Tag: expensive

Ibiza’s Real Estate Market is a “World of its Own”

11 July 2018 – Diario de Ibiza

The real estate market in Ibiza is not encouraging (for the majority): the available stock of homes “is residual”, the majority of homes bought there are rented out, the peak prices reached in 2017 have been exceeded…and all of this is being compounded by a distinct shortage of land. All in all, it is a troubling scenario for those wishing to live on the island all year round.

Tinsa’s Regional Director for the East and South of Spain, José Antonio López, warned on Wednesday that the lack of land, combined with the demand for housing “is generating a dangerous melting pot” in the Balearic Islands. As such, he is asking the administration to get involved to facilitate the availability of land for property developers.

Those were the words used by López in response to a question from participants at a Proinba-Tinsa real estate meeting held in Palma on Wednesday, where the situation of the residential real estate market was discussed, in particular, the market on the coast.

López warned that this situation may “lead to serious problems” on the islands, where “young people need primary residences” and they “need options”. “For this reason, land is required, and the administration needs to get involved”, said Tinsa’s Regional Director, before adding that the supply of urban land with building permission is “almost non-existent”.

What’s more, “the supply is going to decrease” and with the “surplus demand”, we are seeing “dangerous growth that cannot be met”. In this context, “rental is not an option because those circumstances are also being taken advantage of”. In fact, according to data from Tinsa, in areas such as Ibiza (town), many people are buying to let (…).

Based on data from Tinsa, the average monthly mortgage payment on the Balearic Islands is very high, €792, well above the average for Spain as a whole, €543/month. The financial effort being made by families on the islands is also greater, given that they spent 22% of their household income on mortgages during the first year, compared with the national average of 16.8%.

Ibiza and Formentera set a new record

Of the 12 coastal municipalities analysed on the Balearic Islands, Sóller leads the increase in prices over the last year, with price rises of 21%. Ibiza and Formentera towns came in close behind, with 17.8%, followed by Santa Margalida (17.7%), Palma (14.7%) and Llucmajor (13.8%).

Palma is one of the top five most expensive capitals in Spain, with an average price of €1,951/m2, and in the last year, its growing trend has exceeded the average for the autonomous region.

By contrast, the municipalities that have grown by the least are Sant Lluís and Mahón (3.7%), Ciutadella (4.5%) and Manacor (7.1%) (…).

Ibiza is “recovering too quickly”

According to data from Tinsa, the real estate sector on the coast in Mallorca is “clearly recovering”, whilst in Menorca, there are “signs of recovery” and in the case of Ibiza, there may even be an “excessive recovery”, in López’s opinion.

Prices have been “rising rapidly” on the white island, on a consistent basis for the last few years, and the YoY variation is well above the average. In fact, current prices have already exceeded the maximums seen in 2007.

On the basis of all of these indicators, the Regional Director at Tinsa said that Ibiza’s real estate market could be considered “a world of its own, set apart from other islands and provinces” (…).

Original story: Diario de Ibiza (by E.P.)

Translation: Carmel Drake

Optimum III Buys Residential Building In Barcelona For €6.6M

6 July 2017 – Eje Prime

Optimum III, the residential Socimi created by BMB Investment Management and the US fund Bluemountain, is continuing to grow its portfolio of assets with new purchases. In its latest deal, the company has acquired a residential building in the neighbourhood of Sarrià-Sant Gervasi, in the upper area of Barcelona. The purchase of this property has seen the group invest €6.6 million.

The property is located at number 46 on Calle Calaf, in one of the most expensive districts in the Catalan capital. Until recently, Sarrià-Sant Gervasi was the most expensive neighbourhood in the country in which to buy a home, according to data from Tinsa’s IMIE Local Markets index. During the fourth quarter of 2016, the upper area of Barcelona became the most expensive in Spain, with an average house price per square metre of €3,901/m2, up by 8.6% compared to the fourth quarter of 2015.

Nevertheless, during the first three months of this year, the boom in Madrid saw the tables turn, with the neighbourhood of Salamanca becoming the most expensive in the country, exceeding €3,800/m2 (up by 6.8% compared to a year earlier). Meanwhile, Sarrià-Sant Gervasi was ranked in second place, with an average price of €3,778/m2 during the first quarter of the year.

Optimum III is continuing to increase its portfolio of assets (…), however, its business is different in several ways to that undertaken by its predecessor Optimum Real Estate. Firstly, due to the reactivation of the real estate market, the average price of acquisitions will now be approximately €2,500/m2 in Barcelona and €2,800/m2 in Madrid, according to the group. Secondly, the capital of Spain will play a greater role in the portfolio; the city accounted 20% of the total assets owned by the previous Socimi, whereas it will now account for 30% of the total, with Barcelona accounting for the remaining 70%.

Moreover, taking advantage of the work already performed by BMB for Optimum Re Spain between December 2016 and February 2017, Optimum III has now acquired five properties in the two cities. In Barcelona, it purchased buildings located on Avenida Diagonal at the intersection with Calle Girona, and on Calle Bruc at the junction with Calle Aragó, amongst others. BMB’s intention is to invest €100 million through the new vehicle, in the form of both acquisitions and improvements. In this way, Optimum III’s portfolio will comprise more than twenty buildings.

Optimum Real Estate, the older sister  

In parallel to Optimum III, BMB and Bluemountain are continuing to fatten up their other Socimi in Spain, Optimum Real Estate. Currently, the asset portfolio of that Socimi, which was created following the success of two vehicles constituted in 2007 to purchase residential buildings in Berlin (Germany), comprises fifteen assets located in Barcelona, in central areas such as El Eixample, Gran Vía, El Born and Ramblas, as well as one in Madrid, located at number 8, Calle San Bernardino. Optimum’s portfolio is currently valued at €63.7 million (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Residential Investment: Which Are The Most Profitable Districts?

30 May 2016 – Expansión

Madrid and Barcelona are pulling the real estate wagon. The recovery is happening at two speeds, at least. On the one hand, house prices are rising in the large cities, where sales volumes are also increasing significantly, rental prices are growing, non-residential investment is on the up and there is a shortage of land available for sale.

Most of this improvement in due to underlying macroeconomic trends, but not all of it. The impact of private investors is playing a crucial role in the strengthening of the two large real estate regions, whose central areas are the most sought-after by investors, both businesses and individuals, and Spaniards and foreigners alike.

The prime districts of the Madrid and Barcelona offer the highest rental yields for those looking to buy homes as investments. If we also include the appreciation that these properties are experiencing in terms of price, then the total return on these homes exceeds the 10% threshold.

That is according to a report about rental yields, by district in Madrid and Barcelona, prepared by Fotocasa.

The analysis of the Madrilenian capital concludes that the districts that spark the most interest for rented housing are: Centro, Carabanchel, Tetuán, Puente de Vallecas and Latina. They currently offer an average yield of 6%, almost one percentage point higher than the average return in Spain, which stands at 5.3%. The yields offered from rents in these districts range from 4.9% in Centro to 7.4% in Puente de Vallecas.

In Barcelona, the gross yield from buying a home and putting it up for rent (excluding capital gains) is 5.3%, in line with the national average. The districts that are most sought-after by investors in Barcelona are: L’Eixample, Sant Martí, Ciutat Vella and Gràcia, which are currently generating an average return of 4.7%, i.e. 1.3 points below the yield being offered by an average home in the most sought-after areas of Madrid. In any case, the prime returns range between 4.2% in L’Eixample and 5.3% in Ciutat Vella. (…).

Double-digit price rises

In terms of prices, nine of the 10 districts in the Catalan capital recorded double digit increases in 2015. “Within the last few months, we have seen unheard of increases in rental prices in the city of Barcelona. Whilst historically, the Madrilenian district of Salamanca was the most expensive place to rent a home in Spain, now that ranking is led by the Catalan district of Ciutat Vella, after prices there rose by more than 20% YoY. In fact, Ciutad Vella is currently 11% more expensive than the Madrileñian district of Salamanca”, said Beatriz Toribio.

“The high demand for rental housing in the most central areas of the city, and the limited supply of homes, are combining to cause rental prices in Barcelona to rise to record breaking levels. They are even causing rental prices in less central areas, such as Sant Martí and the district of Horta Guinardó, to see double-digit YoY increases in rental prices”, added Toribio.

The most sought after rental properties in Madrid are smaller than the most sought after properties for purchase. Whilst to buy, the average home measures 80 sqm and has two or three bedrooms; to lease, the average home has a surface area of 57 sqm and two bedrooms. The same thing is happening in Barcelona: the average home to buy measures 80 sqm, and has between two and three bedrooms. Nevertheless, to rent the average house size is 60 sqm with two bedrooms.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Idealista: Rental Prices Rose By 4.3% In Q1 2016

12 April 2016 – Idealista

The price of rental housing increased by 4.3% during the first quarter of 2016, taking the price per m2 to €7.40/m2/month, according to a report published by Idealista. In YoY terms, the increase amounted to 5.2%.

For Fernando Encinar, Head of Research at Idealista, “on the basis of the data in the report, it is clear that there is a huge demand for rental housing and that the supply is rising strongly. Unlike in the market for house sales, monthly rental prices are increasing in a general and uniform way across the whole country, which means that the segment is growing in a robust and stable way”.

“Moreover, at Idealista we have found that in certain markets, primarily, major capitals, the pressure of demand is so great that adverts are appearing on our database for just a few hours…(…)”.

By autonomous region

All of the autonomous regions recorded higher rental prices than three months ago, with the exception of Euskadi (where they decreased by 4%). The greatest increase was recorded in the Balearic Islands, where prices rose by 11.2%. That was followed by increases in Madrid (5.2%), Valencia (5%) and Cataluña (4.7%). By contrast, the smallest increases were observed in Extremadura (0.3%), Cantabria (1%), Canarias (1%) and Castilla La Mancha (1.2%).

Madrid (at €11.5/m2/month) is still the most expensive autonomous region. It is followed by Cataluña (€11/m2/month), the Balearic Islands (€10/m2/month) and Euskadi (€9.6/m2/month). At the other end of the table, the most affordable autonomous regions are: Extremadura (€4.1/m2/month), Castilla La Mancha (€4.4/m2/month) and La Rioja (€4.9/m2/month).

By province

Rental prices also increased in 38 provinces over the winter. The highest increase was recorded in the Balearic Islands, where prices rose by 11.2%. Significant price increases were also recorded in Valencia (6.7%), Pontevedra (5.9%), Huelva (5.5%) and Madrid (5.2%). Meanwhile, the largest decreases were registered in Tarragona (-8.6%), followed by Vizcaya (-6.1%) and Cáceres (-1.8%).

The ranking of the most expensive provinces is led by Barcelona (€12.6/m2/month), Madrid (€11.5/m2/month) and Guipúzcoa (€10.2/m2/month). Jaén is the most affordable province for renting a home, at €3.7/m2/month. It is followed by Cáceres and Ávila (€3.8/m2/month in both cases).

By capital city

Valencia is the capital city where rental prices rose by the most in Q1, with growth of 8.8%. Significant rental price increases were also recorded in Santa Cruz de Tenerife (7.5%) and Palma de Mallorca (6.5%). At the other end of the spectrum is Bilbao, where owners are now asking 5.8% less to lease their homes than they were 3 months ago. That was followed by decreases in Ávila (-3%), Tarragona and Jaén (-2.8% in both cases).

Barcelona strengthened its position as the most expensive capital (€15.2/m2/month), followed by Madrid (€12.9/m2/month) and San Sebastián (€11.7/m2/month). Meanwhile, the most affordable capitals were Lugo and Ourense, with prices of €4/m2/month and €4.3/m2/month, respectively.

Original story: Idealista

Translation: Carmel Drake