Solvia To Build 100 Sustainable Homes In Madrid

12 March 2015 – Expansión

Build homes that consume minimal energy and are carefully designed, at an affordable price. That is the goal that has been set for Solvia, the real estate arm of Banco Sabadell and the College of Architects (COAM), with the launch of a competition where Spanish architects will submit their proposals to create the most energy efficient residential development possible. “When COAM suggested this project to us, we looked at which one of our plots (of land) would be the most suitable and economically viable (a construction cost of €600 per square metre has been set) and we chose one in Torrejón de Ardoz with the capacity for up to 100 homes in two phases”, explains Anna Guantar, Innovation Director at Solvia.

The competition has been very successful and the developers have already selected five finalists. “The winner will be chosen this month and will receive €20,000, and if it is economically viable, then the project will be built”, says Pilar Pereda, Head of COAM.

Following the development of these homes, Solvia does not rule out the construction of other homes with zero emissions on foreclosed plots of land.

Original story: Expansión (by R. R.)

Translation: Carmel Drake

Notaries: House Sales Increased & Prices Stabilised In 2014

17 February 2015 – El Economista

House sales grew by 19.1% to 364,601 transactions in 2014 with respect to 2013, a year of minimal activity in the sector, according to the latest statistics from the General Council of Notaries (el Consejo General del Notariado).

So, whilst this rise in the number of transactions should be assessed from that perspective, the statistics reflect the fact that prices have turned the corner on the negative trend observed during the crisis and are growing again, albeit by only 0.1%.

The notaries explain that “last year the real estate market was marked by the stabilisation of monthly figures, in terms of both quantities and prices”.

Increase in sales

In detail, the increase in sales is more evident in the case of single-family homes, a segment that grew by 26.8% to 74,160, versus the 17.3% increase in the sale of flats, although more flats were sold in absolute terms (290,441 transactions).

In the case of the latter, second-hand sales increased by 23.5% to 234,748 transactions, versus an increase of 9.6% in the sale of new flats (39,306).

Prices increase slightly

In terms of the price per square metre, the average value of homes purchased in 2014 was €1,251 (+0.1%). This increase was primarily due to the increase in the value of flats (+1.4%), since the price per square metre of single-family homes fell by 2.7%.

Similarly, sales of second hand properties are driving the sector. The price of used flats increased by 2.4%, whilst the price of new flats remained unchanged.

Finally, 94,586 transactions involving other properties were recorded last year, of which 38.4% related to land or plots.

Therefore, the notaries insist that “the gloomy path of the real estate market ended last year, with the market showing signs of stabilisation compared with the same period in 2013” and they add that “during the first few months of 2015, they expect market figures to continue on the path of stabilisation observed in 2014, although values may be more moderate”.

Improved financing

On the other hand, the mortgage market behaved in line with the stabilisation of the real estate sector in 2014. The market closed the year with a 5% year-on-year increase in the number of new loans granted and with an average amount of €137,878, representing an increase of 10.2%.

In the specific case of mortgage loans granted for the purchase of properties, the number of loans granted last year increased by 39.4%. This increase amounted to 42% in the case of house purchases and 15.6% in the case of other properties.

The average capital of the mortgages granted for the acquisition of a property amounted to €124,217, an increase of 6.4%. In the case of loans for house purchases, the average amount was €117,507, an increase of 5.2%.

More loans for developers

The notarial statistics indicate that the number of mortgage loans granted for construction also increased during the course of the year, by 20.2%. This increase was higher in the case of house construction (23.8%).

In terms of the average loan amount, the figure stood at €288,974 for all mortgages loaned for construction, which represented a year-on-year decrease of 3.5%, slightly higher than the reduction recorded in 2013 (-3%).

Finally, the percentage of homes purchased using mortgage financing stood at 37.5% last year. Moreover, for these purchases, the mortgage represented 75.2% of the value of the home, on average.

Original story: El Economista

Translation: Carmel Drake

Carlton Group: Spain’s Real Estate Sector Records 2nd Best Year In A Decade

16 February 2015 – Property Funds World

Spain’s commercial real estate investment sector rose to approximately EUR9 billion in 2014, exceeding the most optimistic forecasts,  according to a new report by The Carlton Group.

2014 was the second best year within the last decade in terms of volume for Spanish commercial real estate investment, (surpassed only by 2007 when the value of each asset was significantly higher), the report said.

“Spain has once again become a relevant destination for real estate investors and the positive trend is expected to continue over the next few years,” says Javier Beltran, Managing Director of Carlton Iberia (Spain and Portugal) and head of Carlton’s Madrid office.

The report cites the “unparalleled arrival” of a very large number of international institutional and “off radar” investors from Asia, Middle East, Latin America, North America and Europe, along with the new Socimi, the Spanish REITs, that have contributed to the increased volume and value of commercial real estate transactions in Spain.

In 2014, the most desired Spanish assets for investors were prime office buildings and shopping centers, (two of the largest shopping centers in Spain were transacted during 2014), along with hotel, logistic and car park sectors, the Carlton report said.

Many investors have also started to buy “well located land development sites”  in Madrid, Barcelona and Spain’s Southern coast. This has contributed to an increase in construction activity that is also expected to rise in coming years.

The report points to the increased number of international investors, the general improvement of the Spanish economy, along with the renewed interest in Spanish banks’ lending capacity as contributing factors to a revaluation of real estate assets that is expected to continue during the next few years.

It also attributes a very robust hospitality investment market to the record number of international visitors coming to Barcelona, Balearic and Canary Islands, Madrid, Marbella, Valencia and Alicante over the last two years.

Prices in the Spanish residential market are stabilising and have shown slight increases in some areas of main cities, with the trend expected to increase price and activity, the Carlton report said.

The report concludes that Spanish real estate markets are “becoming more professional and international and all that is very good news,” says Carlton’s Beltran.

Original story: Property Funds World

Edited by: Carmel Drake

Santander & BBVA Reduced Their Real Estate Stock In 2014

10 February 2015 – El Economista

In 2014, Santander’s real estate stock decreased by 1.8% and BBVA’s dropped by almost 5%.

Banco Santander and BBVA are beginning to shed some real estate weight. For the first time, the economic recovery has allowed the two large banks to reduce their portfolios of homes and land foreclosed from developers and individuals for the non-payment of debt.

The two largest financial groups in the country have managed to halt the entry of property onto their balance sheets and accelerate its exit, thanks to a boost in sales. Thus, the Cantabrian group has decreased the gross value of its real estate portfolio by 1.8% to €7,851 million. After accounting for provisions, which reflect current market prices, this value decreases to just over €3,500 million.

Meanwhile, the bank chaired by Francisco González has reduced its stock by 4.9% to €13,016 million. After applying the appropriate provisions, the value of its real estate portfolio amounts to €6,131 million.

Boost in sales

This decline in the assets of the two main entities has occurred at a time of stability in terms of prices, which seem to have bottomed out having decreased by 40% in the last seven years. This, coupled with the high provisions, which cover between 53% and 55% of the gross value of the assets, has allowed both entities to sell assets, above all, during the second half of last year, without incurring any additional losses.

The increase in the sale of properties and, even some land, also coincides with the war in the mortgage segment that was unleashed in 2014. The entities have launched campaigns to offer loans at the most attractive prices to enable borrowers to purchase homes, including from their own portfolios.

Different strategy

Santander and BBVA’s real estate strategies are different, but both are now starting to bear fruit, after years of burgeoning portfolios of foreclosed assets as developers and families found it impossible to pay their debts.

Santander, like many other Spanish banks, has transferred the management of these assets to Apollo. The Cantabrian group sold 85% of its real estate platform Altamira to the fund, and whereby achieved significant gains with which to strengthen its capital and transfer the management of the entire stock to a specialist company, which has also just been awarded the management of a portfolio by the bad bank or Sareb for the next few years.

BBVA’s plan is different. The entity, headquartered in Bilbao, has preferred to keep the management of all of its unproductive assets in-house, through its subsidiary Anida.

Although prices have now stabilised and the banks are now making some money on the majority of sales transactions after accounting for provisions, the real estate arms of both banks are still weighing down on their income statements. These divisions include not only foreclosed homes, but also loans granted to companies relating to the real estate sector. In the case of Santander, the real estate department recorded losses of almost €600 million in 2014, 8.2% less than in 2013. BBVA recorded losses of almost €800 million.

Both banks hope that these divisions will begin to generate some kind of positive yield within two years and they expect their respective stock balances to have disappeared or been reduced to an absolute minimum within five years. The decreases were more pronounced (in the double digits) in the case of loans to developers than properties due to the divestments performed in the wholesale market.

Original story: El Economista (by F. Tadeo)

Translation: Carmel Drake

Irea: Real Estate Transactions Tripled In 2014

5 February 2015 – Cinco Días

A study conducted by Irea validates renewed interest in the sector

More than €23,000 million was invested in the real estate sector in Spain in 2014, of which 84% was dedicated to direct investment in assets and the acquisition of real estate-backed debt portfolios. The remaining 16% related to transactions involving shares in real estate companies and servicers.

At a press conference on Wednesday, the CEO of Irea, Mikel Echavarren, explained that the increase in activity in 2014 “has helped to unclog the pipes of the financial sector and bring the sector out of its coma”. It is interesting to note that most of the investors that have shown interest in the Spanish real estate sector, are foreign: on the one hand, the main players included large funds, such as Blackstone and Lone Star, and on the other hand, listed real estate investment companies (Socimis) also played an active role, in particular Merlin Properties, which have a significant percentage of foreign capital.

In the specific case of investment in assets, Irea said that shopping centres accounted for 26% of all of the capital invested in assets in 2014 (€2,501 million), followed by offices (24%) and hotels (11%), with these last two segments in full ascent. Residential assets accounted for barely 8% of total investment, including both land and finished homes. Furthermore, 85% of those transactions related to finished assets, with land representing only 4%.

With all of this, Echavarren highlighted the “merit” of this low percentage of land sold, since it is an asset that will have to be sold at a later date. In the current context, 4% seems like an achievement, since although many developers “want to purchase land, they do not have sufficient capital to do so and it is very difficult for them to obtain financing”.

Irea’s CEO repeated that international investors accounted for 53% of all investment activity in assets, followed by Socimis, which were responsible for 24%. Developers accounted for only 3%. On the vendor side, investors sold 24% of all assets, whilst financial institutions disposed of a further 22%.

The appeal of debt portfolios

Although residential assets were not sufficiently attractive for investors in 2014, that was not the case for debt portfolios linked to residential assets. Overall, the volume of debt portfolio transactions amounted to €9,683 million, of which 48% related to the residential segment. Nevertheless, the majority of this amount related to the portfolio sold by CatalunyaCaixa to Blackstone. In this segment, international investors acquired 100% of the debt portfolios sold, and 91% were purchased by investment funds. On the opposite side, 90.6% of the vendors in this case were financial institutions and 9.3% were other entities. In addition, shares in Metrovacesa and Colonial (both listed) amounting to €820 million (22%) changed hands during 2014, whilst the remaining €2,866 million of shares in real estate companies that changed hands were not listed.

Original story: Cinco Días

Translation: Carmel Drake