Club Noteges Predicts House Price Stabilisation In 2016

11 January 2016 – ABC

House prices rose by 5.42% in 2015 following three years of sharp decreases, according to actual sales data compiled by Club Noteges, the leading national industry trade association, which comprises 135 companies.

Despite the positive trend in 2015, Club Noteges notes that the difference between asking prices and offer prices amounted to 32% at the national level, and was as high as 46% in some areas of Spain.

In this way, the autonomous regions that recorded the smallest gap in terms of (asking/offer) prices during the year were País Vasco and Madrid with a difference of 20%; and Navarra with a difference of 21%. They were followed by Extremadura with a difference of 30%; Cataluña with 32%; Castilla y León with 33%; Andalucía with 34%; the Canary Islands with 36%; and Cantabria, Murcia and Galicia with 37%.

The regions with the largest gap in prices were Castilla-La Mancha with 43%, Valencia with 45% and the Balearic Islands, which led the ranking with 46%. The most significant price decreases in recent years were seen in 2012 and 2013, when prices fell by 15.30% and 14.38%, respectively. They were followed by a slight decrease of 2.31% in 2014 and an increase of 5.42% in 2015.

According to Club Noteges, the highest average sales price this year was recorded in Madrid at €196,749 and the lowest was recorded in Castilla-La Mancha at €69,976. Similarly, the average discount that owners have had to accept to complete sales was the highest in the Balearic Islands, with a reduction of €87,103 on the initial price and the lowest was in País Vasco, with a discount of €36,449.

The actual sales data corresponding to the 3,054 homes that Club Noteges sold in 2015 for more than €384million, show that two spikes were observed during the year; they coincided with the regional and municipal elections in the Spring and with the Catalan and general elections in the Autumn.

Price stabilisation

In this way, the data confirms that the two spikes recorded in 2015 were caused by “electoral expectations in the Spring and Autumn rather than by structural changes in the market, which returned to its original position following the election periods”, explains the CEO of Club Noteges, José Luis Jimeno.

After the first round of elections, prices returned to the path of stabilisation that we have observed since 2013 and according to Club Noteges, all of the data “shows very similar forecasts for 2016, when house prices will once again stabillise following the general elections”.

For Jimeno, “the stabilisation of house prices will continue for at least another decade, due to the lack of demand and the excess stock generated following the explosion of the real estate bubble in 2007”.

Club Noteges brings together 610 real estate agents from 135 associate companies with 165 offices throughout Spain; some of the companies also have a presence in Argentina, Colombia, Mexico and Panama. The trade association currently leads the country’s real estate sector with a sales rate that is 248% higher than the sector average.

Original story: ABC

Translation: Carmel Drake

International Funds Encouraged By Decline In Podemos Support

4 November 2015 – El Confidencial

An air of tranquillity has returned to the offices of the large international funds following the uncertainty that was unleashed on 24 May. Then, the success of groups linked to Podemos in the municipal elections caused many institutional investors to rethink their positions in our country, they slammed on the brakes and chose to move cautiously, as they awaited developments.

This attitude affected the rhythm of several sectors that were enjoying a real boom at the time, including the real estate sector, where large buyers were responsible for driving the recovery. The electoral calendar meant that they had no choice, with the upcoming regional elections in Cataluña (which Junts Pel Sí was trying to hijack as a referendum on independence) and the general elections scheduled for the end of the year, the second half of the year was set to be very quiet. But the latest election polls are changing everything.

The decline of the group led by Pablo Iglesias and the growing expectations surrounding the alliance between PP and Ciudadanos has given the large international funds reason for hope. The results of the opinion polls are showing them that our country’s politics will continue in line with the reforms undertaken in recent years and, above all, that it will not fall into the hands of a leftist coalition involving a Government seeking to resemble the Greek Syriza party.

As one source in the sector explains “now that Podemos is becoming weaker, our concern regarding the country’s political risk has decreased siginficantly – any scenario involving stability is welcome. In other words, the change in the perspective of the international funds has not been driven so much by the rise of PP-Ciudadanos, but rather because the decline in support for Podemos significantly reduces the risk of instability”.

In fact, to say that overseas investors have a preference for one party or another is, in the opinion of the professionals in the sector, completely incorrect. “Investors are not saying ‘I want this party or that party to win’, overseas investment in real estate has been the same under the PSOE and the PP. The good news now is that Ciudadanos is no longer regarded as a risk”.

Several investors specialising in the real estate sector acknowledge that this change of perspective is being felt by the day, a domino effect that has been accelerating with the wave of polls in recent weeks, all of which are marked by the common denominator of the decline of Podemos with respect to the rising trend that started with the European elections and peaked with the municipal elections, and the consolidation of Ciudadanos as the great emerging force.

Tensions continue in Cataluña

(…). The only exception to this rule is Cataluña, “where the separatist tensions mean that there is a great deal of uncertainty”, says one M&A expert. “I have decided to delay any decisions until next year, it only means waiting a few more months. What difference does that make?”.

Just as there is a general feeling of calm amongst the large international investors regarding Spain in general, their views regarding the future of Cataluña are divided. Many are convinced that independence is a utopia that will never actually happen, but there are others that regard it as a credible option, in which case they prefer to wait and see.

The direct consequence of these fears, besides the delay in terms of closing operations, is the downward pressure on the prices of those operations already underway. Similarly, the return of confidence is a revulsive in favour of the vendors, which still have almost two months to reach agreements (before year-end), but now with the factor of economic stability in their favour. Provided that is, that the opinion polls are correct.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Project Kite: Ibercaja Puts €800M RE Portfolio Up For Sale

9 June 2015 – Expansión

Project Kite / The Aragonese group has engaged N+1 to negotiate the sale of 6,900 residential units, 1,300 retail premises and industrial warehouses and 600 plots of land with large overseas funds.

Ibercaja wants to forget about its real estate legacy and focus on its traditional business. After studying a possible operation for several months, the Aragonese group has now decided to sell nearly all of its real estate business. To this end, it has engaged N+1, which has distributed preliminary information about Project Kite to large international funds over the last few days.

Through this operation, Ibercaja offers investors €800 million of foreclosed assets, according to financial sources. Based on the latest available figures, as at the end of 2014, the group held more than €900 million of foreclosure homes, land and property developments on its balance sheet.

The €800 million portfolio will include 6,900 residential units (homes, garages and storerooms); 1,300 retail premises and industrial warehouses; and 600 plots of land, almost half of which have building permits. The homes are primarily located in Zaragoza, Madrid and Barcelona.

Management contract

According to sources, the operation may include a management contract for the remaining real estate assets and the transfer of a team of specialist professionals, comprising around 50 employees. The model for the transaction will be similar to the one adopted by Kutxabank last year.

With this project, Ibercaja joins Bankia, which recently put all of its foreclosed assets up for sale, in the so-called Project Big Bang. These entities are looking to get rid of the real estate assets that are weighing them down, whereby taking advantage of the interest that large funds are showing in becoming Spain’s new property companies, and thus being able to use their resources to grant new loans once more.

The political environment following the regional and local elections has caused many funds to review their strategies, although according to financial sources, they will continue to buy assets provided the misgivings about the general election do not increase.

Ibercaja already explored the possible sale of its real estate portfolio in the middle of 2014, but in the end it backed out.

In 2014, the group also studied the possibility of an institutional investor acquiring some of its share capital; it engaged JP Morgan to assist with that analysis, but ended up ruling out the option. All indications are that Ibercaja will accelerate its IPO in 2016, in line with the philosophy of the savings bank law and the wishes of the ECB.

The Aragonese entity – the result of the merger of Ibercaja and Caja 3 – generated €42.6 million during Q1 2015, up 6% from a year earlier.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake