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

Deloitte: Residential Property Developers Set Their Sights on Consolidation

1 March 2018 – Expansión

The residential sector is on a roll. After years of significant declines in property development activity in Spain, the housing industry recorded its best year since the crisis in 2017, with a total of 500,000 transactions, of which almost 85,000 involved new homes, although the evolution of house sales is still light years away from the levels seen in 2007.

In this context, prices also recovered, recording an increase of 6.6% between 2014 and the third quarter of 2017, albeit with significant differences by province. This recovery in prices came after a cumulative decrease of 27.3% between 2008 and 2014, according to data reflected by Deloitte in its report The Residential Development Handbook. According to that analysis, there are currently 2,150 developments underway, with 114,000 homes being built. Of the total new developments, almost 80% are located in just 10 provinces.

This recovery is happening in the context of a favourable macroeconomic evolution with GDP growth of 3.1% in 2017, a reduction in unemployment and a favourable demographic makeup: Spain has 21 million citizens aged between 25 and 55 years, who may become potential buyers.

Moreover, financing is working in favour of house sales as the banks have opened the credit tap once again, although with greater demands on borrowers and more rigorous controls.

Alberto Valls, Partner responsible for Real Estate at Deloitte, explains that there is “growing unmet demand, which extends beyond the 10 main provinces”. In this sense, sources at the Deloitte have identified 272 hotspots where both demand and prices are growing, unemployment is decreasing and the market dynamics are favourable. “One third of those hotspots are not being covered by any property developers”, explains Gonzalo Gallego, Partner at Deloitte in the Financial Advisory Real Estate team.

These hotspots are located in 158 areas of the country. Specifically, Madrid and Barcelona account for more than 35% of them. In this context, funds such as Castlelake, Cerberus, Blackstone and Värde saw an opportunity in the wake of the recovery and have set up shop in the country. Others, such as Lone Star, have already completed their cycles, and with the sale of its entire stake in Neinor, which has been listed for less than a year, has collected its gains.

For Valls, the Spanish market continues to offer opportunities for investors to create value. “They are continuing to invest through alternative structures: alliances in projects, purchases of property developers and development of platforms for their subsequent debuts on the stock market”, he says.

The Partner responsible for Real Estate at Deloitte also recalls that, despite the creation of new players, the residential market in Spain is “highly fragmented”. And he predicts: “The market for real estate property developers is going to become more concentrated”.

Specifically, the five largest property developers in Spain account for just 6% of the market in terms of units handed over and 12% of the units under development. If we compare those figures with other more mature markets, the Top 5 British property developers account for 39% of the total units handed over, whilst the top five French developers account for 42%, according to data from Deloitte.

Large listed companies

Placing the focus on the large listed property developers, Metrovacesa, Aedas and Neinor, which have a combined stock market capitalisation of €5.2 billion, together, they own a portfolio of land with capacity for the development of 61,500 homes. Their French counterparts Nexity and Kaufman Broad, which have a combined market value of €3.3 billion, own land for the development of 72,100 homes. Meanwhile, the eight largest property developers in the UK, including Persimmon, Taylor Wimpey and Barratt, which have a combined market capitalisation of €37 billion, have potential land for around 300,000 homes.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

BBVA Research: House Sales Will Exceed 550,000 in 2018

9 January 2018 – El Periódico

BBVA Research predicts that house prices will rise by 5% during 2018.

The real estate sector was responsible for more than 11.2% of the growth of the Spanish economy during the first three quarters of 2017. And the strong end to 2017, despite rising uncertainty in the final part of the year, will make way for a 2018 in which the economy will grow once again, supported by both domestic and overseas demand, according to the findings of the report “Real Estate Situation in Spain”, published by BBVA Research.

Although the rate of growth will be more moderate in 2018, forecasts indicate that around 550,000 house sale operations will be closed, which will drive the growth in house prices to around 5% and will increase the granting of building permits to around 92,000. Moreover, increasingly more autonomous regions will show a normalised real estate market, having overcome the crisis.

The scarce data (to be released so far) relating to the final quarter of 2017 indicates a moderation in the growth rate. During the middle two quarters of 2017, house sales maintained their growth rates, which favoured the increase in prices and the launch of new projects. With the official data for the final quarter yet to be published, this report indicates that the balance for the sector during 2017 as a whole was positive, thanks to the strong foundations, which are still having an effect.

Between January and October 2017, 432,500 homes were sold, up by 16.4% compared to the same period in 2016. That figure was made possible by the strong performance of the mortgage market: the volume of new loans to buy homes grew by 16.4% YoY during the first 11 months of the year, and the granting of mortgages increased by 14.7% between the months of January and October. All of this, in a context in which financing costs are at minimum levels, with mortgage interest rates of around 2.2%. The increase in demand favoured construction activity and between January and October, 28.0% more permits were signed, taking the total to 60,695. In this way, house prices rose again during the third quarter, following a moderation in Q2 (by 2.7% according to the Ministry of Development and by 6.6% according to INE).

The Catalan uncertainty

The uncertainty resulting from the political events in Cataluña will influence the evolution of the market. It already forced the moderation of the growth forecasts for the sector as a whole in 2017 and has determined the projections for 2018. Although most of the data from the last quarter has not been published yet, the figures that have been released indicate a certain deceleration, such as house sales in October, which grew by less than expected.

Between the months of June and September, house sales in Spain remained at relatively high levels. The data reveals that house sales amounted to around 45,000 transactions per month, according to data from the Notaries’ Centre for Statistical Information (CIEN). Meanwhile, during the month of October, house sales decreased by 9.3%, the greatest decrease recorded in recent months and that may be related to the increase in uncertainty.

Resident buyers

Alicante, Málaga, Valencia, Madrid and Tarragona are the five provinces that attracted the most resident buyers from other provinces between January and September. Nevertheless, when we compare the total number of homes sold in each province, we see that those where second residences have the highest market share are those that are closest to large cities. Such is the case of Ávila, Segovia and Toledo, provinces close to Madrid where around 35% of homes sold in each one are acquired by residents from other provinces. The same thing happens in Cantabria, close to Bilbao and its surrounding area, and in Tarragona, close to Barcelona.

Original story: El Periódico (by Max Jiménez Botías)

Translation: Carmel Drake

Aguirre Newman: Inv’t in Offices Exceeded €1.7bn in YTD Sept

1 December 2017 – Eje Prime

The office sector in Spain is stable. During the first nine months of the year, the sector accounted for investment amounting to €1.7 billion, in line with the investment level recorded during the same period in 2016, according to the Office Market Report compiled by the real estate consultancy firm Aguirre Newman.

“The main indicators of the office market (the availability rate, the uptake rate, rental prices and the evolution of stock) have continued their positive behaviour previously observed in recent years”, explain sources at the consultancy firm.

“The high level of economic activity in Spain, combined with the strong economic performance of the main countries in our environment, are having a clear impact on our two main office markets”, they say.

Focusing on Madrid, the gross leasing of office space during the third quarter of the year amounted to 93,173 m2, which represents an increase of 2% with respect to the same period in 2016, although, according to Aguirre Newman’s report, 16 fewer operations were closed in 2017 (down to 96).

One of the most active areas in the capital was the Other Business Districts segment (RDN), which accounted for 31% of the total area leased. Nevertheless, the report highlights that the leasing of space in the Central Business District (CBD), with 27% of the total and the OUT area, with 23% of the total, showed significant increases, more than doubling the figure recorded during the same period in 2016 in absolute terms.

Regarding rents, the maximum recorded during that period was €36/m2/month, whilst the average rent in the CBD area was €28.96/m2/month. In the Decentralised area, the average rent amounted to €12.71/m2/month.

