Developers Focus on Spain’s Largest Cities as Smaller Towns Are Left Behind

8 November 2019 – The recovery of the Spanish property market since its nadir in 2013 has been relatively slow and concentrated in the country’s largest cities. In that year, developers applied for just 34,000 construction permits to begin work on the development of new homes. The year 2006 saw the last decade’s peak of a staggering 860,000. Last year, municipalities issued 100,351 new permits, when market sources state that Spain’s needs between 100,000 and 150,000 per year to keep up with demand.

The recovery, however, has been limited to the country’s largest urban centres. Major developers have so far largely ignored Spain’s smaller cities and towns, leaving any needed construction there for much smaller, local builders with limited financial capacity.

Last year, developers concentrated the majority of their investments (51.6%) in just five provinces: Madrid, Barcelona, ​​Malaga, Alicante and Bizkaia, which together account for just 36% of the country’s inhabitants. Ten provinces account for 65% of the homes built, while another 40, which account for 45% of the country’s total population, saw just 35% of the requests for new construction permits.

Original Story: Cinco Dias – Alfonso Simón Ruiz

Adaptation/Translation: Richard D. K. Turner

Investment Recovers to New Highs Two Years After Referendum on Catalonian Independence

21 October 2019 – The Barcelona Meeting Point (BMP), the largest real estate fair in Catalonia, opened its doors just two days after Spain’s highest court convicted many of the leaders involved in Catalonia’s referendum on independence on October 1, 2017. Even as major riots shut down the airport and filled the city with the smell of burning plastic, investors appeared unruffled. The region’s real estate market has come back strong after having taken a nosedive in the two quarters during and after the bid for independence.

The last edition of the BMP, two years ago, was held just fifteen days after the referendum, and the difference from today was stark. Attendees referred to the fair as something of a funeral rite as the referendum led to plummeting investment. Hundreds of companies at the time decided to move their headquarters away from Barcelona. That uncertainty caused two quarters of sharp reductions in real estate investment in Catalonia. The market, however, has come back roaring.

Investment in the office real estate sector fell by half in the two quarters after the referendum in 2017, shocking many investors at the time. But by the summer of 2018, Blackstone finalised one of the most important transactions in the office market. The giant US fund acquired the historic headquarters of Grupo Planeta from the Lara family for 210 million euros. During the same period, Solvia sold three hospitals in Barcelona, ​​Bilbao and San Sebastián to Carmen Godia for 200 million euros.

Total investments between January and September of this year reached €4.5 billion, near to the levels of the last two years and above the tally in 2008, which set the record high for the previous real estate cycle of €4.4 billion. It remains to be seen whether the rioting after the Supreme Court’s ruling will depress investments once again, but most investors appear to be sanguine.

Original Story: El Confidencial – Elena Sanz

Adaptation/Translation: Richard D. K. Turner

BBVA Looks for Buyer to Acquire Up to €1.3 Billion in Toxic Real Estate Assets

14 October 2019 BBVA is looking to sell off up to a third of its approximately €1.3-billion portfolio of non-performing real estate assets. The Spanish bank acquired many of the assets during Spain’s financial and real estate crisis when BBVA bought up several of the country’s failing savings banks.

The bank is looking to rid itself of the €3.6 billion in foreclosed assets and €1.345 billion in shares of real estate companies, in addition to unpaid loans from SMEs and individuals valued at about €5 billion.

Some of the groups potentially interested in acquiring the assets include Cerberus, which already bought BBVA’s real estate business in 2018, Apollo, Blackstone, Bain Capital and Lone Star.

The sale, which consists of residential, commercial and land assets is still in its initial phase. However, the bank is looking to complete any sale before the end of the year.

Original Story: Business Insider – Adrián Francisco Varela

Adaptation/Translation: Richard D. K. Turner

Ibiza Exemplifies the Real Estate Market’s Recovery

25 April  2019 – El Confidencial

The real estate market on the Balearic Islands, and especially the well-known Ibiza, have exemplified the market’s recovery since the beginning of the financial crisis, just over a decade ago.  Aided by geographical constraints, limiting any potential growth on the islands, housing prices have increased significantly over the past four years.

Burgeoning demand by foreign buyers has pushed prices on Ibiza to a level that is 38% above the previous historical highs seen in February 2008 (for existing housing).  Other Balearic municipalities are also clawing their way back up, though at a reduced pace.  Fotocasa stated that prices on Calvià are 1.6% above pre-crisis levels while prices in Palma de Mallorca are just 1.3% below.

That growth has led to Ibiza to have the third most expensive property prices in Spain, behind San Sebastian and Sant Cugat del Vallès (near Barcelona), and ahead of Barcelona, Santa Eulalia del Río (also in the Balearic Islands), Pozuelo de Alarcón and Madrid. All have prices exceeding 3,000 euros per square meter. The Balearic Islands also has the second highest levels of real estate activity in Spain, with 13.41 sales per thousand inhabitants, only surpassed by the Valencian Community with 15.88 and ahead of the Community of Madrid, with 11.63.

Prices in the Canary Islands are currently 22.1% below the high of May 2007 (2,155 euros per square meter), while prices Madrid are 27.4% below its high of June 2006 (3,970 euros). On the other hand, prices in Navarra are still 53.3% below their previous highs, followed by La Rioja (-53.2%) and Murcia (-50.5%).

Original Story: El Confidencial – E. Sanz

Translation/Summary: Richard D. Turner

Angel Cano’s Firm to Market Flats in Benidorm’s Giant In Tempo

4 October 2018

The proptech firm Sonneil will market 270 flats, seeking clients for the tallest residential building in Spain.

After years of paralysis, the tallest residential building in Spain, at 192 meters, will begin work on its last phase of construction, while starting sales of its 270 flats. The SVP fund (which owns the property) has commissioned the real estate company Sonneil, owned by Ángel Cano, the former CEO of BBVA, to sell the apartments on an exclusive basis. Sales are expected to begin shortly, the proptech firm announced on its website.

Sonneil is a proptech, which apply information technology to real estate transactions, based in Alicante. Its founder is Alfredo Millá, an ex-executive at Solvia, Sabadell’s servicer. Juan Pedro Moreno, president of Accenture; Albert Ribera, founder of Trovit; and the lawyer Juan Busquets are partners.

Last year, Sevenzonic, run by several former executives at BBVA, including Ángel Cano, and Javier Rodríguez Zapatero, former general manager of Google in Spain and president of the ISDI business school, also invested in the company. Sevenzonic was founded to invest in new technology companies.

The real estate agency Sonneil has not revealed any potential prices or the date that sales will begin. This firm is highly focused on international clients looking for coastal housing in Spain. More than 60% of the buyers it attracts are foreigners, mainly Belgians, Nordics, Dutch and Germans.

As a proptech company, Sonneil uses hyper-segmented online marketing tools segmented by client type, through social networks, Google Ads and web positioning. The real estate company seeks to reduce the number of intermediaries that act in a sale, especially in the case of international clients, becoming a single agent.

Construction on the building began in 2007. Its developer, Olga Urbana, was declared insolvent in 2014. Sareb (the bad bank of the Spanish government,) became its main creditor, selling the debt to SVP Global last year. The American fund took over the project and announced its intent to finish construction on the skyscraper, which has been paralysed for years.

Original Story: Cinco Días – Alfonso Simón Ruiz

Translation: Richard Turner

The Basque Real Estate Market Has its Best Semester Since 2010

8 August 2018

Housing sales rose by more than 7%, with 10,166 operations in the year to June, the highest level in eight years.

The Basque property market is continuing to gain rhythm as it traverses its fifth consecutive year of growth. Between January and June, more than 10,000 homes were sold in Euskadi (the Basque country), most of which were existing homes, the same as in the first half of 2010 and increasingly close to the 15,000 sold at the beginning of 2007. The economic improvement and the rebound in employment are stimulating demand and pushing up prices, softened in part by the low cost of credit.

Some experts are already warning of a potential new housing bubble like the one that caused the crisis to explode in 2007, even though the wounds from the last crisis have yet to fully heal. Last year, activity in the Basque construction sector grew again after nearly a decade of contraction, thanks to a recovery in housing construction. The sector is also seeing hopeful data regarding employment, which grew strongly in the second quarter of 2018 despite the slowdown in hiring in the Basque industrial sector.

The key to the maintaining the continuity of this virtuous cycle lies in the purchasing power of workers, especially young people. Salaries are the engine of the economy; hence the growth of the real estate market is linked to the progress of the economy in general. High prices, in this case, are a handicap that slows down the recovery of the sector. In this, the low cost of credit is a boon, which can encourage many families to take the plunge.

In the first half of 2018, 10,166 homes were sold in Euskadi, according to the INE’s data, the best result since the first half of 2010. Despite the slowdown in June, with a year-on-year decrease of 6.7%, operations grew by more than 7% in the first six months of the year. This would maintain last year’s pace and lay the foundations for a fifth consecutive year of growth.

The Basque real estate market bottomed out in 2013 when there were fewer than 11,000 transactions during the year as a whole – and just 6,300 between January and June. The trend changed in the second half of 2014, and the market began to see increasing signs of reactivation and consolidation in the following years. In 2017, just over 17,000 homes were sold in the Basque region, and the figure is expected to near 20,000 this year, practically double that of 2013, and not far from the record year of 2007, when 26,000 homes were sold.

The sale of new housing increases

Most of the sales have corresponded to existing housing. Around 80% of the transactions in the first half of the year involved previously existing homes. However, there has been a clear upward trend in the sales of newly built homes, which saw two consecutive monthly increases in May and June. For the semester as a whole, the sale of new flats increased by 10% compared to January-June 2017, higher than the average for real estate market in general.

On the other hand, although transactions involving existing homes do not directly affect the operations of the construction companies, those sales are also a reflection of the dynamism of the market and, although this is not always the case, a sign of an improvement in the perspectives and economic capacity of many families.

The acceleration of the real estate sector is supported by an increase in mortgage loans, which rose by 8% last year and continue to rise in the first half of 2018. The market is waiting to see the effect of the expected change in Euribor rates. Those rates fell below zero at the beginning of 2016, but have since started to rise again, albeit very slowly. For now, Euribor rates are still negative, generating savings for mortgage holders, but experts they agree that this will not be the case for long. The ECB hopes to put an end to the currently ultra-low interest environment, which would push Euribor upwards.

Although this factor can be a brake in the medium term, in reality at the moment, it serves as an important stimulus for the market. The fear that the cost of mortgages will increase, in many cases, leads to a decision to bring forward any planned purchases, to take advantage of the banks’ low rates.

The rise in sales has been particularly pronounced this year in Araba, where 450 homes more homes were sold more than in the first half of last year, reaching roughly 1,900 operations. Bizkaia (Biscay) recorded an increase of 300 homes compared to the first six months of last year, exceeding 5,200. In Gipuzkoa, whose capital has the most expensive flats of the three territories, there was a slight decline in the number of sales in the year to June, with just over 3,000.

In the whole of Spain, housing sales rose by almost 11% between January and June, according to INE data, which confirms that, in general, the Spanish market is somewhat more dynamic than the Basque market. In any case, the semester closed out with a smaller advance than the one in May, 13% than in April, above 15%.

Much of the slowdown was produced by the tepid data in June when sales in Spain rose by an anaemic 1.8% while avoiding the downturn in the Basque country. In April, the Spanish real estate market saw its best growth since the beginning of 2007, recording an increase in sales of 30%. The strong start to the year, therefore, gives some leeway for the type of retrenchment seen in June, and experts believe that growth will continue for the rest of the year.

Original Story: Deia – Adrián Legasa

Photo: Oskar M. Bernal

Translation: Richard Turner

 

Bankia’s Return to Financing Developers: €180 Million in First Semester 2018

20 August 2018

In the year to June, the Spanish bank signed ten financing operations, nine lines of guarantees, as well as seven comfort letters, worth fifty million euros, on its return to the development business after the European Commission.

Bankia has returned to the development business in a big way. The Spanish bank financed real estate projects in the amount of 180 million euros in the first half of the year in its return to the sector, after freeing itself of the restrictions imposed by Brussels five years ago as a condition for receiving lines of capital that saved the institution from bankruptcy.

From January to June, the institution signed ten financing operations, nine lines of guarantees, and seven comfort letters worth almost 50 million euros, as reported by the company on Monday.

In its return to the real estate business, Bankia created a development management team at the end of last year, in line with its plan to loan 400 million euros per year to the sector and capture a market share of 8% by 2020.

Bankia’s re-appearance in the area of developer loans began with a loan to the Basque group Amenabar, one of the country’s most promising developers, for the construction of 150 homes in Las Rozas (Madrid).

Alberto Manrique, director of ​​Bankia’s development team, this line of business is “one of the bank’s levers” in a new phase of growth that began this year.

Original Story: EjePrime

Translation: Richard Turner

 

Housing Prices Break Records in 16 Regions… 11 are on the Coast

19 August 2018

The increase in the price of housing has been especially pronounced in the Spanish archipelagos.

The real estate sector is already beginning to show signs of heating up on some levels. Many indicators are still below those registered during the real estate boom, but others are already reaching record highs, and not only in Madrid and Barcelona.

In fact, of the 16 localities and municipalities that are already reaching new record highs, 11 are outside of these cities and on the coast.

Sant Just Desvern (Catalonia); Retiro, Salamanca, Centro and Chamberí (Community of Madrid); Benhavis (Andalusia); Calviá, Ibiza, Palma de Mallorca, San José and Santa Eulalia del Rio (Balearic Islands); Gran Alacant (Comunidad Valenciana) and Adeje, Arona, Granadilla de Abona and San Bartolomé de Tirajana (Canary Islands) are the areas where prices have already exceeded the records set during the pre-crisis real estate boom, according to data published by Idealista.

The residential market on the Spanish coast is experiencing a gradual recovery, but there are already cities that have returned to pre-crisis levels. The locations that first began to stabilise after that period are already demonstrating intense growth in prices and new housing construction activity.

However, there are also markets that are still showing signs of the bursting of the bubble, which can be seen in the oversupply of that time and the current weak demand, as Tinsa points out in its report on the Spanish residential market on the coast.

In one year, the areas that were in a situation of moderate adjustment have been reduced by half, from 27.6% to 11.2%. On the other hand, 36.5% of provinces and municipalities near the coast already are in the process of “clear recovery.”

Regarding the trend in prices, statistics from bank appraisals in the first quarter of 2018 reflect positive year-on-year growth in 104 of the 147 coastal municipalities that have available data, compared to 84 that showed positive growth in last year’s report.

Algeciras, Barbate, Cantabria and Asturias: the areas where the recovery is taking the longest to appear

The main signs of a recovery in the market already occurred three years ago, but 2018 has been a year for setting new records, with prices reaching highs in many areas, particularly in the Spanish archipelagos.

There are also other areas, such as the Costa del Sol, the north and south of the provinces of Alicante, the Maresme and around Barcelona. In recent months, some markets have begun to awaken to mainly national demand, where there have been signs of improvement.

On the other hand Algeciras, Barbate, Cantabria and Asturias are the areas where this recovery is taking the longest to arrive.

Need for new housing

The stock of new housing that remained after the outbreak of the crisis also beginning to be absorbed. The stock is at an average level in 47.7% of the areas, although in half of those the supply could be absorbed in the short term, according to Tinsa.

Among the locations where it is practically non-existent (19% of the areas), Ibiza stands out along with the Conil and Tarifa (Cádiz) coasts; Fuerteventura, Lanzarote and south of Gran Canaria, as well as the Basque coast.

It is natural that this has been accompanied by an upturn in the activities of developers. After years of almost total paralysis, where construction was conspicuously absent due to weak demand and overcapacity, developers once again began to increase their operations in specific enclaves of the Alicante coast and Costa del Sol.

The market has been recovering slowly. In half of the areas analysed (50.8%), Tinsa noted that the construction of new housing projects has begun, compared to 36.2% in last year’s report.

Original Story: Vox Populi – David Cabrera

Photo: Teresa García

Translation: Richard Turner

 

Costa del Sol, the Epicentre of the Real Estate Investment Boom

9 August 2018

Housing on the Costa del Sol has become synonymous with rehabilitation, new construction and luxury. Both Málaga and the coast have experienced continual and growing demand for housing since 2015. The trend has been fuelled by the influx of foreign tourists, who are spending increasingly longer periods of time in Spain, along with the boom in tourist flats as an investment in the short and medium terms. This demand, in turn, has resulted in steep price increases, which in some cases have returned to pre-crisis levels. However, experts say that opportunities can still be found.

“The Costa del Sol is a reference for the coastal market and Malaga is the focus of interest for investors since it has all the necessary services: AVE (high-speed rail), airport, seaport, cultural and gastronomic facilities… It meets all the requirements so that Spaniards and foreigners can enjoy their old age,” says Jesús Gil, CEO of the luxury real estate brokerage agency, Gilmar.

With these characteristics, the Costa del Sol has once again become a reference for investors, of which there are currently three types: institutional, small investors and local investors, who buy homes as a means of saving.

Despite the boom in the market, “the outlook is still very attractive, mainly due to the capital gains that people who bought during the crisis achieved,” explains Ivan Rodríguez, CEO of iKasa, who believes that the market will continue its growth during another three to four years.

The executive also highlighted the residential rental market, since most international buyers rent before buying. Finally, for tourist rentals, “where profitability can reach 10 to 12% and where there is as much interest as in the main capitals of Madrid and Barcelona,” Mr Rodriguez said.

Álvaro Marcos, head of sales for Aedas Homes, believes that this is one of the great attractions of this market, since “the new coastal market offers clients the opportunity to rent their second home, combining the enjoyment of [the home] with a good investment. It is something that we see a lot of at Aedas Homes.”

The British are still the biggest property buyers, but clients from Sweden, Belgium, Germany and France are also highlighted

The coast was, according to experts, the first market whose appeal to foreigners began to recover after the crisis. “It is a market dominated by international customers, who are increasingly stable and more diversified in origin. While the British continue to lead, other buyers, especially from Sweden, Belgium, Germany and France, are appearing. It is a destination that covers the desires and needs of these customers, who are looking for good weather, the beach, golf courses, good infrastructure and services. This has given the market new life, growing by double digits,” says Ignacio Peinado, the director of Eastern Andalusia for Neinor Homes.

Strong demand has caused price increases in some specific areas, such as “Marbella, Estepona and Benahavís, where currently there is nothing for less than 300,000 euros, as average prices range from this base to half a million euros, along with multi-family homes that go for sale a million euros,” says Susana de la Riva, director of marketing and communication for Tinsa. She added that ” flats costing 120,000 euros can only be found in more degraded areas.”

Ms de la Riva stated that “the coast of Mijas, Fuengirola and Estepona is the most dynamic area after Benalmádena and Torremolinos, where new construction is more contained and the prices, after the change in trend seen in 2016, have stabilised.”

The principal challenge for the Costa del Sol is providing greater legal security to investors and developers

Estepona is the most dynamic area in the Costa del Sol’s real estate development market since it combines a strategic location with all the services that tourists seek and an agile administration that grants certainty to projects. Also, there are two clear markets in the city, one for first homes, and the other, which is aimed at an international clientele.

On the other hand, Álvaro Marcos, from Aedas Homes, points out that the most significant challenge facing the Costa del Sol is providing greater legal security for investors and developers. “The governments need to give legal certainty and confidence regarding the deadlines for land development processes. Otherwise, we as developers are unable to do our jobs, since buyers don’t know if the project will be cancelled or stopped.”

Biggest developers buying land

The boom has not failed to attract the attention of Spain’s biggest developers, who have worked to position themselves on the Costa del Sol since late 2015 and early 2016, buying land. “In the city of Malaga, there is no more development-ready land available. Whatever there was has already been added to the portfolios of the main developers. For example, the largest number of developers is concentrated in the Teatinos area, and there, Neinor Homes has two projects that will add more than 400 homes,” Ignacio Peinado affirmed. In the rest of the province of Malaga, “this market is returning to normal and most of the consolidated vacant and developing land (including paralyzed developments) belongs to financial entities, which are already marketing them to developers in the area (for the quick start of medium-small developments) or investment groups that focus on acquisitions from the financial institutions,” a report on the coast by Tinsa stated, highlighting the increase in prices.

Original Story: ElEconomista.es – Luzmelia Torres

Translation: Richard Turner

Eurostat: House Prices Rose by 6.2% in Spain in 2017

11 July 2018 – Eje Prime

The acceleration of the housing market has placed Spain amongst the leading countries in Europe in terms of price rises. In fact, in just one year, the country has risen from 21st position, with an average increase of 4.6% in 2016, to 12th , with an average increase of 6.2% last year.

In 2016, Spain already exceeded the average rise for the European Union as a whole, which amounted to 4.6% at the time, but in 2017, it distanced itself further from the average, moving closer to the group of countries with the highest rises in prices: whilst in Spain, the increase amounted to 6.2% in 2017, the average rise for the European Union as a whole was 4.4%.

Spain outperformed Austria, where prices rose by 8.5% in 2016 (in 2017, they only increased by 5.3%); Norway, which went from an increase of 7.9% in 2016 to 5.4% in 2017; and the United Kingdom, where house prices increased by 7% in 2016 and by 4.5% in 2017.

Iceland, the Czech Republic and Ireland were, in that order, the three markets where house prices rose by the most in 2017, with rises of 19.5%, 11.7% and 10.9%, respectively. Iceland was the only country to feature in the top 3 in both years; in 2016, it was joined by Hungary and Sweden.

Several countries from Eastern Europe, such as Lithuania, Latvia, Bulgaria, Slovenia and Hungary (with high volatilities in terms of the evolution of house prices) were amongst the most inflationary in terms of house prices in 2017, together with countries in Western Europe, such as Portugal, where prices rose by 9.2%; the Netherlands (7.5%) and Sweden (6.4%).

At the opposite end of the spectrum, the only European country where house prices decreased in 2017 was Italy, with a reduction of -0.8%. It was accompanied by moderate price increases in Finland (1.6%), Cyprus (2.2%), France (3.6%) and Croatia and Poland (both 3.8%).

The figures from Eurostat, the European Union’s statistics office, include purchase prices of new and second-hand homes. According to the EU entity, these prices “have fluctuated significantly since 2006”. “The annual growth rate in the European Union as a whole was close to 8% in 2006 and 2007, followed by decreases of 4% as a result of the financial crisis”, it continued.

Prices started to increase in 2014, with an average cumulative rise across the whole of the European Union of 11% between 2010 and 2017, and of 6% in the Eurozone during the same period, according to Eurostat. In the case of Spain, despite the increases in recent years, the country has registered a cumulative decrease of 17% since the start of the century.

Original story: Eje Prime (by Christian de Angelis)

Translation: Carmel Drake