comes from the local network. On the far side of the development, trees sprout out of the middle of a street that was never paved. Brightly-colored pipes and cables protrude from the ground. Bags of plaster on a pallet have long hardened.

Spain’s housing crash was fueled by a speculative frenzy combined with loose restrictions and corruption that allowed plots of farmland in rural villages to be converted to feed a demand for homes that never truly existed, said Velayos, who is chief executive officer of Neinor Homes. At the height of the boom in 2006, authorities approved 865,561 new home licenses when even in an economic boom demand is no greater than 250,000 homes, he says.

Banks were handing out loans to developers who had little to lose if a project didn’t find a buyer because the money wasn’t theirs. The result was an almost total collapse of the market and close to $200 billion of soured assets.

About half of them were bought in 2012 by Sareb, a bad bank set up by the government to help lenders. Sareb spent about 50 billion euros to acquire assets that were once valued at twice that amount, mostly loans to developers and real estate. Among the latter are also 97 of the 267 properties at La Encina. None of them are currently for sale as Sareb works through legal issues and construction of many isn’t finished.

Other assets were picked up by deep-pocketed investors such as Blackstone, which has 25 billion euros invested in Spain, according to Claudio Boada, a senior adviser at the firm. The New York-based company — the world’s largest private markets investor — is doing what it did at home after the financial crisis: renting out homes instead of selling them in a bid that fewer people can afford to own. Spain had a relatively high home ownership rate before the crisis but it has since come down.

Blackstone’s Bet

“We’re holding most of what we own and looking to rent it out for the foreseeable future,” said James Seppala, head of real estate for Europe at Blackstone. “There’s a meaningful increase in demand for rental residential around the world, including in Spain, driven by home ownership rates coming down.”

Private equity investors also backed a new breed of real estate developers that are bringing a different rigor to the industry. Companies such as Neinor and Aedas Homes S.A.U. are more tech-savvy when assessing markets, and emphasize industrial production techniques to improve efficiency. They’re behind a surge in licenses for new homes to 12,172 new homes in July, the highest monthly total in a decade.

But demand is uneven: Madrid is enjoying its most robust year of home construction since 2008 with an average of 2,151 licenses awarded per month in the first seven months of the year. In Segovia, just 27 minutes from Madrid on the state-run bullet train, an average of 25 homes licenses have been approved per month in 2018, compared with an average of 180 homes a decade earlier.

The volume of residential mortgages sold in Spain peaked in late 2005 before hitting a low in 2013. Since then they have gradually picked up, with 28,755 sold in August, a seven percent annual increase.

Velayos, chief executive officer at Neinor, said business is starting to pick up beyond Madrid and Barcelona to smaller cities and the coast. His company plans to hand over 4,000 homes by 2021, more than 12 times as many as in 2017. The biggest challenge has been getting licenses approved on time. Velayos had to cut his delivery target for 2019 by a third as often understaffed local councils cause bottlenecks in the production process.

More significantly, Spain’s real estate is now funded by investor’s equity and not credit, said Velayos. Neinor was bought by private equity firm Lonestar Capital Management LLC from Kutxabank SA in 2014 and went public in March 2017. Aedas is backed by Castlelake, another private equity investor, and was floated the same year. Metrovacesa SA, owned by Spain’s biggest banks, held an initial public offering earlier this year.

Shares of all three developers have declined this year at more than twice the rate of the local stock index, a reminder that the market’s recovery remains fragile, with higher interest rates and an economic slowdown on the horizon.

For the Bioclimatic City La Encina, that means it may take longer still until Alba gets new neighbors. Prices for half-finished chalets were slashed by half, according to residents. Some now sell for as little as 16,700 euros, half the cost of a mid-range car.

Alba doubts such cuts will lure buyers. Then again, that may not be a bad thing, he says in summing up the development’s advantages: “It’s very peaceful.”

Original story: Bloomberg (by Charlie Devereux)

Edited by: Carmel Drake

Núñez i Navarro Invests €25M in Site of Former Metalarte Factory to Build 80 Homes

19 October 2018 – Eje Prime

Núñez i Navarro has not forgotten about its land on the site of the former Metalarte factory. The property developer chaired by Josep Lluís Núñez is going to invest €25 million in the construction of a residential development in the Barcelona municipality of Sant Joan Despí.

The company is planning to build eighty homes, in total, with parking spaces and storerooms in the same property, which will be constructed between this autumn and 2021. 61 of the homes in the development will be private, whilst eleven will be social housing units and seven will be granted to the Town Hall of Sant Joan Despí by the Catalan company.

Núñez i Navarro acquired the former Metalarte factory in 2001. Almost twenty years later, the property developer is recovering the land to build its second residential project in the Barcelonan municipality. The company has just carried out a comprehensive renovation of the farmhouse where the Trias de Bes family used to spend its summer holidays to convert it into a school.

At the moment, the Núñez i Navarro group has twenty-three projects underway, corresponding to an investment of €250 million in Cataluña. Barcelona, Sabadell, L’Hospitalet de Llobregat and Sant Joan Despí are the cities chosen by this unlisted property developer to build 947 homes, two hotels, a co-working centre and 69 commercial premises or offices.

In fact, the company is one of the firms in the sector that has best overcome the crisis, with its low debt policy. Proof of that is the investment effort that it has undertaken in the Catalan region over the last five years, where it has disbursed almost €400 million.

Original story: Eje Prime 

Translation: Carmel Drake

Sevilla: The Slow Re-awakening of the Real Estate Sector in the Andalucían Capital

2 August 2018 – Eje Prime

Sevilla, the third largest Spanish city by population, is seeing the first signs of recovery in its residential market (…).

The capital of Andalucía, which is home to almost 690,000 inhabitants, has seen its population decrease on a gradual basis since 2012 when it exceeded 702,000 inhabitants. The slow but progressive decline of the population is probably one of the reasons why house prices have not risen there and why new builds account for an all but residual percentage of the market.

Nevertheless, some of the data does indicate that Sevilla is jumping on the bandwagon in terms of the improvements in the real estate market that are being seen across Spain: a sharp increase in prices in 2017, an on-going rise in sales and, finally, investment in the city by groups of the calibre of Habitat and Ayco.

The city of NO8DO, Sevilla’s traditional motto, saw its population peak at 710,000 inhabitants in 2003, before falling below the 700,000 threshold in 2007. That figure rose above 700,000 again in 2009 before reaching a decade high of 704,000 in 2010, but it has fallen continuously since then to the current figures.

Real estate dynamism

Despite that, the dynamism in terms of house purchases has been considerable in recent years. In 2013, operations in the sector were still registering strong decreases, with a fall that year of 24.4% to just 4,715 house sales. However, the rises have been unwavering since then: up by 12.1% in 2014; 11.3% in 2015; 15.1% in 2016 and 14.1% in 2017, with a total of 7,732 sales.

According to data from the Ministry of Development, during the first quarter of this year, 2,234 house sales were recorded in the city, of which more than 95% corresponded to second-hand homes. With just 98 sales, new homes accounted for just 4.4% of the residential activity during the first quarter.

Nevertheless, and despite this growing activity in terms of sales, residential prices in Sevilla remain stagnant. In recent years, average appraisal prices per square metre in the fourth quarter of each year have decreased steadily, with the exception of 2014 only, when they rose by a measly 0.3% (…).

Currently, house prices amount to €1,468.70/m2 on average (€1,754,40/m2 for new builds and €1,464/m2 for homes aged five years or more). That value is 26.3% lower than the prices in Sevilla in 2012 and 35.9% lower than the peaks of 2007, before the outbreak of the crisis, when the average house price amounted to €2,316.10/m2.

Governed by the socialist Juan Espadas since June 2015, the weight of social housing in the city is greater than that of many other Spanish cities, at least based on data for the first quarter of 2018. In this sense, 177 of the purchases recorded in the city between January and March involved social housing properties, which accounted for 7.9% of the total.

New projects

Habitat is one of the companies that has invested in the Sevillan market this year. In July, the property developer announced a €30 million investment in a new development in the Andalucían capital comprising 199 homes. The acquired land is located in Mairena del Aljarafe, one of the fastest growing areas in the local residential market (…).

Another active player in the city is Ayco, which has acquired a batch of buildable plots this year in the municipality of Camas (Sevilla). In total, that company has purchased land spanning 18,000 m2, where it plans to build around 200 homes.

Another emerging business for the city is the office market, which closed 2017 with 919,173 m2 of space leased, up by 4% YoY, and approaching the records of 2013, according to a report by the Sevilla-based consultancy Inerzia (…).

In the commercial sphere, the Torre Sevilla project is the most important in the city at the moment. Six years after inheriting this macro-project, CaixaBank has let 100% of the office space and the shopping centre is on the verge of opening its doors.

Aenor, Deloitte, Everis, Orange and the Chamber of Commerce are some of the entities present in the 18-storey office block, which account for just half of the skyscraper. The rest of the tower is occupied by a hotel managed by Eurostars, belonging to the Hotusa Group.

Original story: Eje Prime (by C. De Angelis)

Translation: Carmel Drake

Bankia Puts €450M Rental Property Portfolio Up For Sale

27 June 2018 – Expansión

Bankia is going to start a sales process for a portfolio of rental properties with a market value of €450 million, reports Reuters, citing two sources familiar with the operation.

The entity chaired by José Ignacio Goirigolzarri expects the interested groups to present their non-binding offers over the summer, so as to finalise the process with definitive offers from September onwards, indicates one of the sources.

This portfolio of rental properties forms part of the €4.9 billion in assets and loans foreclosed during the crisis that Bankia is trying to eliminate from its balance sheet.

At the end of March, Bankia had a gross exposure of around €16.6 billion on its balance sheet comprising non-performing loans and assets. The bank’s objective is to reduce its non-performing assets by around €9 billion.

Original story: Expansión

Translation: Carmel Drake