Tag: finished homes

Twice As Many Housing Permits Were Granted In Málaga In Q1 2017

16 May 2017 – La Opinión de Málaga

The province of Málaga has seen a sharp rise in the number of building permits granted for the construction of new homes during the first quarter of the year with respect to last year and as such, it is recording its best start to the year since the crisis, providing further evidence of the recovery that began in the sector a few years ago.

Specifically, 1,397 housing permits were granted by Málaga’s College of Architects during the first quarter of the year, more than double (631) the figure recorded during the same period in 2016 (a rise of 121% to be precise). To find the highest number of permits granted in the province during the first quarter in recent years, we have to go back to 2008, when almost 4,900 were granted, a year that also marked the start of the recession.

The number of permits dipped to a historical minimum in Málaga in 2014 (when only 798 were granted in the whole year) and since then the heat of the general economic recovery has boosted the figures. In total, 2,454 permits were granted in 2015 and 3,041 in 2016. The data for the start of 2017, which was published at the beginning of May by the College of Architects, confirms the upward trend, and augurs a further increase this year, provided nothing out of the ordinary happens. In fact, during the first quarter, more housing permits have been granted than in the years 2012 (1,134), 2013 (904) and 2014 (798) in total, which were veritable years of drought in the sector. Nevertheless, the number is still a long way below the pre-recession figures (for example, in 2007, more than 27,000 permits were granted). (…).

The college of architects believe that the objective for the province should be to grow year on year to reach an annual volume of around 20,000 housing permits by 2020, which would be sufficient to meet the natural demand of the Malagan population, as well as to supply buyers from further afield, be they domestic or foreign, in search of a second holiday home. (…).

Returning to the data for the start of 2017, the statistics from the College of Architects reveal that the housing permits granted between January and March were primarily concentrated in the towns of Málaga capital (369), Estepona (238) and Rincón de la Victoria (235). Those three towns accounted for 60% of the permits granted in the province during the first quarter of the year. Behind them came the following towns: Fuengirola (127), Mijas (100), Ojén (76), Manilva (67) and Marbella (52). (…).

The number of finished homes rises

In terms of the number of finished homes, the figures for the first quarter of 2017 also show an increase. The College of Architects notes that between January and March, 504 properties were finished in Málaga, representing a significant increase of 84% compared to the first quarter in 2016. The finished home statistics dipped to historical lows in 2015 (when only 1,134 homes were completed during the entire year) and have increased only slightly since then (1,235 in 2016). (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake

 

Ministry Of Development: Finished Homes Fell By 4.9% In Jan

30 April 2017 – El Mundo

In January 2017, construction of 2,973 homes was completed in Spain, which represented a decrease of 4.9% compared to the same month in 2016, according to data from the Ministry of Development.

In this way, the number of finished homes in Spain began 2017 on a negative note, after recording nine consecutive years of decreases in 2016. Since the peak of 2007 (641,419 homes), the figure decreased by 94% with respect to the end of 2016.

Of all of the homes completed in January 2017, 99% (2,945) corresponded to private developments and 1% (28) to Public Administrations.

In comparison with the figures recorded in the same month in 2016, the construction of homes by private developers decreased by 5.3%, whilst the number increased in the case of Administrations from 16 to 28 constructed homes.

In the private segment, 1,918 homes were constructed by companies, representing a YoY increase of 5.3%; 956 were built by individuals and communities of owners (-21.2%) and 26 by cooperatives (-59.4%). In addition, there were 45 construction completion visas relating to another type of private developer.

Meanwhile, the liquidation value of the material execution of the construction work rose by 27.86% in January, to €444.7 million.

Renovations rose by 4.7%.

Permits to renovate or restore homes in Spain amounted to 1,785 units in Spain in January 2017, which represented an increase of 4.7% with respect to the same month in 2016 (1,705 permits).

In this way, permits to renovate homes began 2017 on a positive note, after recording two consecutive years of increases, although the rise in 2016 (2.7%) was more moderate than in 2015 (13.4%).

In 2014, permits to renovate homes recorded four consecutive years of decreases and dipped to a minimum in the historical series prepared by the Ministry of Development, but that trend was broken in 2015, and the new trend was consolidated in 2016 and maintained at the beginning of 2017.

Meanwhile, permits to expand properties doubled in January, from 89 during the first month of 2016 to 197 in 2017.

Original story: El Mundo

Translation: Carmel Drake

BBVA Sells 3,500 Properties To Blackstone For c. €300M

20 February 2017 – El Confidencial 

BBVA has started the year with the sale of the largest real estate portfolio in its history: Project Buffalo. The portfolio contains 3,500 assets, the vast majority of which are finished homes, but it also includes storerooms, garages and retail premises, worth around €300 million in total. The whole package has been acquired by Blackstone.

All of these properties had been foreclosed and so the bank was holding them on its balance sheet. They are located mainly in Cataluña (28%), Andalucía (20%) the Community of Valencia (18%), Madrid (6%), the Canary Islands (6%) and Castilla-La Mancha (6%).

With this move, the entity has fired the starting gun on a year in which experts hope that the financial sector as a whole will accelerate its real estate divestments, not only of loans with collateral linked to properties, but also in the placement of large blocks of finished assets, like in this case.

The new regulatory requirements have represented a genuine revolution for bringing these types of portfolios onto the market. And BBVA has dealt with this change in the rules by engaging its Strategy and M&A team, led by Javier Rodríguez Soler, to be responsible for closing this kind of transaction.

Two-thirds of the more than €20,000 million real estate-related assets on BBVA’s balance sheet are foreclosed assets, whilst the remainder are loans, a clear indication of the importance for the bank of undoing these positions.

In addition to portfolio sales, the entity chaired by Francisco González (pictured above) has committed itself to joining other players in the market as a way of deconsolidating these assets. On the one hand, it is taking advantage of the merger between Merlin and Metrovacesa, by transferring thousands of homes to Testa; on the other hand, it is working with Santander and Popular to create a large bad land bank, which will allow it to also start divesting its land.

Original story: El Confidencial (by R.U.)

Translation: Carmel Drake

 

Bankinter: House Prices Will Rise By 3%-4% In 2017 & 2018

20 February 2017 – Idealista

The rise in house prices is starting to run out of steam and will become more moderate over the next two years. That is according to forecasts from Bankinter, which explains, in a report about the real estate sector, that the limitation on the upwards potential is the consequence of several factors.

On the one hand, prices are now reaching their pre-crisis levels in many areas, primarily in prime locations and, on the other hand, the financial effort that families are having to make to acquire a home is starting to increase once more.

As a result, the capacity of families to access the residential market will be limited if prices rise at disproportionate rate. In this way, Bankinter estimates that house prices will grow by between 3% and 4% in 2017 and 2018. Moreover, the entity insists that, despite the moderation in price increases, the residential market will continue to rise.

One of the reasons is the shortage of supply, given that the number of finished homes is still at historical lows (40,000 homes were completed in 2016) and the fact that that figure cannot cover the normalised demand of around 200,000 new homes per year. “The combination of the scarcity of supply and the increase in house sales (which exceeded 400,000 operations in 2016) will continue to put upwards pressure on prices”, said the bank, which insists that, in this context, prices will continue to rise.

On the other hand, the report highlights the appeal of large cities, primarily Madrid and Barcelona, which are registering YoY price increases of between 4% and 7% and which have now recorded increases for eight quarters in a row. By contrast, average prices are still adjusting downwards slightly in YoY terms in other cities such as Bilbao and Sevilla.

Another factor that is also affecting prices is the increase in rental prices, which are also being driven upwards by the evolution of leases in the large cities, where, like in the case of the purchase market, there is a shortage of supply and high demand.

Demand for 500,000 homes.

The financial institution predicts that residential demand will continue to rise. “The upwards trend will continue for the next few years. We expect growth of almost 10% in 2017 and for demand to reach 500,000 homes by 2018”, explains the report.

But what is behind this increase? As sources in the sector have been commenting for several months, the drivers of demand are economic growth and the creation of employment, as well as the fact that housing is becoming more attractive as an investment opportunity and that financing conditions are still accessible.

Nevertheless, and this is where the experts are focusing, none of these drivers are reducing the effort that families are having to make to buy a home.

“The effort (that families are having to make) has risen again to 6.6 years of annual household income (compared to 6.2 years at the end of 2014) and there is no scope for improvement in terms of financing conditions. Finally, Sareb’s marketing of discounted homes located in areas characterised by oversupply will continue to limit the increase in average prices”, said Bankinter. (…).

Original story: Idealista

Translation: Carmel Drake

Project Tour: Bankia Puts €166M Property Portfolio Up For Sale

3 February 2017 – Idealista

The banking sector is starting 2017 with a bang as it accelerates the sale of properties. Bankia has put a new real estate portfolio on the market – it does not contain debt, but rather comprises 1,800 properties, including finished homes, plots of land, retail premises, industrial assets and hotels. Known as Project Tour, the package is valued at €166 million.

Bankia is one of the most active banks at divesting real estate assets once again, as it seeks to focus on its pure banking business. It is a technique that has worked well for the banks in recent years and not just in Spain, but in other countries around the world as well.

In this case, so-called Project Tour is in the hands of the firm Alantra (formerly N+1) which intends to place this property portfolio (known by its initials in English as an REO) with international investors. Its value amounts to €165.9 million, according to financial sources consulted by Idealista.

The portfolio comprises 1,292 finished homes (it does not include any subsidised housing), 324 plots of land, 159 retail premises, 20 industrial assets and 9 hotels. None of the assets in the portfolio are rented or co-owned.

The properties are primarily located in the Community of Valencia, mainly in Valencia; Cataluña, mainly in Barcelona; the Canary Islands, mainly in Las Palmas; Madrid and Castilla y León (Segovia is home to most of these assets).

According to sources consulted by Idealista, Bankia expects to receive non-binding offers from a small number of investors by the beginning of February and binding offers by the middle or end of March. In this way, it plans to close the sale of the package during the month of March.

The entity chaired by José Ignacio Goirigolzarri (pictured above) is known as one of the most dynamic in the market: in 2016, it put several portfolios up for sale, including Project Ocean, a real estate loan portfolio worth almost €400 million, which was sold to Deutsche Bank; Project Tizona, a mortgage debt portfolio worth €1,000 million; and Project Lane, containing properties worth €288 million.

Original story: Idealista (by P. Martínez-Almedia)

Translation: Carmel Drake

80% Of Popular’s Bad Bank Will Comprise Finished Homes

24 October 2016 – El Confidencial

The first details are emerging about Project Sunrise, the bad bank in which Banco Popular is planning to segregate properties amounting to €5,800 million (gross) (€4,000 million net). Approximately 80% of its assets will be finished homes, which the entity hopes will reduce the risk associated with the project and facilitate sales of the vehicle, according to financial sources close to the project. As a result, the entity chaired by Ángel Ron hopes to reach “break even” in its third year of life, in other words, in 2019, and to generate profits thereafter.

According to the plans for the aforementioned bad bank, more than €3,000 million of Sunrise’s balance sheet will correspond to finished homes, whereas only around €400 million will relate to land – the second most important asset. In third place, the bad bank will hold developments in progress with a gross value of €300 million and finally, Popular will transfer homes for rent amounting to another €200 million. It total, more than 40,000 individual assets will be transferred to the new entity.

The bank is looking to increase the quality of the assets that it transfers to this vehicle and whereby achieve a dual objective: on the one hand, improve its prospects for sales and revenues, given that finished homes have more appeal in the market (when compared to land or developments in progress, which require additional investment to be completed); on the other hand, allow lower provisions to be recognised upon transfer, given that the prices at which the assets were awarded to the bank do not need to be reduced by as much in these cases. The average provisioning level of Sunrise’s assets will amount to 31%.

Profits from year 3 onwards

And it is precisely thanks to this greater ease to sell the bad bank’s assets that Popular expects that the new vehicle will emerge from losses during its third year of operation, in other words, in 2019 (it plans to list on the stock market in 2017). Sunrise’s business plan forecasts profits of around €50 million per year for the next two years, according to sources consulted.

To this end, the bank chaired by Ron is relying on a strong performance in the Spanish real estate market, based on good economic forecasts, low interest rates and improvements in other indicators, which are already being seen in some cases, such as the number of mortgages, the volume of house transactions and the prices of operations. According to their calculations, house prices are still undervalued and as a result, will continue to rise over the next few years.

The bad bank, vital for achieving its objectives

The segregation of the bad bank is one of the fundamental milestones in the restructuring plan that Popular presented to justify its €2,500 million capital increase in June, given that, by removing almost €6,000 million (gross) in real estate assets from Popular’s balance sheet, the entity will free up capital and strengthen its solvency levels. Nevertheless, it has faced difficulties due to the lack of buyers interested in the vehicle, and so it has decided to list the vehicle on the stock market by gifting its share capital to the banks current shareholders in the form of a dividend. (…).

Original story: El Confidencial (by E. Segovia and J. A. Navas)

Translation: Carmel Drake

Sareb Wants To Sell 4 Large Portfolios Before Year-End

19 November 2015 – Cinco Días

The fourth quarter of the year is usually the most hectic for any real estate business, but this year Sareb’s activity is off the scale as year-end approaches. On the one hand, this is because following the decrease in the rate of house sales to individuals during the year, the company is looking to benefit from the traditional retail boom that always happens in the final quarter.

On the other hand, it is because a new, and onerous, accounting circular has just been officially approved, and it will govern the results of the so-called bad bank for this year end, which means that, amongst other things, it has been forced to launch a race against the clock to re-appraise, and value at market price, at least half of the €44,000 million assets it still owns.

Moreover, because it is trying to at least partially alleviate both effects, Sareb is also preparing the relaunch of several macro-operations with large investors. Specifically, according to sources, it has launched the sale of four portfolios with a combined nominal value of €1,500 million.

All of the portfolios contain loans, which represent 80% of Sareb’s total burden, and those loans are secured by real estate assets as collateral. In this way, the purchasers of these packages, who will have the option of acquiring specific tranches in each case and not necessarily each of the portfolios in their entirety, may invest with the objective of trying to recover the loans or of enforcing them and repossessing the properties that secure them.

The first two portfolios, which have a combined nominal value of €800 million, comprise loans secured by unique assets as collateral, in other words, luxury properties or large buildings, which could lend themselves to being shared between a group of buyers.

The third portfolio, worth €400 million, contains loans secured by both finished homes and land. In this case, the portfolio could be sub-divided into tranches to allow various buyers to participate if they are interested in acquiring just one specific part of the portfolio.

Finally, the fourth portfolio has a nominal value of €200 million and comprises loans secured by hotels, warehouses and retail premises. As an additional feature, besides the loans in this portfolio, the package also includes certain physical assets, specifically some industrial warehouses that have already been foreclosed.

Although the sales prices that Sareb will obtain for these portfolios remains to be seen (the figure of €1,500 million represents the combined nominal value), market sources claim that the conditions in the market have improved and so the bad bank could well obtain good prices. Those same sources reveal that the most demanding international investment funds have reduced the size of their discounts from 20% of asset values to around 12%, on average.

Either way, Sareb’s objective is ambitious (…), given that the assets for sale in these portfolios significantly exceed the volume sold at the end of last year, when the bad bank divested portfolios worth €1,000 million to large investors. (…)

Original story: Cinco Días (by Juande Portillo and Ángeles Gonzalo Alconada)

Translation: Carmel Drake

INE: Land Sales Increase By 10.5% In 8m To Aug

27 October 2015 – Cinco Días

This week has seen the conclusion of the two major annual events in Spain’s real estate calendar: the Real Estate Trade Fair in Madrid (SIMA) and Barcelona Meeting Point. In addition to a sharp increase in the number of private visitors, this year more companies have wanted to be present at both events, because the figures clearly show that more houses are being sold, at higher prices (the price decreases have now come to an end across most of the country) and most importantly, new properties are being constructed once again.

Given that land is the raw material required to launch new developments, it was crucial for funding to return to this segment of the market as well, and the statistics show that the trend there is now reversing. Not only are more mortgages being granted to acquire homes and complete developments abandoned due to the crisis, loans are also being granted once more to buy land. (…)

According to the latest available statistics, compiled by INE, for the period from January to August 2015, 48,905 plots of land were sold in Spain during the first 8 months of the year, an increase of 10.5% compared with the same period in 2014 (when 44,237 plots were sold). If this trend continues, 2015 will close with a significant increase on the number of plots of land sold last year (65,821), breaking the downward trend that began in 2007 (the first year this data was collected) when 195,269 plots of land changed hands.

What are investors looking for?

In terms of whether more or fewer mortgages are being granted on the plots of land being sold, the figures do not yet reflect an overwhelming improvement (…).

Again, according to INE, between January and July (the data for August is published today), 4,897 mortgages were granted for plots of land, a decrease of just 1.6% compared with the same period last year, when the number amounted to 4,979. Like in the case of land sales, if the trend in mortgages granted for land is maintained between now and the end of the year, then 2015 will close with an increase in the number granted for the first time since 2009.

For the experts and everyone now working in the real estate sector (including the banks, the Socimis and the new servicers), the fact that financing has returned to the land segment is very good news, since this will revive the construction of new builds. Above all, we are now starting to see studies that show that one of the imbalances on the horizon in the market is the lack of offices, developable land and industrial warehouses in prime and other good locations in cities, which is what exactly national and international investors are looking for.

Finally, if this trend continues and improves, it will be a great relief for the banks, since 37.8% of the almost €80,000 million in foreclosed real estate assets that last year weighed down on the balance sheets of the main Spanish financial entities (Santander, BBVA, CaixaBank, Sabadell, Popular, Bankia, Bankinter, Kutxabank, Unicaja, Ceiss, BMN, Liberbank, Ibercaja-Caja3, Novagalicia and Catalunya Banc) related to land, the same percentage as for finished homes, which accounted for 37.1% of the total, according to a study by the Department for Research and Economic Analysis at La Caixa.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Tinsa: House Prices Fell By 0.8% In Q3 2015

1 October 2015 – Expansión

Since their peak at the height of the real estate boom in 2007, average house prices have recorded a cumulative decline of 41.2%.

The statistics from the appraisal company Tinsa for the third quarter of 2015, published today in its IMIE Local Markets report, reveal that the downwards trend in average house prices in Spain is coming to an end, evidenced by the fact that average prices recorded a YoY decrease of 0.8% during Q3 2015, compared with a decrease of 2.9% in Q2 2015.

According to this study, since the peaks of 2007, average house prices have recorded a cumulative decrease of 41.2%.

The statistics, which are based on Tinsa’s appraisals of finished homes (new and second hand) performed all over the country, reveal a range of variations, since even in the areas that were first to anticipate the changing trend, such as the cities of Madrid and Barcelona, differences are now being seen in the evolution of prices.

Specifically, average prices in the Catalan capital rose by 7.4% in Q3 2015 with respect to the same period a year before, whereas in the city of Madrid, prices remained stable, increasing by just 0.2% YoY.

Variations by regions

Moreover, the markets showing the first signs of recovery are coexisting alongside others that have been slower to adjust and where the downwards trend will continue for a while. The latter are weighed down by a significant over-supply (of homes) and depend heavily on very local demand, where the recovery in the employment market still needs to be established.

In the third quarter of the year, the islands joined the select group of regions with positive YoY growth; during the second quarter, only Cataluña and Madrid recorded price increases. However, in the third quarter, average house prices also increased in the Canary Islands (by 2.3% YoY) and the Balearic Islands (by 0.9%). In Cataluña, prices increased by 1.4% and in Madrid by 0.7%.

At the other end of the spectrum, prices continued to decrease in Murcia (-5.1%), País Vasco (-5.6%), Extremadura (-6%) and Galicia (-6.4%), which recorded the largest YoY reductions out of all of Spain’s provinces.

Nevertheless, Castilla-La Mancha is still the autonomous region that has recorded the greatest cumulative decrease in house prices since the peaks of 2007, with a -52.1% average reduction, followed by Cataluña (-49.6%) and Aragón (-49.3%).

Original story: Expansión

Translation: Carmel Drake

Tinsa: House Prices Fall In May 2015 By 3.6% YoY

5 June 2015 – Expansión

According to Tinsa’s IMIE General and Large Markets Index, the average price of new and used housing decreased by 3.6% during the year to May 2015.

Specifically, the index stood at 1,322 points. Tinsa has explained that “the intense downwards variation experienced by the index from June 2014 onwards explains the significant inter-annual differences, even through average prices have remained relatively stable since November”.

Moreover, according to this index, the average house prices in Spain have accumulated a decrease of 42.7% since the peaks of 2007.

Prices by regions

The report also highlights that the average house price in Spain was 1.6% cheaper in May than at the end of 2014; a similar trend has been on the islands (the “Balearic and Canary Islands”), where the cumulative fall with respect to December 2014 amounts to 1.5%.

Towns on the “Mediterranean Coast” are the only ones that closed the first five months of the year with positive growth (+1.4%), although there, average prices in May 2015 were still 2.3% below those recorded in May 2014.

The “Capitals and large cities” recorded the worst performance of all of the areas analysed in May, with a 4.9% YoY decrease. In terms of the intensity of the decrease with respect to the same period last year, they are followed by the “Metropolitan Areas”, with a 3.8% drop and smaller towns, grouped together within the category “Other municipalities”, where average prices were 2.7% lower than in May 2014.

It is important to remember that Tinsa’s IMIE index is compiled using appraisal (values) for finished homes (new and used) prepared by the company. This means that it reflects prices assigned by the appraiser, on which market prices are based, versus other indices, such as the one prepared by the Registrars, which is based on the prices the feature in the deeds signed before Notaries.

Original story: Expansión

Translation: Carmel Drake