Tag: geographical mobility

Servihabitat: Rental Prices Will Rise By 2% Before Year End

26 October 2017 – La Vanguardia

Residential rental prices will rise by 2% on average in Spain during the second half of the year, according to the third edition of the “Residential rental market in Spain” report, compiled by Servihabitat, which also forecasts that the trend will continue to be “positive” into the beginning of 2018, despite the fact that some provinces “have stalled”.

The platform says that greater geographical mobility, the popularity of the rental culture amongst young people and the impact of tourism are the factors that are continuing to drive up rental property prices.

In this way, according to Servihabitat’s data, almost 70% of renters in its areas of operation are aged between 26 and 35 years, a figure that increases to 90% if that range is extended to include people aged up to 40 years old.

Currently, 52.3% of homes that are rented out are found in buildings with 10 or more homes; 66.1% are between 46 m2 and 90 m2; and 56.4% were constructed more than 35 years ago.

The average time that it takes to rent a home from when it becomes available on the market has decreased from just over two months on average in Spain to 1.7 months, in just six months.

Nevertheless, in the autonomous regions of Cataluña and Madrid, it takes a maximum of 1.5 months to rent out a home. In fact, in cities such as Madrid and Barcelona, the lag time can be as short as a few days.

Spain currently has 97,900 rental homes available, down by 17.5% compared to a year ago. In other words, there are currently 2.5 homes on offer for every 1,000 inhabitants or 5.3 properties for every 1,000 households.

Servihabitat believes that the progressive reduction in available homes is explained by a reduction in the average length of time it takes to rent out a home and due to “the shortage of residential stock being allocated to  the rental market”.

Supply is most abundant, taking into account the population and the number of households, in provinces such as Salamanca, Alicante, Ciudad Real, Segovia, Burgos and Cantabria.

The following autonomous regions have a supply of more than 13,000 homes: Andalucía, Comunidad Valenciana, Cataluña, Cantabria, Castilla y León and Castilla-La Mancha.

Spain’s most expensive regions: Balearic Islands, Madrid and País Vasco

On the basis of price per square metre, the Balearic Islands, Madrid and País Vasco are the regions where the average rental price is the highest.

In general, in Spain, the average price of a home measuring between 80 m2 and 90 m2 is €620, up by 3.3% compared to 6 months ago.

The average gross return from rental homes in Spain amounts to 5.5%, a figure that is even higher in the autonomous regions of Cataluña (6.1%), Madrid and the Balearic Islands (5.8%) and the Canary Islands (5.7%).

The study also highlights that the evolution of the rental market in Spain is characterised by “a positive trend, although it displays different behaviours depending on the region analysed”.

In this way, Servihabitat considers that the proposals aimed at increasing the stock of public housing for rent will contribute to a “greater equilibrium” between the purchase and rental markets as residential options in the country.

The Director-General of Servihabitat’s real estate business, Juan Carlos Álvarez, believes that the rental market represents an “attractive prospect for the arrival of new investors dedicated to this activity in Spain”, but he considers that the trend in the future will involve “necessary regulation” to protects both landlords and tenants alike.

He also thinks that this regulation should be accompanied by “a strong commitment” to the rental market by institutions, through a “decided” institutional investment in the rental market.

Original story: La Vanguardia

Translation: Carmel Drake

Demand For Rental Housing Will Soon Exceed 500,000

19 May 2016 – El Mundo

Demand for rental housing from the population cohort aged between 20 and 39 will exceed half a million within the next few years in Spain, in a market in which 15% of homes are already occupied on a rental basis.

That was one of the findings from the XVII Annual Meeting of Esade Alumni’s Real Estate Club, which focused on the residential rental market in Spain and Europe and its viability from the point of view of operations, financing and capital markets. The meeting was attended by more than 150 specialists from the real estate sector.

The President of Esade Alumni’s Real Estate Club, Eduard Mendiluce, said that residential rental properties represent “an investment in the future” and he made reference to the business models that operate in other European countries, where a couple of companies manage stocks of 200,000 and 300,000 homes.

Eduard Mendiluce, who is also CEO of Anticipa, said that the residential rental market “is here to stay” because it responds to structural changes and he said that we do not currently have a stock of residential homes for rent of the quality that meets demand.

Meanwhile, the Professor of Applied Economics at the Autonomous Universiry of Barcelona, Josep Oliver, explained the reason for that demand. According to data from INE, 42% of young people aged between 20 and 39 live with their parents, approximately five million people, of which 2.3 million have a job. “From this group, we can expect to see a demand for 500,000 rental homes in Spain over the next few years”, he said.

Similarly, the Director of Diversified Industries and Real Estate for EMEA at JP Morgan, Guillermo Baygual, analysed the market from the point of view of investors, who “are looking to obtain returns with minimal risk”.

Within the European framework, he made reference to UK legislation, which most protects the interests of owners and Dutch legislation, which is the most favourable towards tenants. In turn, the CEO of Sogeviso, Pau Pérez de Acha, made reference to social rental housing, given that in Europe the average proportion of rental housing allocated for that purpose amounts to 12%, whilst in Spain, that figure ranges between 0.8% and 2%.

Similarly, the CEO of Immeo, Thierry Beaudemoulin, analysed the German rental market, where just 45% of the population live in their own homes, one of the lowest rates in Europe. (…).

Finally, the Director for Strategy and Business Development at Acciona Real Estate, Luis Morena, also predicted a positive future for the residential rental market.

This will involve the elimination of tax incentives for house purchases; the maintenance cost of home ownership, which is similar to rental cost; and the recovery of the labour market, which is increasing geographical mobility and therefore demand for flexibility in terms of the residential real estate market.

Moreno pointed to insufficient financing to buy a home as another one of the key factors that will influence the increase in the percentage of residential rental homes in Spain in the short term. Currently, 15% of Spanish homes are occupied on a rental basis, whilst in 1970 that figure accounted for 30% of the available stock of homes.

Original story: El Mundo

Translation: Carmel Drake