Tag: forecast

Sareb Sold 25 Homes Per Day During H1 2016

15 June 2016 – El Mundo

The Chairman of Sareb estimates that the company sold 25 real estate assets per day during the first half of 2016, a pace that he considers “normal”, albeit below the historical average of 27 properties per day for the last 3years, since the so-called bad bank was created.

“At Sareb, we are constantly pedalling hard. We can’t stop”, said Jaime Echegoyen, who also pointed out that the company has debt to pay off. In this regard, he estimated that Sareb has already paid €3,100 million in interest.

He also admitted that the banks’ efforts to clean up their balance sheets by selling off real estate assets is affecting Sareb’s rate of property sales, due to increased competition. Nevertheless, he said that Sareb will benefit from the trump card in that it has on its side, namely, time.

“Sareb is not in any rush (to sell)”, he said at a summer course organised by the Universidad Internacional Menéndez Pelayo (UIMP) and the Asociación de Periodistas de Información Económica (APIE).

No plans to demolish any properties

The Chairman of Sareb reaffirmed an earlier prediction that the company will stop losing money in 2017 and he confirmed that the bad bank does not expect to undertake any demolitions, despite the fact that some of the assets on Sareb’s balance sheet may take years to sell or “may never be sold”. “Would it be better to knock them down than hold onto them? Perhaps, at first”, he reflected, before adding: “But we are not thinking about demolition, because you need money for that”.

Echegoyen stated that the revenues that the bad bank is generating are mostly being used to pay off debt. In a summary of Sareb’s first three years of life, Echegoyen said that the company has sold 35,200 properties and generated revenues of €12,800 million. In addition, the so-called bad bank has reduced its portfolio by €7,800 million and has repaid €7,700 million (of debt).

On the other hand, Echegoyen stated that the real estate sector “has woken up with clarity” and is enjoying a really “sweet moment”, judging by the recovery in the number of construction permits for new homes and the “stability” that demand for real estate is showing.

Homes as a haven

The Chairman of Sareb emphasised that the improvements in real estate indicators have not only been observed in the large (regional) capital cities; and he pointed out that, at a time of significant volatility on the stock market, properties represent a haven for “Spaniards”.

Finally, the Chairman highlighted the change that is happening in terms of the (property) investment (market), from sale to rental, which is leading to an increase in prices in that segment.

Original story: El Mundo

Translation: Carmel Drake

Servihabitat: House Prices Will Rise By 3.8% In 2016

2 June 2016 – Expansión

The increase in demand, the reactivation of investment activity and the improvement in access to mortgage financing are some of the factors behind the marked improvement in the residential market.

In its report entitled “The Residential Market in Spain”, Servihabitat, which is jointly owned by TPG and CaixaBank, says that “the positive trend experienced in house prices/values in Spain during 2015 will be consolidated this year”. The largest price rises are forecast in the Balearic Islands (+6.8%), the Community of Valencia (+4.6%), Cataluña (+4.4%) and the Community of Madrid (+4%).

The average price rise across Spain is expected to amount to 3.8%, which is 2.4 points below the figure (6.2%) forecast by Servihabitat in November. This lowering of expectations may be due to the fact that prices actually accelerated at the end of last year. In addition, “there is a certain amount of volatility because the realities of the sector are very different by area”, said Julián Cabanillas, CEO at Servihabitat.

The report predicts “that this year, the rate of growth will continue” in terms of the sale and purchase of residential properties, driven “by pressure from increased demand”. Specifically, in 2016, the number of operations is expected to grow by almost 10% YoY, which means that more than 440,000 homes will be sold in total.

The autonomous regions where sales activity is expected to increase by the most this year include: Asturias, Cataluña, País Vasco, the Community of Madrid, La Rioja and the Community of Valencia, as well as in the Canary and Balearic Islands, all of which have a forecast YoY variation of more than 10%. The only region where sales are expected to decrease is Extremadura (-0.6%). (…).

The report also forecasts YoY growth of 12.5% in terms of the number new homes that will be completed this year, to reach 50,800 units.

The volume of new build stock will continue to decrease by approximately 25%, from 492,000 homes last year to 367,500 by the end of 2016, according to the study. (…).

Boom in the rental sector

The study points out that, according to Eurostat, the rental market in Spain has grown significantly in recent years. “More than 21% of Spaniards live in a rented home, a figure that brings Spain ever closer to other European countries with more tradition in this regard. In addition, the forecast until the end of the year shows that the number of rental operations will remain stable or increase with respect to the number of sale and purchase operations, at the same time as rental prices are forecast to stabilise”

On the other hand, the company highlights that more than 17% of purchases in Spain were made by foreigners in 2015, who acquired more than 69,000 homes in total, for both residential and holiday use. “The concentration in just eight provinces is noteworthy: Alicante, Santa Cruz de Tenerife, the Balearic Islands, Málaga, Girona, Las Palmas, Murcia and Almería”, adds the report.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Aguirre Newman: 2016 Is Going To Be A Good Year For RE

26 February 2016 – El Economista

According to the President of the real estate consultancy Aguirre Newman, Santiago Aguirre Gil de Biedma, the real estate sector is going to continue to see an “extraordinary” level of activity in 2016, thanks to the significant interest from investors.

In a presentation at the 2nd Meeting of the Real Estate Sector, organised by the business school IESE, Aguirre was optimistic about the year ahead: “we are continuing to see very significant interest” from investors.

Nevertheless, he lamented the possible effects of the on-going political uncertainty. “We should be worried if we look at what has happened to our friends in Portgual”, he said, although he qualified that by saying that “it will not be easy to undo the reforms approved over the last four years because that would require consensus”.

“These reforms have given us stability and confidence in the markets, which will continue for the next few years”, he said. In any case, Aguirre expects the panorama in his sector during the second half of the year to be “much clearer than it is now”.

A new sense of normality in the real estate sector

Meanwhile, the CEO of the appraisal company Tinsa, Ignacio Martos, confirmed that we are experiencing a new sense of normality in the real estate sector. “The increase in prices during 2015 was consistent. We are facing a scenario in which asset prices are very good and it is likely that they will continue to increase”, he said.

In terms of the near future, Martos advised investors to “not gamble too much” to “take the right decisions” in a market that is going to be characterised by caution.

When asked about the trend in the sector, Martos said that speculation and large price movements “are now a thing of the past” and he agreed with Aguirre that the market “is in a good position” and “there are going to be lots of opportunities”.

Original story: El Economista

Translation: Carmel Drake

Bankinter: 53,000 More Homes Will Be Sold In 2016

22 February 2016 – Expansión

The recovery of the real estate market is growing from strength to strength and according to Bankinter, in its latest report about the sector, around 420,000 homes will be sold this year, in other words, 53,000 more than in 2015. But, what is driving this growth spurt?

The entity’s analysis predicts that the upswing will continue into 2017, when it forecasts that 450,000 operations will be closed.

Above all, demand for homes is going to be driven by the “improvement in employment, reduced financing costs and the increasing attractiveness of homes as investments”, says the report.

Moreover, “the combination of higher demand and a limited supply in the major cities will result in an increase in average prices in 2016 and 2017 of almost 3% p.a., a figure that could reach 5% in prime areas”, predict the experts at Bankinter.

A new feature of the real estate sector compared with 2015, will be the increase in number of new homes, in light of the upturn in new housing permits registered last year”. However, the analysis warns that this improvement will only happen “provided the political context does not result in a loss of confidence”.

Below, we detail the factors that are expected to drive house sales this year:

1 – Economic growth and an improvement in employment

Bankinter highlights that the Spanish economy is going to grow by more than 2.5% in 2016, a rate that will facilitate the continuation of the positive trend in the labour market over the next few quarters. And it adds that “the increase in the number of people in work (by 525,000, of whom 171,000 have permanent contracts) may represent a catalyst in terms of the demand for housing”.

2 – Low financing costs

Another factor…is the low rates of interest, a scenario that the bank expects to continue until the end of 2017. “12-month Euribor will remain close to 0% in 2016 and the conditions for accessing credit will continue to improve”, according to its forecasts. (…).

3 – Favourable yields compared with alternative investments

The report argues that the gross yield from housing rentals compares favourably to other investment alternatives, such as long-term deposits and fixed income securities, which are currently offering yields of around 0%. (…) …. meanwhile, “gross yields on residential investments may reach 4.0%…”.

4 – “Cultural” trend towards buying homes

The culture of ownership versus renting has survived the crisis in Spain. In fact, despite the fact that demand and the possibilities for accessing housing reduced significantly during the recession, “the percentage of rental homes still remains low (compared with the European average) and has barely increased in recent years (the current rate stands at 21%, up from 17.2% in 2011)”, explains the document. (…).

5– Market outlook

Bankinter also highlights the positive influence of the strong outlook for the market. Specifically, the entity forecasts that housing sales will grow by 6.5% this year and that the favourable conditions in the real estate market will continue into 2017. (…).

No chance of a return to the boom figures

Nevertheless, Bankinter also stresses that, despite the good times being enjoyed by the property sector at the moment, the recovery “does not represent a return, in any way, to the levels of demand seen during the real estate boom years”. The study points to various factors to explain this, such as the declining population (due to the negative migration balance), the awareness that property prices may indeed decrease and, in particular, the fact that the unemployment rate will remain above 17.5% until the end of 2017. These aspects “represent structural changes in the market, which mean that levels of demand exceeding 900,000 homes per year are no longer attainable”.

Original story: Expansión (by B. Amigot)

Translation: Carmel Drake

Colonial Will Sell Mature Properties To Fund Investment

2 February 2016 – Expansión

The real estate company Colonial plans to increase its forecast future investment (estimated to amount to €300 million p.a. on average), by selling certain buildings from its portfolio that it considers have now reached maturity.

At the end of 2015, Colonial announced a plan to invest €1,500 million over the next 5 years.

Original story: Expansión

Translation: Carmel Drake

The Pérez Gil Family: Accor & Hilton’s Spanish Partner

1 February 2016 – Expansión

Routemap / Hoteles Temáticos, which works with giant players in the hotel sector through franchise contracts, expects to double in size and revenues over the next four years.

The Pérez Gil family is making closer ties with large international hotel groups. The family, which already has a partnership with the French company Accor, has now signed a similar agreement with Hilton. A new partner, but the same modus operandi: a franchise agreement that allows Hoteles Temáticos, the company owned by the Pérez Gil family, to manage hotels and, in exchange for a fee, use Accor and Hilton’s brands and distribution channels, which have 25 million and 74 million users, respectively, in their loyalty programs.

This summer, Hilton will open the doors of its first hotel in the centre of Madrid – until now the hotel giant had just one hotel in the city, next to the airport (pictured above) – under the Double Tree brand, which will debut in the capital. The 4-star property will have 61 rooms and will be located on Calle San Agustín, opposite Congress. The work to renovate the building, which housed offices until now, will cost around €4 million. In parallel, the Pérez Gil family has paid €8 million for 50% of the property.

In addition to this project with Hilton, which will allow the family to raise its profile in the US market, Hoteles Culturales is finalising several other new additions. It currently operates three hotels under franchise agreements with Accor in Madrid and Barcelona, as well as a complex containing 16 apartments in the capital and another (unbranded) 3-star property in Alfaro (La Rioja). “Our objective is to increase our portfolio from 400 rooms to between 800 and 1,000 rooms by 2020, and for our turnover, which currently stands at €10 million, to grow to €25 million”, says Guillermo Pérez Palacios, Director General of Hoteles Temáticos and the son of Antonio Pérez Gil, who used to be the Chief Operating Officer of NH, when the chain founded by Antonio Catalán had six hotels.

Royalties

In the short term, Hoteles Temáticos will focus on Barcelona and Madrid…but Bilbao, San Sebastián, Porto and Lisbon also feature on its radar. The company is looking for management contracts, and, depending on the opportunity, investment contracts. And the door is also open to new partners, even though the involvement of international brands can increase investment costs by up to 20%, due to the high quality and safety standards such brands demand.

Agreements with overseas brands include the payment of royalties for the use of those brands and their distribution channels. Nevertheless, the formula has its benefits: “The consistency of the brand makes up for (the associated costs) and helps to make investments more effective”. At the Hotel Ibis Styles Madrid Prado, the Pérez Gil family’s first franchise contract, 55% of reservations are generated by Accor’s sales channel. According to the franchisee, brands allow hotels to increase revenues per room by between 10% and 15% compared with those charged by independent hotels and domestic chains. “Brands have allowed us to reduce our dependence on online travel agents”.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Don Piso Plans To Open 30+ New Branches In 2016

29 December 2015 – Cinco Días

The real estate company Don Piso plans to open around 34 new offices in Spain in 2016, of which 22 will be franchises, according to a statement made by the company yesterday.

Don Piso’s agency network will open four new offices, all operating under franchise agreements, before the end of the year, taking its total number of offices to 60, which represents growth of 27% with respect to 2014 (…).

Two of the four new offices will be opened in Madrid, with new offices also opening in the cities of Menorca and Salamanca, according to a statement issued by the real estate company, which is headquartered in Barcelona.

The chain currently has 18 owned offices and the forecast for 2016 involves expanding that number to 30. Moreover, in terms of its franchises, the company expects to increase the number from 38 to 60 by the end of next year.

Growth plans

These plans for growth, together with the fact that the Don Piso network has not closed down any owned or franchise offices in the last five years, according to the company, means that its managers are certain that the franchise arrangement is currently the preferred business model in the sector.

“As a result of the strong performance shown by the consolidated data for the real estate market, we think that now is a good time to invest in the sector through real estate franchises, as a highly profitable model in the short and medium term”, says Emiliano Bermúdez, Assistant Director General of Don Piso and head of brand growth.

Created in 1984, the company currently has a significant network of offices in the country’s main cities and a turnover that has enabled it to act as the intermediary on property sales worth more than €500 million in the last year. The company provides sales, rental and renovation services and employs 296 people.

Survivor of the property crisis

Don Piso is one of the survivors of the property crisis. It was created in Barcelona in 1984, as a network of intermediary agencies for the sale of properties. During the boom years, specifically in 2001, its owners sold the company to Ferrovial. Five years later, the company changed hands once again, when it was acquired by Habitat Promociones.

In the midst of the real estate crisis, in 2010, the former founders of the company, led by Luis Pérez Fernández, former Director General of Don Piso, submitted the highest offer in an auction process for the company, organised by the commercial court of Barcelona. The chain, which closed 2008 with losses of €42 million, reduced its network to 60 agencies after implementing a series of cutbacks.

Original story: Cinco Días

Transltion: Carmel Drake

S&P Increases Spain’s Rating To BBB+ With “Stable” Outlook

5 October 2015 – Expansión

On Friday, the credit rating agency Standard & Poor’s (S&P), one of the world’s three main players in this sector, together with Fitch and Moody’s, announced an increase in its rating for Spain’s long term sovereign debt from BBB to BBB+, with a “stable” outlook. In this way, the agency rewarded Spain for the impact that the structural reforms approved in recent years have had on the economy.