In Barcelona, during the third quarter of 2017, 57,000 m2 of office space was leased, which represented a decrease of 32% with respect to the same period in 2016. Nevertheless, the cumulative figure for the year increased by 8% with respect to the first three quarters of 2016, to reach 265,000 m2.

During the period, 103 operations were closed, with an average surface area of 562 m2, in line with the situation observed in previous periods. The most significant operation by size was the deal closed by WeWork, which leased more than 6,500 m2 of office space in the 22@ district.

“In terms of rents, the upwards trend is continuing both in terms of maximum levels, as well as averages”, explain sources at the consultancy firm. The maximum rent recorded during the period was €23/m2/month, whilst the average rent in the CBD was €18.25/m2/month. In the Decentralised area, the average rent reached €14.01/m2/month.

Original story: Eje Prime

Translation: Carmel

Gov’t Says RE Recovery Is More Intense Than Expected

30 May 2017 – El Mundo

The Secretary of State for Budgets and Expenditure, Alberto Nadal, has highlighted that the growth of the economy in Spain is being favoured not only by the country’s exports, but also by the recovery of the construction and real estate sectors, which is proving to be much more intense than the Government had expected.

Those were the declarations made by the Secretary of State during the presentation of Inmonext 17, an event organised by Idealista in the context of Madrid’s International Real Estate Fair (SIMA) 2017, where he noted that GDP growth this year is set to exceed the official forecast of 2.7%.

During his speech, Nadal emphasised that this increase in growth is being supported by exports, which will continue to be very strong and by the recovery of the construction and real estate sectors. “The coffers don’t lie, people don’t pay taxes if they don’t have any cash”, he added.

In this sense, he said that the real estate sector is going to play a fundamental role in the growth of Spain and he reminded his audience that the sector was oversized during the years prior to the crisis and that real demand for housing was not well founded because prices were growing and the volume of credit exceeded the borrowing capacity of families. “Economic growth was unbalanced and was heavily concentrated in the real estate sector”, he said.

In his opinion, a reasonable cruising speed would be the creation of 50,000 homes per year and he added that the recovery is reaching the real estate sector later than other markets, perhaps because it was oversized before. For this reason, he said that the logical thing would be for the sector to operate at a reasonable average, leaving behind the extremes seen before the crisis and over the last few years.

Nadal said that the data shows that there is not a bubble now and he emphasised that the outlook of the Spanish real estate sector depends on the faith that Spaniards have in the future, especially in their jobs and salaries.

Original story: El Mundo

Translation: Carmel Drake

BBVA: Housing Market Makes A Strong Start To 2017

10 May 2017 – Europa Press

BBVA’s latest report highlights the “positive” evolution of the real estate market at the beginning of 2017, given that house purchases are still being “backed” by mortgage financing, construction is continuing to grow and house sales are maintaining their upwards trend.

At least that is according to the “Real Estate Observatory of Spain”, compiled by BBVA Research, the financial entity’s research service and BBVA’s Real Estate area, which states that the recent review of the macroeconomic scenario by BBVA, which forecasts GDP growth of 3% this year, introduces “an upwards bias into the forecasts for 2017”.

In this sense, the entity highlights that house sales maintained their growth rate, supported by the “strong performance” in terms of employment and mortgage loans, whilst construction activity also “remained dynamic”.

According to data from the General Council of Notaries, during the first two months of 2017, 72,371 homes were sold, up by 13.9% compared to a year ago, but in line with the average for 2016 as a whole.

Amongst the factors that BBVA points to as reasons for the improvement in the real estate sector, are the labour market in Spain, which “has continued to improve”, as reflected by Social Security sign-on data, such as the Active Population Survey (EPA). According to the EPA, the number of people in employment grew by 0.6% during the first quarter of the year.

In addition, credit conditions remain “favourable” for households. Interest rates are at minimum levels: the mortgage rate for new operations remains at around 2.2%; meanwhile, the 12-month Euribor rate hit a new minimum in April, closing at -0.119%.

The mortgage market supports residential demand

Moreover, the mortgage market is continuing to drive residential demand. New loans to buy a home rose by 23.5% YoY during the first quarter, excluding refinancings, according to data from the Bank of Spain.

In turn, during the first two months of 2017, almost 12,800 housing permits were granted (20.3% YoY).

Finally, BBVA highlights that the dynamics in the market for land “are still positive”, given that during the first two months of the year, the number of transactions involving land rose by 12.8% YoY, which represents an increase in the traded surface area of 8.8% in one year.

Original story: Europa Press 

Translation: Carmel Drake

Which Players Will Shape The RE Sector In 2017?

5 December 2016 – Expansión

The end of 2016 will mark not only a new record in terms of real estate investment in Spain, but also the start of a new phase in the sector, after three years of recovery.

“In mid-2013, funds like Blackstone started to close operations, at a time when the market was completely paralysed. That prompted a magnet effect, which, together with the creation of Socimis and the reorganisation of the banking sector, launched the recovery of the sector”, said Adolfo Ramírez-Escudero, President of CBRE.

Thus, after closing last year with an investment volume of €12,884 million, the expectation is that the figure will reach €13,900 million by year end 2016. “We may reach record investment figures by year end, as new property owners, with a more institutional profile, enter the market, such as German investment funds, insurance companies, etc.”, he said.

The investment figure may be maintained next year if corporate operations continue, say sources at the consultancy firm. “We are living in a different Spain, with GDP growth of 3.2% this year and forecast GDP growth of 2.5% next year. That has a direct correlation with employment and, therefore, with real estate”, said Ramírez-Escudero.

For this new phase, one of the most important players will be the large Socimis, which have continued to close operations this year, but in a more measured way as they have been more focused on managing their properties; as well as German funds, such as Invesco Real Estate and the real estate division of Deutsche Bank.

Nevertheless, these more risk-averse investors will share the stage with another kind of player in the Spanish real estate sector in 2017. “We are pretty convinced that there is going to be a new property developer cycle, given that the real estate companies have now been established, with new capital. Next year, the property developers will be building new products”, said the Head of CBRE.

Residential segment

These new players will include Neinor Homes. The real estate company, created by the fund LoneStar with the former subsidiary of Kutxabank, has become a key player in the property development sector, with projects underway across Spain. In 2017, the company led by Juan Velayos will debut on the stock market, whereby restoring the profile of property developers, such as Martinsa Fadesa and Reyal Urbis, which fell from grace following the burst of the bubble.

Another player in the residential sector will be Avantespacia. The new real estate company, in which Inveravante (Manuel Jove’s company) owns a 70% stake and Anida (BBVA’s real estate arm) owns a 30% stake, will promote almost one thousand homes during its first phase of development. Its first project in Málaga, with 135 properties, is already being sold, whilst in Madrid, the new company is preparing a development in the Francisco Silvela area.

But development will not only be happening in the residential segment, major projects are also planned for the office and shopping centre segments. In the former, Merlin Properties is expected to play an important role. Spain’s largest Socimi is currently working on the development of an office building in the Isla Chamartín area, in the north east of Madrid.

In addition, it has just completed the purchase of the Adequa business park, a complex that comprises four office buildings and a shopping area, with space for the construction of a 24-storey skyscraper, with a total surface area of 29,000 m2.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

BNP: RE Inv’t Amounted To €11,700M In 2015

13 January 2016 – Cinco Días

Real estate investment soared by 67% in 2015 to reach €11,700 million, a record figure that exceeds the total level of investment seen even in the years before the crisis by 25%, according to the consultancy BNP Paribas Real Estate.

After a record year, the firm considers that it is more than likely that the volume of investment will stop growing and will instead stabilise at around €8,500 million (compared with €9,000 million in 2007), due to, amongst other reasons, the scarcity of appropriate investment opportunities and a forecast rise in the cost of money.

This recovery in the real estate sector has also manifested itself in terms of the number of transactions completed, which reached figures never seen before in the historic series, with a total of 271 operations in 2015 compared with 169 in 2014.

The retail and office segments were the most popular in 2015, with investment of almost €4,000 million in each, whilst residential assets accounted for just 5% of total investment.

The consultancy explains that this increase is due to, amongst other factors, the price of properties, many of which still have upwards potential, which would generate profits, as well as the expectations of an improved performance in terms of rental income and occupancy rates.

Madrid and Cataluña continued to be the busiest areas, with investment volumes of €6,000 million and €2,000 million, respectively. By type of asset, shopping centres were the most sought-after properties during the first half of the year, whilst operations involving office buildings were in most demand during the second half of the year.

The most active players in the market were international investors, which made acquisitions both directly, as well as through their shareholdings in Socimis.

In terms of direct investment, players from France, the USA and UK were the most active, but there were also significant capital inflows from Asian countries, such as China and the Phillipines, as well as from countries in the Middle East and Latin American, although the latter was more symbolic than anything.

In September, the company revealed that the total annual investment volume may amount to almost €12,000 million, or to €10,000 million excluding merger deals.

The real estate investment data provided by BNP Paribas Real Estate is based on certain economic indicators that forecast GDP growth of 0.8% in Q3 with respect to the previous quarter, which would mean GDP growth of 3.2% for the year as a whole. In addition, GDP is expected to grow by 2.5% in 2016.

Original story: Cinco Días

Translation: Carmel Drake

Bankinter: House Prices To Grow By 1.5% In 2015 And By 5% In 2016

18 February 2015 – El Mundo

Bankinter expects the volume of house sales to reach 450,000 by 2016.

The large ‘stock’ (in poor locations) will not prevent the recovery in construction.

GDP is forecast to grow by 2.2% in 2015, which will significantly boost the real estate market.

Demand for housing in Spain will increase again in 2015, with a 15% increase in the volume of transactions, which will drive up property prices by 1.5% on average and by a further 5% in 2016, according to the half-yearly report about the real estate market in Spain, prepared by Bankinter.

The financial institution states that, given the heterogeneity of the Spanish real estate market, prices in most provincial capitals and in the towns furthest from the large cities will remain stable and may even decrease slightly over the next few months. Meanwhile, in the most sought after areas (prime) of the main cities and in the best locations of tourist centres, prices will increase and may even grow by more than 3% in 2015 and by 5% in 2016.

Bankinter explained that this improvement in the outlook for the real estate sector is due to the economic recovery – GDP is forecast to grow by 2.2% this year – which will lead to a better climate for employment, increased confidence and greater access to finance. However, the financial institution warns that it does not expect the recovery of the sector to be fast or sufficiently profound to generate a return to the pre-crisis position, either in terms of transaction volumes or price increases.

The report states that unemployment will remain above 20% over the next two years; the financial effort required to make a purchase will continue to be high due to the decrease in disposable household wealth; the size of the Spanish population will decline (with the consequent negative knock-on effect on demand); and homes foreclosed by banks will continue to come onto the market with big discounts.

Recovery in new build sales

In terms of demand, the report expects an increase to 400,000 homes in 2015 and to 450,000 homes in 2016. A significant part of this growth will be driven by a recovery in the sale of new homes and by the maintenance of demand from foreigners. This increase will cause (new) house sales to break through the psychological barrier of 100,000 transactions in 2016.

In the case of supply, Bankinter points out that Spain still has a stock of between 650,000 and 700,000 empty homes, based on data published by the Ministry of Development and Sareb. Nevertheless, it considers that “this will not prevent the reactivation of the construction sector, given the mismatch between the location of the surplus (stock and demand)”.

In this sense, it warns that around 100,000 homes may never be sold unless huge discounts are applied to compensate for their challenging locations. Whereas, in the prime areas, there is a shortage of supply, according to the entity, which will be covered through renovations and new developments over the next few quarters.

Original story: El Mundo

Translation: Carmel Drake