Eurostat: Rental Prices Rose by 2% in Spain in 2017

8 February 2018 – Eje Prime

Rental prices are resuming momentum in the Spanish market. After years of gentle rises followed by three consecutive years of decreases, rental prices closed 2017 with an increase of 2%, almost double the rate seen in France and Italy, according to data from the European statistics agency, Eurostat. For the first time since 2008, the rise in Spain is higher than the average recorded for the European Union as a whole.

Although owning your own home is still the preferred model for the majority of the population in Spain, the rental segment has been gaining strength in leaps and bounds, especially since the crisis.

According to the latest available data, also compiled by Eurostar, in 2016, 22.2% of Spaniards lived in rental properties, compared to 77.8% that lived in their own homes. Specifically, 13.8% of the population was paying rent at market price, whilst 8.4% had a reduced or free rent.

In 2006, just 19.8% of Spaniards lived in rental properties, well below the European average, which amounted to 27.2% at the time. Nowadays, the average for the EU stands at 30.9%.

Despite the rise in rentals, prices have evolved very unevenly in recent years. In 2008, at the height of the economic crisis, residential rents soared by 4.1% in Spain, above the average for the EU, which amounted to 3.7%.

In the following years, rental prices continued to rise, except for a slight dip in 2009, although below the EU average. Nevertheless, after four years on a bullish streak, rental prices started to fall in 2014 and have been declining since then, with reductions of 0.2% in 2014, 0.6% in 2015 and 0.3% in 2016.

In 2017, for the first time in almost a decade, Spain was once again one of the fifteen countries where rental prices rose by more than the EU average, which stood at 1.7%.

The country that recorded the highest increase in rental prices was Turkey, where rents soared by 11.1% last year. It was followed, albeit at a distance, by Estonia, Lithuania, Serbia and Latvia. The first mature market to appear on the list is the United Kingdom, where house inflation reached 2.7%.

Prices also rose at a similar rate to Spain in the Czech Republic, Hungary, Belgium, Austria, Sweden and Norway. By contrast, other mature markets such as Germany, the USA (which Eurostat also analyses), Italy and France registered more moderate rises of 1.7%, 1.7%, 1.3% and 1.2%, respectively. The only country in Europe where rental prices decreased in 2017 was Island.

This data corresponds to the House Price Index, compiled by the European statistics agency Eurostat. In Spain, several sources are published each year about the evolution of rental house prices, primarily by real estate websites and agencies, although the Ministry of Development recently announced the launch of a new official quarterly statistic.

Original story: Eje Prime (by I. P. Gestal)

Translation: Carmel Drake

Notaries: Foreigners Bought 13.4% More Homes During H1 2017

27 November 2017 – Eje Prime

International players are setting their sights on Spain for investment. The purchase of private homes by foreigners amounted to 50,087 operations during the first half of 2017, which represents an increase of 13.4% compared to the same period last year, according to data from the General Council of Notaries.

Operations completed by overseas purchasers accounted for 19.4% of the total number of sale-and-purchase operations signed during the period, compared with 20.3% during the first half of 2016, although that figure has been increasing since 2007, in line with the start of the economic crisis.

If we differentiate between resident and non-resident foreigners, 46.6% of the purchases were made by non-resident foreigners, up by 5.1% YoY, which means that operations by resident foreigners accounted for 53.4%, the highest proportion since 2011. They grew by 21.8% YoY.

All of the autonomous regions reported progress in terms of the number of homes purchased by foreigners and only five of them recorded increases below the national average, which stood at 13.4%, specifically: the Balearic Islands, with just 5.3%; Andalucía, with 5.4%; Murcia, with 5.7%; the Canary Islands, with 10.1%; and the Community of Valencia, with 12%.

Finally, the average price per square metre of the operations undertaken by overseas buyers amounted to €1,667/m2, which represents an increase of 2.9% in YoY terms. Specifically, the price paid by non-resident foreigners rose by 4.5% to €1,941/m2, whilst the price of homes purchased by residential foreigners increased by 2.8% to €1,405/m2.

Original story: Eje Prime

Translation: Carmel Drake

Investment Returns To The Residential Market

11 February 2016 – Expansion

Experts say that this trend is heterogeneous, with regions that need to dispose of their stocks and other in need of developable land.

The residential business – until recently the ugly duckling in the housing sector – emerges again as one of the values on the rise, in part thanks to the return of large reals estate companies to this activity, one of the most affected by the economic crisis. Thus, for the first time since in mid-2007 the gradual deterioration of the housing market situation began, the sector turns its attention to this business, since in 2014 it showed the first signs of improvement, although with a concentrated demand in very well located and high segment product.

Ongoing projects  

Some of the most recent examples are the Socimi Lar-Pimco España, which will soon begin “Lagasca 99 project” on the site at Juan Bravo, 3, Madrid, or Metrovacesa, with “Ciudad del Sur” in Tarifa and the study of new projects in Madrid. Likewise, Realia has residential assets in the Madrid suburb of Valdebebas and Quabit has strongly returned to this activity thanks to the capital increase undertaken last year. At the same time, developing companies like Via Célere, Pryconsa, Aelca, Inmobiliaria del Sur or Neinor Homes are making a move in this segment with the aim of becoming the first residential developer of Spain, as well as cooperatives as Momentum, Domogestora and Ibos. 
The director of the National Residential and Land area of CRBE España, Samuel Población Blanco, emphasizes the “great heterogeneity” in this trend, with differing behaviors. 
Thus Población highlights that while in Madrid there is a great need for developable land, with the risk that in one year the housing demand can be much higher than the existing supply, other regions still need to dispose of their stock. 
Likewise, Población notes that SOCIMIs and asset management companies will be increasingly interested in the residential renting area, coinciding with the change of mentality in Spanish society, the higher functional-geographical mobility and the professionalization in this activity. 
For his part, the Chairman of Armabex, Antonio Fernández, explains that there is a gap between renting demand in Spain and Europe, which tends to shorten due to the new working conditions and the lack of funding. 
”In Madrid, for example, they lack efficient product; no large blocks or buildings dedicated to renting” says Fernández.

Original story: Expansion (by Rebeca Arroyo)

Translation: Aura Ree

Unemployment Rose By 26,000 In Sept To 4.1M

5 October 2015 – Expansión

The unemployment rate always increases at the end of the summer following the end of the holiday period as the abundance of temporary jobs linked to the tourism sector comes to an end. Other sub-sectors also tend to be hit, for example, catering, trade and leisure activities.

And that is exactly what happened last month (September). For this reason, the number of unemployed people registered at the Public Employment Service increased by 26,087. However, if we discount the effects of seasonality, the number of people on the dole actually decreased by 9,746 people.

In any case, the increase in the unemployment figure is in line with the previous two years. Unemployment grew by 19,720 people in September 2014 and by 25,572 people in the same month in 2013.

It could be said that with the economic recovery, the evolution of unemployment in September is tending to become more normal. During the economic crisis, unemployment rose by 95,000 people during that period.

It also true that, according to the Bank of Spain, QoQ economic growth weakened by 0.2 p.p. between July and September. GDP increased by 0.8% in Q3, compared with 1% in the second quarter of the year. This was due primarily to the impact of the crisis in China and Brasil on the global economy. Nevertheless, activity in Spain is also suffering from the moderation in household spending and residential investment.

For these reasons, the YoY rate of reduction in unemployment has fallen below 8% once again, after exceeding that threshold in July. Thus, in absolute terms, unemployment decreased by 353,808 people in September, i.e. by 7.95% in relative terms. The total number of unemployed people stands at 4,094,042. A (low) level not seen for five years – since 2010. (…).

By sector, unemployment in the construction sector has now recorded 35 consecutive months of decreases. (…).

Original story: Expansión (by M. Valverde)

Translation: Carmel Drake

Spain property: Madrid waits for the signal to ‘go’

27 April 2015 – Financial Times

Is the influx of Latin American buyers a sign the capital has turned a corner?

Over the past decade and a half, making even a modest investment in Madrid’s housing market has been a bit like taking a rollercoaster ride. Since the market reached its peak in early 2008, average house prices in Spain have dropped by 35 to 40 per cent, according to a report issued in March by the Spanish Savings Banks Foundation, known by its acronym Funcas. New developments on the outskirts of Madrid have been some of the hardest hit.

Other figures suggest an even greater drop in values: also in March, the Spanish property portal calculated that the average home in Spain has lost 45 per cent of its value since the peak of the Spanish housing boom, with values in Madrid (a 44.6 per cent drop) representative, more or less, of Spain as a whole.

But both Funcas and report glimmers of light at the end of the tunnel: recorded a 1 per cent increase in home prices in Madrid in February, while Funcas says that the Spanish housing market is now in an “incipient, gradual recovery”.

As in Barcelona and the Balearic Islands, where small price rises have also been recorded in recent months, overseas buyers are helping to create a mild sense of optimism.

In Madrid, the most enthusiastic foreign homebuyers are heading from across the Atlantic, rather than Europe, according to Alberto Costillo, prime residential director at Knight Frank Spain. A “perfect storm” is bringing a new wave of wealthy Latin American house-hunters to Madrid, particularly from Mexico, Colombia and Venezuela.

“Madrid has advantages of culture and language, and Latin American buyers have long thought of Madrid as a safe haven. But with an improving Spanish economy, and the recent fall in the value of the euro [Latin Americans are more likely to have savings in dollars than euros], they see now see a real opportunity here,” says Costillo.

With its pretty boating lake and rows of statues, many wealthy foreign buyers look to purchase property near the city’s celebrated Retiro Park.

In the grid-like Salamanca district adjacent to Retiro Park, Knight Frank is selling a three-bedroom, two-bathroom apartment with 187 sq metres of living space, parquet floors and air conditioning in a building dating from the early 20th century for €1.47m.

In the well-heeled neighbourhood of El Viso, part of the Chamartín district north of the city centre, a 402 sq metre duplex apartment with four en suite bedrooms and a txoko — a combined cooking and dining space more commonly found in homes in the Basque Country — has an asking price of €4m. On sale through the agency Rimontgó, the unit has three parking spaces and the building has a pool and a gym for residents’ use.

“[El Viso is] quiet and exclusive, but also well-connected with the rest of the city and within easy reach of the downtown,” says José Ribes, director-general of the agency handling the sale. “This is a part of town most associated with aristocrats and intellectuals, but in recent years it has attracted people working in the financial sector, politicians and sportsmen.”

Salamanca and Chamartín are home to many of Madrid’s best restaurants. The capital has 12 Michelin-starred restaurants, compared with 23 in Barcelona. But Madrid is the only one of the two cities with a three-star restaurant — David Muñoz’s DiverXO, where dishes are called “canvases” and diners are asked to arrive “with an open mind”.

Central districts of Madrid are densely populated, but some of the city’s satellite communities, particularly to the northwest, offer more leg room for buyers. In Pozuelo de Alarcón, nestling among pine trees and benefiting from cool breezes from the nearby Sierra de Guadarrama mountains, a gated housing estate called La Finca is home to some of the capital’s wealthiest residents, including footballers from Real Madrid such as Cristiano Ronaldo.

Typical of the sprawling, cubist-style homes at La Finca is a five-bedroom, seven-bathroom house with almost 2,000 sq metres of living space. The property has a two-bedroom housekeeper’s apartment, a lift, indoor and outdoor pools, a gym, a sauna, a cinema, a wine cellar and a carport for six vehicles. On sale through La Finca Real Estate for €11m, the house stands on a plot of just over a hectare. However, according to one estate agent who prefers to remain anonymous, potential buyers are sometimes put off La Finca “because of its reputation as a playground for soccer stars”.

On Calle de Serrano, a broad, tree-lined avenue in the Salamanca district which is sometimes referred to as Madrid’s golden mile for its high-end shopping, there are few signs of the economic downturn, dubbed la crisis in Spain. However, the recession has hit some of the city’s public infrastructure.

Guillermo Bernardo, a former banker with two young daughters who now runs his own cabinet-making business, points to cutbacks in the maintenance of neighbourhood parks and gardens. “The Retiro is Madrid’s calling card, and it’s immaculate, but there is less money these days to clean and repair local playgrounds,” he says. “The perception that most people have is that the state of the economy hasn’t changed a lot but we may be about to turn a corner. Nothing is forever, not even la crisis”.

Buying guide

● Buyers should budget 6 per cent of the sale price to cover land registry taxes

● Estate agents typically charge vendors a commission of 3 to 5 per cent

● Madrid has the third largest metropolitan area in the EU by population size

● Units in a building without a lift are unpopular and may be difficult to resell

● Madrid has hot, dry summers and cool, usually sunny, winters

● Violent crime is rare but pickpocketing and bag snatching can be a problem

What you can buy for . . .

€500,000 A modern, 90 sq metre flat with two bedrooms in the Chamartín district of Madrid

€1m A 140 sq metre, three-bedroom apartment in the Salamanca district, within walking distance of Retiro Park

€5m A seven-bedroom house in El Viso with an outdoor pool on a plot measuring 1,000 sq metres

Original story: Financial Times (by Nick Foster)

Edited by: Carmel Drake

House Prices Rose At Fastest Pace In Over Six Years In Q4

9 March 2015 – Reuters

Spanish house prices rose at their fastest pace since the beginning of 2008 at the end of last year, official data showed on Monday, the latest sign that the country’s real estate sector is turning a corner.

House prices rose by 1.8% in the fourth quarter from a year earlier, according to the National Statistics Institute, compared to a 0.3% rise a quarter earlier.

Spain’s decade-long property boom went bust in 2008, triggering a prolonged economic downturn and an unprecedented surge in unemployment, which only began to abate in the second half of 2013.

The country’s economic output is expected to grow by as much as 2.5% this year after registering the first noticeable annual expansion for five years in 2014, boosted by growing domestic demand.

As interest returned to the property market, prices rose 0.3% in 2014 from a year earlier, their the first annual rise since 2007 and following a 10.6% drop in 2013.

House prices have fallen by almost 40% since the beginning of the economic crisis.

Original story: Reuters (Reporting by Paul Day; Editing by Sarah Morris and Catherine Evans)

Edited by: Carmel Drake