In a statement, S&P said that “the increase in the rating reflects our view of the behaviour of the Spanish economy over the last four years – we consider that it has been strong and balanced, and that it is gradually benefitting the public finances”. The agency has been particularly encouraged by the two employment law reforms that have been approved since 2010 (under the governments of Zapatero and Rajoy), which have, in its opinion, improved the competitiveness of Spain’s exports and its service sector.

“The rating from S&P is a sign of confidence in the future of the Spanish economy and an acknowledgement that the political uncertainties do not carry significant weight”, said the Minister for the Economy, Luis de Guindos, yesterday, after S&P made its statement. In reality, the agency is not quite so optimistic – it says that there is still “considerable uncertainty” over whether the next government to emerge, following the elections on 20 December, will continue or even increase the pace of reforms that are still required to improve the economy and fulfil the growth and deficit targets in the medium term. “It is unclear just what a potential change in government would mean for the Spanish economy’s primary weakness, its unemployment rate”, it said.

S&P does not see much danger in the secessionist challenge and believes that Cataluña will continue to form part of Spain; furthermore, it expects that the tension between the central Government and the regional authorities will gradually dilute. However, it warns that a hypothetical independence would hit the Spanish economy hard, including its GDP per capita, its foreign trade balance and the public finances.

Risks still remain

Nevertheless, there are also some purely macroeconomic factors that could divert the country from its positive path…”We would consider reducing the rating if economic growth does not reach our projections; if the monetary policy does not manage to stop the deflationary pressures from eroding the fiscal performance and growth in Spain; and if, contrary to our expectations, net debt exceeds 100% of GDP”. The agency expects this ratio to decrease as the economy improves, and forecasts that it will peak at 98.4% this year and drop to 98% in 2016.

Similarly, the agency says that it is important to remember that certain exogenous factors have favoured the (recent) economic recovery, such as for example, the price of oil and the euro exchange rate.

For the time being, Standard & Poor’s expects nominal GDP to grow by around 4% over the next three years. Last Wednesday, the agency improved its growth forecast for Spain in 2015 by 2 p.p., from 3% to 3.2%, and by 1 p.p. in 2016, to 2.7%. Its estimation for 2017 is 2.4%. (…).

Original story: Expansión (by Yago González)

Translation: Carmel Drake

JLL: Global Inv’t In Hotel RE Reached €38,590M In H1 2015

18 August 2015 – Cinco Días

Hotels have become a very desirable haven for investors. Private and sovereign funds and hotel chains are all committed to boosting these purchases. In fact, according to a report by the real estate consultancy JLL, a “new historical high” was reached during the first half of 2015, as acquisitions amounted to €37,590 million.

“All indications show that 2015 is going to be a record year for hotel transactions at the global level”, says JLL in a statement, “driven by significant overseas investment”. During the first half of 2015, the largest volume of transactions was recorded on the American continent, with €21,490 million changing hands in total – that figure reflected an increase of no less than 73% YoY. Next in the ranking was EMEA (Europe, the Middle East and Africa), with an increase of 55% to €13,430 million.

The consultancy had predicted that the volume of transactions in the hotel sector would amount to €60,870 million in 2015. “We have already reached 60% of that figure during the first half of the year, and so if the level of activity continues into the second half of the year, then we may actually exceed our original forecast”, say JLL.

“The clear improvement in the main hotel markets in Europe and USA, the general economic recovery and the availability of debt with interest rates at historical lows are some of the drivers behind the increase in the level of investment at the global level in 2015, strengthening the trend that began in 2013”, explains Carlos Ortega, Vice-President of the JLL Hotels & Hospitality Group.

Although US private equity firms continue to be the main source of capital, the number of transactions involving investors from mainland China and the Middle East increased significantly during the first half of 2015 – their contribution to the global hotel real estate sector amounted to €8,775 million, compared with €2,060 million a year earlier.

The major transactions closed so far this year have involved several sovereign funds, such as the Abu Dhabi Investment Authority, which acquired the Grand Hyatt in Hong Kong, the Reinaissance Harbour in the same city, and the Edition in New York. The largest sale was closed by the hotel chain Hilton, which sold the Walforf Astoria in Manhattan for €1,745 million.

These investors are looking for trophy businesses, in other words, iconic buildings in large cities that guarantee high returns and have secure customer bases. “Europe, with Paris and London as the major capital cities, continues to be one of the best destinations for agreements involving trophy assets, and hence is where the Middle Eastern sovereign funds continue to show most interest”, says Ortega.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Housing In 2015: Some Vital Statistics

10 February 2015 – Expansión

For translation of the first part of this article, refer to: Housing In 2015: More Sales And Higher Prices

Vital statistics about the housing sector in 2015

House sales: +7.5%: House sales have returned to positive growth. After seven years of decreases, in which the end of tax reliefs barely affected the market – only in an artificial way – a real increase in the number of house sales was recorded in 2014 (up 2.6%). According to the Real Estate Heart Rate Monitor (Pulsímetro Inmobiliario) from the Institute of Business Practices (Instituto de Práctica Empresarial), 7.5% more sales will be closed in 2015 than last year.

House prices: +2.5%: The key indicator for buyers is price, which, combined with necessity, is the factor that tips the balance towards the purchase of a home or not. According to the Real Estate Heart Rate Monitor, prepared by the Institute of Business Practices, house prices rose by 6.47% last year and will increase by 2.5% in 2015. The average value of homes sold in 2014 was €141,718 and this year will close with an average price of €145,261, i.e. we will see a return to 2012 levels.

Construction: +7.5%: Timidly, slowly, the cranes will return to the skyline of Spain’s major cities. In 2014, the construction of new buildings began to increase. Specifically, 37,418 new builds were started in 2014, an increase of 20% on 2013. In 2015, the upwards trend will continue, but it will be less pronounced. According to the IPE, at least the first brick will be laid on 40,225 homes, i.e. 7.5% more than last year.

Mortgages granted: +2.53%: The number of urban buildings financed through mortgages will return to positive growth after no less than eight years in decline. This year, 306,639 loans will be signed for the purchase of property, i.e. 2.53% more than the 299,064 recorded in 2014. Last year, the total volume of mortgages amounted to €39,472 million, i.e. 13.8% more than in 2013. In 2015, the figure will increase to €41,840 million, i.e. 6% more.

Average mortgage: +3.4%: The average size of the loans granted by financial institutions to cover the purchase of residential property in 2014 was €131,984, i.e. 15.8% higher than in 2013. This year the figure will continue to rise, to reach €136,477, i.e. 3.38% more than last year. The average mortgage is equivalent to 93% of the average sales price of homes (note, we should remember that mortgages are granted for all kinds of real estate property).

Construction permits: +5%: Having seen the beginning – timid but evident – of the recovery in the real estate sector, professionals in the market are starting to glimpse a more promising future. And so, permits for the construction of residential developments will grow again in 2015, after eight consecutive years of marked decreases. This year 64,591 permits will be granted. That is 5% more than last year and 24,000 more than the number of new homes started.

All properties: +1.8%: The report from the Institute of Business Practice focuses on the residential market in particular, i.e. the housing market, but the real estate sector is more broad. If we consider all urban properties – shops, shopping centres, offices, housing – 717,471 properties will change hands in 2015, i.e. 1.8% more than in 2014, the year in which the increase was similar, boosted by the arrival of vulture funds looking to purchase bargain properties with high yields.

Housing stock: -29.1%: For the fourth consecutive year, the number of surplus homes decreased in 2014, from 777,000 in 2013 to 662,761. That is, 115,000 fewer homes or 14.7% of the total. In 2015, the decrease in empty properties will be even greater. According to the IPE’s forecasts, the figure will drop to 469,708 properties this year, i.e. 29.1% fewer (193,000 homes). Valencia, Castilla-La Mancha and Andalucía account for 54% of the total stock.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake