Tag: Experts

House Prices Will Rise by 5%+ in 2019 & Sales Will Grow by 13%

8 January 2019 – Expansión

The normalisation of the market in Madrid and Barcelona will make way for high growth in provincial capitals such as Valencia, Málaga, Palma and Sevilla. Rents will rise by more than 10% in the large capitals and sales could exceed 600,000 units in total.

Housing is going to enter a new phase of the cycle in 2019. After a year of expansion in 2018, with growth brushing the records seen before the crisis, this is going to be the year of consolidation, but also of awakening in the medium-sized capitals.

A panel of experts consulted by Expansión foresees an average price rise of more than 5%, and an increase in the sales volume of between 10% and 13%, which means that house sales may exceed the threshold of 600,000 units. That would make 2019 the seventh consecutive year of improvement in the residential sector after prices decreased by more than 30% during the years of the crisis.

Madrid and Barcelona, which inaugurated the recovery in 2016 and which have been leading the housing charge until now, are going to begin a process of normalisation. The experts agree that moderation will be felt in those two markets in particular. In the case of Barcelona, the political uncertainty, control measures from the Town Hall and price levels reached could lead to corrections in some districts where prices have already peaked.

This year, it will be the new capitals that will lead the growth of the market. The last quarter of 2018 already closed with three revelations: Valencia, Málaga and Tarragona led the increase in sales prices, with rises of more than 15%, according to data from Tinsa. In 2019, the experts are placing their focus on those and other cities, such as Sevilla Alicante, Palma, Bilbao, Murcia and Zaragoza. In the large capitals, price increases will exceed 10%.

The rise in sales prices versus the stagnation of wages will continue to cause demand to increase in the rental market, which will rise by around 7%, and by more than two-digits in the large cities, where price tensions are even greater. The volatility of the financial markets will continue to make rental a very attractive investment option. Nevertheless, the experts warn that the uncertainty regarding the measures approved by the Government in terms of the rental segment could put future investments at risk.

Whether the sector tends towards a plateau or rather moderate growth will depend on factors such as the evolution of the economy, policy changes by the ECB and the measures that the Government decides to introduce.

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Registrars: House Sales Exceeded 134,000 in Q2 2018

4 September 2018 – Expansión

The housing market is performing well, so much so that forecasts indicate that more than half a million house sales will be completed this year (…) whereby returning to pre-crisis levels.

During the second quarter of the year, 134,196 units were sold, up by 12.4% compared to the same quarter in 2017. That is the highest figure recorded in a second quarter since 2008, when 152,630 sales were registered, according to real estate statistics published yesterday by the College of Registrars.

The slight moderation in GDP growth, which is expected to rise by 2.7% in 2018, according to Government forecasts, has not prevented the real estate market from reaching cruising speed. Domestic demand, which is continuing to sustain the Spanish economy, is allowing for a reduction in the unsold stock of homes, thanks to the pull of large Spanish cities. The strong demand that is driving these figures is also having an impact on prices, which rose by 10.7% between April and June.

“The statistics are continuing to reflect the excellent performance of the sector”, said Ferran Font, Head of Research at Pisos.com, given that during the second quarter, the highest volume of transactions for 40 months was recorded.

The drivers of the increase in prices and demand relate to the increase in consumer confidence in the economy, which has boosted private consumption, and the greater weight of housing as an investment alternative, in a volatile environment where interest rates are low. This behaviour is feeding the forecasts of the experts, who expect 2018 to close with house sales of between 500,000 units, according to the ratings agency S&P, and 600,000, as predicted by the consultancy firm Jones Lang La Salle (JLL).

Nevertheless, the market is not evolving in a homogenous way. On the one hand, the sale of second-hand homes is driving the figures, accounting for 83% of total sales, whilst new build homes are more expensive. Thus, second-hand house sales between April and June recorded their highest figure since the middle of 2007, with 111,537 sales, up by 12.2% compared with Q2 2017. Although by volume there were significantly more second-hand house sales in Q2, it is also worth noting the growth rate of the sale of new build homes, which rose by 12.9% to reach 22,659 units sold.

In terms of prices, the situation is different. In general, new build homes are more expensive than second-hand homes. According to a report published by Pisos.com yesterday, the price of second-hand homes amounted to €1,612/sqm in August, up by 5.5% compared to a year ago.

By contrast, the price of new homes in Spain rose by 5.9% in June, according to data from Sociedad de Tasación. Nevertheless, that figure is skewed by the pull of the large capitals. “The average prices of new homes in Spain rose by 5.9%, but that figure decreases to 2.8% if we eliminate the impact of Madrid and Barcelona, which means that prices are in line with other fundamental factors of the Spanish economy”, indicate sources at Sociedad de Tasación.

The average price of a 90 sqm home in a provincial capital is around €205,600, whilst in the other cities, the average price amounts to €1,605/sqm, which represents a rise of 2.9% compared to 2017.

The Spanish market is still growing at several speeds, with the large cities acting as links in a chain pulling up prices and sales. Madrid, Barcelona and Alicante are the provinces where the most homes were sold during the second quarter (…).

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Madrid’s Town Hall Faces Compensation Payments of €1.6bn For Suspending Developments in SE of the Capital

16 May 2018 – El Confidencial

The suspension of the developments in the south-east of Madrid could cost the capital’s Town Hall as much as €1.6 billion, in other words, 34% of its annual budget. That is the calculation that two independent experts have performed on the basis of the execution of the Master Plan for the New Development Strategy for the Southeast of Madrid, which has led to the ‘de facto’ paralysis of all of the areas in the south of Madrid: Los Berrocales, Valdecarros, Los Cerros and Ahijones, the last large block of buildable land to the south of capital, which was destined to bring thousands of homes onto the market at affordable prices.

The report, compiled by Federico García Erviti and Gerardo Roger Fernández Fernández, experts in urban planning valuations, estimates that the indemnity payments for the Compensation Boards of Valdecarros, Berrocales and Los Cerros will amount to €1.58 billion. The Master Plan itself, compiled by the Town Hall, mentions possible compensation payments but does not quantify them.

According to this document, the number of homes will be reduced by two thirds – from 105,000 to 38,708 – ; also, the total surface area will be cut and several other modifications will be made to the plans.

Specifically, according to the report from these experts, we will be talking about a payment of more than €640 million for the Compensation Board of Los Berrocales, another €755 million for Valdecarros, whilst, in the case of Los Cerros, the indemnity payment will amount to €182 million. To all of these figures, possible additional compensation payments to each one of the owners – around one thousand – will have to be made, who may also file claims with the Town Hall of Madrid, for example, for the taxes paid over the last few years for buildable plots, whose classification is now going to change on the basis of this Master Plan.

“The Master Plan does not have any legal validity to make a modification such as the one required”, said Juan Antonio Gómez-Pintado, Chairman of the Association of Property Developers of Madrid (Asprima), who considers that “during periods of real estate activity, such as the one the sector is experiencing at the moment, the effects of these measures and the damage for the city as a whole are irreparable, given that they have paralysed the only block of buildable land with these characteristics, where homes could be built for the lower and middle classes in the capital, driving those who want to buy a home at an affordable price out of Madrid”. Moreover, he considers that “the Master Plan will lead to significant increases in the price of land, whilst the legal uncertainty will scare off investors” (…).

The (Compensation) Boards filed an appeal against the Master Plan, as well as the legality of it, with the Supreme Court of Justice (TSJM), because they consider that “a pseudo planning instrument has effectively been approved. A town hall cannot approve an urban planning instrument”, and they have requested the precautionary suspension of it. The TSJM has admitted the appeal for processing but has not ruled on the matter for the time being.

Since the arrival of the new Government in Cibeles, “developments have slowed down and there have even been written requests for their agreements to be adapted to the Master Plan”, claim sources from Asprima.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Spain’s Housing Sector is Heading for Another Golden Cycle

6 February 2018 – Cinco Días

Ten years ago, the largest real estate bubble of the democracy was about to burst, and although it was not the first, it was by far the most spectacular:  not only were residential property prices extremely high, everything relating to property was excessive: the volume of homes built, the amount of credit granted and the number of sales recorded. And although there were those who warned that the bubble would burst and the consequences would be dire, no one guessed how dramatic they would actually be.

Now, a decade later and four years after the recovery began, the consensus amongst analysts is that we are starting a new golden cycle that shares almost no similarities with the one that burst in 2008. The most optimistic observers even forecast five years of stable and sustained increases in house prices, as well as an increase in house sales and in the construction of new properties boosted by the global economic recovery.

In terms of prices, the forecasts for 2018 range between a conservative 3% increase and an average of 6% for the whole country. Nevertheless, regardless of the figure projected for the country as a whole, all of the studies agree that house prices will rise at different speeds this year. Madrid, Barcelona (but not the rest of Cataluña) and the Balearic Islands will clearly perform better than the rest, with price increases in the double-digits. And although they will record their fifth consecutive year of rises, prices will still be around 27% below their former peaks, on average, according to Eduard Mendiluce, CEO of Anticipa Real Estate.

The forecasts for this year are not surprising if we take into account the latest figures for 2017, relating to the third quarter, which show an annual increase in house prices of 6.7% YoY (…).

In terms of the areas that will see the most activity, Victor Pérez Arias, Managing Director of the international real estate fund manager ASG Iberia, says that the Mediterranean Arc will continue to account for a great deal of activity, spurred on by the pull of overseas demand (..).

According to the CEO of Servihabitat, Julián Cabanillas, given that more than 470,000 homes were sold in 2017, the psychological barrier of 500,000 is going to be exceeded again this year, something that has not been seen since the fateful year of 2008.

One of the determining factors in the return of house purchases to positive rates was the reopening of the credit tap. Nevertheless, access to financing is still a long way from the free bar decreed at the beginning of the 2000s. The granting of a mortgage now requires certain solvency criteria, which forces future borrowers to have savings – and that requirement was avoided in the past on too many occasions. This prudence on the part of the banks is one of the keys that, according to the experts, differentiates this cycle from the previous one and distances the ghost of a new bubble.

In fact, the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, says that whilst the volume of mortgages granted is considerably below the volume of purchases, the market will be healthy and that is what happened in 2017. With the official figures yet to be published, all indications are that around 470,000 house purchases were recorded in 2017, whilst the banks granted no more than 320,000 mortgages (…).

The previous crisis also hit property developers hard, given that demand was stopped in its tracks from 2008 onwards, following the outbreak of the global economic crisis, whereas just two years earlier, the number of new housing permits had set a new record, with more than 800,0000. Numerous companies had started projects without any presales, convinced that they would sell all of the units quickly. Given that it takes between 18 and 24 months to build a housing development, many buildings were finished only to spend years unoccupied. In this way, construction was suspended, above all, from 2009 onwards and even today, just 10% of the record volumes reached twelve years ago are being built.

Nevertheless, given that in the large cities and certain areas along the Mediterranean Coast, the absorption of stock has evolved at a good pace in recent times, for the experts, it seems that the time has come to increase the rate of construction once more. That is what the National Director of Residential and Land at CBRE, Samuel Población, thinks. He expects the supply of new homes to start to increase from the end of this year, although its impact will be greater in the second half of 2019. That consultancy firm is sure that despite this rise in supply, prices will not increase by less than 5-6%, with Madrid, Barcelona and a large part of the coast as the most dynamic markets (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Spain’s Residential Sector: A Fleeting Boom Or A Genuine Bubble?

3 October 2017 – El Confidencial

A fleeting real estate boom or another bubble in the making? Although many in the real estate sector – property developers, banks, experts… –, deny that Spain is committing the errors of the past and are instead convinced that we are witnessing the creation of a new real estate boom, the truth is that some indicators have started to trigger the first alarm bells, in particular, those relating to the evolution of house prices. The increases in house prices are not only generalised, in certain markets, they are very striking.

Such is the case of large cities, like Madrid and Barcelona, where the increases – in new build and second-hand prices – are now well into the double digits. According to data from the appraisal company Tinsa, in just twelve months, house prices have risen by 20.6% in Barcelona and by 15.5% in Madrid. This means that during the summer months, there has been a real boom in prices since, during the second quarter of the year, the YoY rise amounted to just 1.8% and 2.7%, respectively.

“A sustainable increase in prices would range between 4% and 5%. The double-digit figures in certain areas, where there is limited supply or a tourist boom, such as Las Palmas and Ibiza, are sustainable over the long term”, explained Jesús Amador, Real Estate Analyst at Bankinter, speaking recently to El Confidencial.

Both cities are still well below their maximums of 2007 (Barcelona is 28.3% below and Madrid is 37.4%), nevertheless, since their minimums, prices have now appreciated by 44.4% and 24.9%, respectively (…).

Prices in Palma de Mallorca have returned to the peaks of 2007

The most notable finding in the second-hand market is the rise in house prices in Palma de Mallorca, which increased by 7.3% over the summer, making it the country’s first capital city to exceed the price levels of 2007, followed by Lleida (5.3%), according to data from Idealista. Increases in Málaga (5.2%), Girona (4.9%) and Pamplona (3.9%) are also noteworthy (…).

Five indicators of the health of the Spanish real estate market 

1.- Average sales period (liquidity)

In Spain, it takes 9.1 months on average to sell a home. The cities of Madrid and Barcelona are the most liquid markets, with average sales periods of 3.2 and 3.4 months, respectively. Of the five largest capital cities, Valencia and Sevilla have the longest periods, where it takes 8.7 and 6.4 months, respectively, to sell a home.

2.- Financial effort

On average, Spaniards spend 16.6% of their gross household income to pay the first year of a mortgage. The autonomous regions where below-average financial effort is required are La Rioja (13.2%), Murcia (13.3%) and Castilla y León (14.2%).

At the opposite end of the spectrum (…), a much higher percentage of the household income is required to buy a home with financing in the Balearic Islands (21.2), Andalucía (17.6%) and Cataluña (16.7%) (…).

3.- Average mortgage and monthly repayment

The average mortgage in Spain amounted to €113,130 during the second quarter of the year (the most recent data available), compared to €148,037 in 2007, according to data from Spain’s National Institute of Statistics (INE). The average monthly mortgage repayment amounted to €528 in Q2, almost 40% lower than ten years ago (…).

4.- Sales and purchases

The provinces of Málaga, Alicante and the Balearic Islands, which all have a clear tourist component, are those with the highest number of house sales in the last four quarters with respect to the size of their respective housing stocks: 33.3 homes for every 1,000 properties in the province of Málaga; 29.4 in Alicante and 28.8 in the Balearic Islands.

By contrast, the least active markets include Ourense, with barely 6.6 house sales for every 1,000 properties; and the provinces of Zamora and Teruel, with 9.4 and 9.5 homes sold, respectively, for every 1,000 properties.

5.- Permits for new builds

In terms of property developer activity, the provinces of Madrid, Navarra and Vizcaya are still the ones where the highest number of new build permits were registered over the last four quarters, in proportion to the size of the housing stock.

In the Community of Madrid, 5.4 permits were granted in the last year for every 1,000 homes already in existence, whereby exceeding the number granted in Navarra (4.4 permits) and Vizcaya (4.3 permits). The least active areas in this regard include the provinces of Tarragona and Lugo (0.7 permits for every thousand homes in both cases), followed by Valencia, Pontevedra and Zamora, where 1 permit was issued for every 1,000 homes.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

The Housing Market Recovery Will Strengthen In 2017

9 January 2017 – Expansión

Expansión interviews a panel of real estate experts / Analysts expect house prices to rise by around 5% on average in 2017, but that figure is likely to be even higher in the large cities. Moreover, sales will grow at a higher rate than prices, even though the comparison will be performed against 2016, when around 400,000 transaction were completed. (…).

The property sector started to reverse its negative trend in 2014; it really emerged from the darkness in 2015; and the improvement started to be felt across the country in 2016, albeit in the shadow of the political paralysis. For this reason, and with the macroeconomic improvement to boot, 2017 is set to be the year in which the real estate recovery finally takes hold. The consensus of the experts consulted by Expansión is that house prices will rise moderately, by around 5% during 2017; sales will increase by even more – around 10%; and mortgage lending will flow a lot better than last year. All of this provided that interest rates do not rise.

The reasons for this realistic optimism are primarily macroeconomic. The increase in employment (above all), the growth in GDP, the improvement in consumer confidence – a more important indicator for the real estate sector than many people think – and the gradual opening of the mortgage tap are juxtaposed in a virtuous way for property, which will not only become attractive again for those looking to reposition themselves on the property ladder, but which has also become a major focus of returns for investors. At the same time, there is still some uncertainty hanging over this recovery. For example, the scarcity in terms of the demand for new households.

In this context of a “slow, moderate but constant recovery”, as defined by Beatriz Toribio, Head of Research at Fotocasa, house prices will definitely rise, but not very significantly, according to all of the experts that have responded to our survey.

For example, Aguirre Newman estimates “price growth of around 6% for new and second-hand homes”, according to Juan Riestra, Director of the Residential Division at the real estate consultancy. Maurice Kelly, Director of the Residential area at JLL, thinks that established areas, such as the centres of major cities and exclusive locations along the coast will see “increases of more than 6%”.

Almost all of the forecasts indicate price rises of around 5% and highlight the disparity between the different real estate markets around the country. (…).

José Luis Ruiz Bartolomé, Managing Partner at the consultancy Chamberí AM, notes that “prices will rise by around 5%…” but adds a new and different perspective: “These price rises will not be driven by the central districts of Madrid and Barcelona (like until now), but rather by the more peripheral regions and other cities that have not been performing particularly well so far”.

Moreover, not all of the analysts agree with the forecast of 5%. Jorge Ripoll, Director of Research at Tinsa, thinks that the increase will be less marked, ranging between 0.1% and 2%. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

What’s In Store For The Housing Market In 2017?

28 December 2016 – Cinco Días

“The real estate market can look forward to a new smooth and long expansionary cycle”. That is the consensus of the majority of analysts who have spent the past few days preparing their end of year report and forecasts for next year. Although the forecast figures are unlikely to coincide exactly, the fact is that the trend is unanimous. Provided there are no major macroeconomic changes, in other words, provided employment continues to grow and interest rates continue to remain a minimum levels, all of the experts consulted, be they property developers, construction companies, intermediaries such as the API, notaries, registrars, appraisal companies or bankers, agree that: 2017 will be better than 2016.

This does not mean that there are no clouds on the horizon. For the consultancy firm Knight Frank, the main risk is the political context at home and, to a lesser extent, overseas. “During the months when there was a caretaker Government, many projects were frozen; now the main uncertainty is whether the new Govenrment will manage to approve the budgets”, said Ernesto Tarazona, Managing Partner of Residential and Land at Knight Frank.

In this way, provided there aren’t any new political upheavals, 2017 will be the year in which more homes are sold and constructed and at higher prices. In terms of production, experts calculate that if this year around 70,000 new homes are going to be finished, then next year that figure should increase to around 100,000. Meanwhile, in terms of transaction volumes, next year could be the first year since 2008 when we see more than half a million homes being sold once again, according to Tinsa.

On the other hand, the forecasts vary the most when it comes to house prices, with predicted increases ranging from 2% to 5%. The VI Observatory of the sector, compiled by the Spanish Association of Value Analysis (AEV), together with the Head of the Applied Economics Department at the University of Alicante, Paloma Taltavull, and a group of 21 experts states that the evolution of house prices will be contained due to two essential factors: the stock that still needs to be sold or leased, of which they calculate that 25% is owned by the banks; and the weakness in terms of demand that still persists across the majority of the country. In the opinion of these experts, prices will end this year with nominal increases of around 3.8%, and will continue to rise by around 3% in 2017. Other sources, such as Bankinter, raise that percentage to 5%, due to the booms currently happening in the real estate markets in Madrid and Barcelona, where house prices are rising at double-digit rates given the scarcity of supply of new homes.

What all of the experts seem to have rejected is that the market may generate a new bubble over the medium term, given that: house sales are growing in a sustainable way, in line with new mortgages; and they are doing so in regions with the greatest economic activity and highest levels of job creation. Moreover, the recovery in terms of the promotion of new homes will act as a buffer to prevent one-off price spikes amounting to anything more. (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

International Funds Reactivate Residential Development Market

7 July 2016 – El Economista

After several years away, cranes are appearing on Spain’s landscape once again. Their return has come thanks to several large international funds, which have managed to reactivate the property developer market in record time and just at the right moment. Thanks to their presence, property developer activity in Spain grew by 30% last year, with 50,000 new construction permits; and the experts are certain that the residential business is now unstoppable.

The financial capacity of the new players is overwhelming in some cases. They have liquidity surpluses that the historical property developers would have envied, but, nevertheless, they do not know the ‘ins and outs’ of the local market, and their experience in terms of land is practically non-existent. For this reason, their entry into the Spanish market has been undertaken through the purchase of property developer platforms and through partnerships with local companies (…).

In light of the high profile partnerships that have been signed in the last two years, involving players such as Lone Star, Värde and Kennedy Wilson, the experts predict that the high level of activity will continue this year with the purchase of plots of land. In fact, they confirm that sales of non-developable land are starting to accelerate and that demand for land purchases will increase, especially those in the final stages of development, due to the high level of competition that has been generated between the key players in the sector – property developers, investment funds and cooperatives.

All of these players have realised that the opportunities that the residential development business is now offering “have yields that are considerably higher than those of other investments”, according to Solvia’s Market View report, which states that transactions have grown by 8.6% and prices have risen by around 4.5%. With these positive indicators, the development figures being talked about now include 150,000 new homes and 50,000 secondary residences per year until 2020.

Most of these homes will come onto the market thanks to Neinor Homes, which is looking to become the largest property developer in Spain. This company will be one of the most active over the next few years, given that according to its own forecasts, it expects to build between 2,500 and 3,000 homes per year. The firm, led by Juan Velayos – the former CEO of Renta Corporación – is the largest residential real estate company created in Spain following seven years of recession.

Its potential was proven last year, since between its creation, in May 2015, and the end of the year, it invested own funds amounting to €800 million on the purchase of land, on which it plans to construct 10,000 homes over the next few years, bringing together the largest bank of high-quality developable land in Spain (…).

But Lone Star is not the only fund that has made a long-term commitment to the Spanish residential market. The US fund has had a major competitor for several weeks now, in the form of Värde, which after acquiring 25% of the real estate arm of San José from Banco Popular, has now created a new property developer.

The company is called dospuntos and its Business Plan for 2016-2012 forecasts an investment of almost €2,000 million in the Spanish real estate market over the next six years, to complete the construction of 2,000 homes per year on average from 2019 onwards. For the time being, the group already owns a sizeable bank of land for the construction of more than 7,000 homes across Spain.

Inmobiliaria Habitat is another company with history in the sector, which in 2015, after finding itself in a very delicate financial situation and incapable of paying its debt, ended up in the hands of a group of funds – Bank of America Merril Lynch, SP101 Finance Ireland, Capstone and Goldman Sachs, amongst others. In this case, although the commitment by the funds has been key, it is nonetheless a temporary measure, given that they plan to exit the group within two or three years.

The latest residential report from the consultancy firm CBRE highlights other partnerships between international funds and domestic developers such as: Grupo Lar and Pimco; Renta Corporación and Kennedy Wilson; Momentum Real Estate and HMC; Aquila Capital and Inmoglaciar; Mina Inmobiliaria and Eurostone; Aelca and Värde; and Q21 Real Estate and Baupost. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

The RE Sector & Its Challenges For The Future

14 April 2016 – Cinco Días

“Few countries in the world have as much regulatory complexity as Spain”, said Alfonso Benavides, Chairman of the Urban Land Institute in Spain yesterday, at the Sustainable Urban Development Forum organised by the newspaper El País and sponsored by Distrito Castellana Norte. According to experts, the diversity of legislation hampers growth in a sector that has great potential for expansion. The politicisation and lack of a roadmap for management plans represent another obstacle”. “There is no strategic vision”, said Eduardo Fernández-Cuesta, Chairman of RICS in Spain.

The system is so complex (and hard to interpret) that it generates more questions than it answers. The continuous updates to the regulatory framework resolve one set of problems and create another. “The private sector can work with complexity, but not with uncertainty over timings”, warned Benavides, who pointed out that the first draft of an urban planning request alone can be up to 2,500 pages. The proposed extension of the Castellana being managed by Distrito Castellana Norte has been in the pipeline for more than 20 years, awaiting the various approvals.

“The fundamental concept is legal security, something which we currently lack”, said Ricardo Martí-Fluxa, Chairman of the Spanish Association of Real Estate Consultancy Companies. It is estimated that for every €1 million of real estate investment, between 18 and 20 jobs are created. In his opinion, we should stop demonising the economic gains of projects because the private sector, which has to drive these processes, must be able to generate a return from its investments and he noted that Town Halls in other European capital cities, such as London, are determined to give companies facilities so that they can execute such investments.

Juan Antonio Gómez-Pintado, Chairman of the Association of Real Estate Developers in Madrid, expressed the same views. He noted that the first people who are interested in putting an end to speculation are property developers. “It is absolutely essential that land is available, when it is restricted, a natural speculative process occurs. By the law of supply and demand, when land is restricted, its price increases”, he complained. (…).

The big question is, following the burst of the real estate bubble, whether Spain needs to continue building homes. The Ministry of Development, which prepares an annual report, estimates that there are 43,000 empty new homes in Madrid alone. Sources in the sector dispute those figures. “The report is prepared using a valid methodology, but it does not reflect the reality because, for example, it does not take account of the fact that the owner of a new home may not want to sell it”, said Juan Fernández-Aceytuno, CEO of Sociedad de Tasación. The actual number, if we look on a promotion by promotion basis, does not exceed 8,000 homes in Madrid. “One of the major problems is that we have run out of stock”, said Gómez-Pintado.

Nevertheless, the experts agree that, a new bubble is unlikely, especially due to the lack of available mortgage financing. In 2006, around 1.3 million loans were granted. In 2014, that figure barely reached 350,000. “There is no risk of a bubble”, said Fernández-Aceyuno. “We expect a period of stability in terms of house prices across the country”.

Original story: Cinco Días (by Carlos Santana)

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