Malaga, or How the Sun is Shining Again on the Costa del Sol

14 August 2018

With sales and prices in rapid ascent, the real estate sector is firmly committed to continuing the recovery of the property market in the Andalusian city.

The sixth largest city in Spain, with 569,002 inhabitants in 2017, Malaga is the Andalusian city where housing prices have increased the most in the first quarter of this year, according to data from Urban Data Analytics, with a year-on-year increase of 19.4%. According to data from the Ministry of Development, valuation prices rose by 10.8% to 1,506.8 euros per square meter. The increase was also substantial compared to the fourth quarter of 2017 when the square meter in Malaga was priced at 1,440.40 euros per square meter.

The recovery of the residential property market in the city on Spain’s Costa del Sol can be largely explained by the rapid pace of acquisitions, which are being carried out by domestic and international buyers, and which have steadily increased in recent years. While there were around 3,150 transactions in 2013, there were close to 5,000 in 2015 and over 7,000 in 2017.

Also, compared to the token level of new construction in other Spanish cities, new developments in Malaga have been substantial. Just in the first quarter of 2018, 242 purchases of new homes were finalised in the city, equivalent to 12.3% of the total.

In its report, Vision 2018: the Real Estate Market in Malaga, the consultancy Savills Aguirre Newman notes that the market’s strength in the city will cause the Costa del Sol to reach record sales for the year, adding that Malaga has positioned itself as the main power in Andalusia, even ahead of the capital, Sevilla.

Thus, the consultancy stresses that construction began on 5,236 homes in the Andalusian city, compared to the 2,980 in the capital. As for deliveries, Malaga finished a thousand more homes than Sevilla: 2,580 finished units compared to Sevilla’s 1,511.

Projects underway in Málaga

Faced with this data, operators such as VBare, Inbisa and Quabit have already finalised operations in the city, which also stands out for the demand for land for logistics platforms, large commercial projects and student residences.

In April, Quabit stated that it owns 200,000 square meters of land in the province of Malaga for the construction of 1,700 homes, equivalent to 20% of the developer’s portfolio of land. For its part, VBare completed the acquisition of 14 homes in the city in June for 1.35 million euros for placement on the rental market, for which it expects a profitability of approximately 5.1%. Gilmar, a real estate agency, also chose Malaga’s city centre as the site of its 32nd office.

With the presence of 40,087 companies, of which 87.1% are in the service sector, Malaga’s office market has also once again taken off. Another report by Savills Aguirre Newman places the occupancy rate of offices in the city’s prime area at 90%. Rents are also increasing, reaching 18 euros per square meter in the central street Larios. According to the consultancy, the trend will continue in 2018, which will cause buildings that have been unoccupied for nearly a decade to be taken up. The demand for land for logistics platforms is also increasing in the city, particularly for areas exceeding 5,000 square meters, which are rare.

On the commercial side, one of the larger projects underway is the Designer Outlet Centre, which Sonae Sierra and McArthurGlen have added to the Plaza Mayor shopping centre, with an additional 85,198 square meters (added to the rest of the existing complex), housing a total of 107 stores.

Also, the new wave of student residences has also reached the Andalusian city. Syllabus, a subsidiary of Urbania, will build a new student residence in the historic centre of Malaga in a ten million euro investment. The new development will have 143 rooms and an area of 4,600 square meters and will be ready by 2020.

Lastly, in June, the Malaga City Council approved a project for a luxury macro hotel in the city’s port. The hotel will be a 150-meter-high, 45,000-square-meter building that will be developed by the Qatari investor Abdullah Al Darwish. The building, which will involve an investment of 116 million euros and will be located in the Dique de Levante, will begin construction in 2020 and will be inaugurated three years later.

Original Story: EjePrime – C. De Angelis

Translation: Richard Turner

 

Málaga Redeems Itself: the Capital Pushes the Costa del Sol towards Record House Sales

8 June 2018 – Eje Prime

Málaga is in the real estate news but this time not only because of its coastal towns. The boom in the Malagan capital looks set to push the Costa del Sol to maximum highs this year in the residential market. According to the report Vision 2018. The Real Estate Market in Málaga, compiled by the consultancy firm Savills Aguirre Newman, more homes will be sold this year than in 2007 (19,464), just before the start of the crisis, which affected the sector for almost a decade.

The director of the consultancy firm in Málaga, José Félix Pérez-Peña, explained that the city of Málaga has become one of the main focuses of attention for the real estate sector at the domestic level, and it is also positioning itself as an investment location for overseas clients. “This is something that never used to happen, the residential engine used to always focus, almost 90%, on the Costa del Sol”.

Nowadays, property developers and funds are investing in the capital, acquiring land in light of the existing demand. In this regard, large real estate groups, such as in the case of Gilmar, have also opened regional offices in the city, as revealed by Eje Prime.

Similarly, the report from Savills Aguirre Newman highlights that, within Andalucía, Málaga has positioned itself as the main powerhouse, ahead even of the capital, Sevilla. In this regard, the consultancy firm underlines that 5,236 new homes were started in the city on the Costa del Sol in 2017 compared with 2,980 in Sevilla. In terms of deliveries, Málaga outperformed Sevilla once again with the handover of 2,580 finished units compared with 1,511 in Sevilla.

23.8% larger residential supply in 2017

Another one of the key aspects in the growth of Málaga Capital is its residential supply. Last year, new builds grew by 23.8%, increasing the number of planned homes by 3,859 in the case of apartment blocks and 370 in the case of detached family homes.

In terms of the city’s neighbourhoods, Puerto de la Torre accounted for the highest proportion of stock, with 55% of the total. In total, across the province, 17,738 homes were sold last year.

In terms of prices, the centre of Málaga is where the price per square metre for homes in apartment blocks is most expensive, reaching €3,073/m2, whilst Málaga Este is becoming a reference in the market for detached family homes with average prices of €2,568/m2.

Original story: Eje Prime

Translation: Carmel Drake

Asprima: Buildable Land is Running Out in Madrid

25 November 2017 – ABC

Land is running out and the market is becoming distorted in the Spanish capital. For two years, the price of buildable land for the construction of new homes in the Community of Madrid has been rising, especially in the centre. There is not much buildable land left and the space that is available has seen its value rise due to the increase in demand. This equation means that, unless new variables are introduced, we will end up seeing an acceleration in house prices. “Real estate activity has returned with a vengeance and new housing is needed”, according to Daniel Cuervo, the Director General of the Association of Property Developers in Madrid (Asprima) (…). By way of example, “in Valdebebas, two years ago, people were paying €800 per square metre for buildable land “and now that price is above €1,500/m2 (…)”.

He also thinks that the property developers feel very certain about the sale of their homes “and that there is competition between them”, which translates into high house prices. Certain political decisions have paralysed several developments (…).

The Councillor for the Environment and Town Planning at the Community of Madrid, Pedro Rollán, was quite explicit this week when he said that “talking about housing requires us to talk about land” (…). “Many people have been obliged to go outside of Madrid due to the (high) price of land (in the centre),” he said, at a conference organised by the Association of Housing Managers (AGV). At the same time, he called for “a policy that allows for the development of sufficient land to deal with the true demand in the city of Madrid”. Rollán made reference to the importance of the “large batch of land in the south-east of Madrid”, where “at least 50% of the homes will be subsidised properties”.

Value of land

Daniel Cuervo also said that the project underway in Los Berrocales, Los Ahijones, Los Cerros and Valdecarros (the Strategy for the Southeast, within the municipality of Madrid) will allow “the relaxation of new house prices, given that more than 100,000 homes are planned”. To this end, the Town Hall needs to “continue complying with urban planning legislation to convert plots into buildable land”.

The Director General of Asprima also (…) made reference to a study conducted by IESE, which indicates the need for 13,000 new homes per year in the municipality of Madrid “and the impossibility of achieving that”.

According to the experts, the price of land, with respect to the price of a home, should not exceed 20-25% of the total value; and the traditional unwritten rules indicate that it should represent one third. “In the neighbourhood of Salamanca, in certain cases, the price paid for land may reach 70%-75% of the final value of the home”, explains Óscar Ochoa, Director of the New Build department at the real estate firm Gilmar (…).

Areas on the rise

If we talk about other parts of Madrid, things change. In San Sebastián de los Reyes, for example, the value of land “represents around 30%-35%”. Ochoa warns that it is not only in the centre that it is impossible to find new land, the supply is also scarce along some of the main access roads. “Such is the case in Las Tablas, San Sebastián de los Reyes, Montecarmelo and Valdebebas along the A-1 and in Pozuelo and Las Rosas along the A-6”.

For Ochoa, the solution involves establishing urban development plans designed to meet the true demand for the areas (…). Ochoa acknowledges that in terms of buildable land “we are in the hands of the politicians”. That is why he asks “for the plots to be organised and for the concession and licence processes to be streamlined”.

According to the Community of Madrid, there is a need for between 15,000 and 20,000 homes per year, including the repositioning of homes for those who want to change the kind of property they live in and new homes that are built. (…).

The situation is also affecting the rental market, according to José María García Gómez, Director General of Housing and Rehabilitation for the Community of Madrid (…). “The rental market is under pressure and prices are rising there once again”.

García Gómez believes that the role of the Administration “is not to put obstacles in the way, but rather to grant licences. He believes that the new Land Act, which is being drafted, will bring stability, pointing out that of the 178 municipalities in the region, only 20 have a general housing plan in place. The conclusion is clear: much remains to be done” (…).

Original story: ABC (by Belén Rodrigo)

Translation: Carmel Drake

Stoneweg To Convert Former Provincial Court Building Into Luxury Homes

25 October 2017 – Expansión

The real estate investment platform Stoneweg, led by the Spaniards Joaquín Castellví and Jaume Sabater and headquartered in Geneva, has unveiled a new project in Madrid. The firm, which brings together funds from private and institutional investors across Europe, has acquired a building on Calle Ferraz in the Spanish capital where it plans to create a residential development containing 25 luxury homes. Until recently, the property used to house several departments of Madrid’s Provincial Court.

Located in the Argüelles neighbourhood between Calle Princesa and the exclusive Paseo de Pintor Rosales, the building will contain more than twenty homes, with a surface area of between 150 m2, for the smallest flats, to 176 m2 for the penthouses, with 30 m2 of terrace space and 77 m2 of solarium with a private swimming pool.

Construction work is expected to begin in January 2018, for completion at the end of 2019.

The homes will cost between €935,000 and €2.2 million and will include one or two parking spaces each plus a storeroom. The sale of the homes will be led by the estate agency Gilmar.

This is not the only residential project that Stoneweg is currently working on in Spain. The Swiss manager has 30 developments underway at the moment, located in Madrid, Barcelona, Costa del Sol and Costa Brava.

In total, the company has invested around €450 million in various real estate projects across the country and plans to invest a further €250 million. Besides Spain, the manager also has investments in Switzerland, USA and Italy.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

GreenOak Puts Luxury Homes On C/Fuencarral Up For Sale

7 February 2017 – El Confidencial

Between €350,000 and €1 million. That is the price bracket at which the high-end homes at number 77 on Madrid’s alternative shopping street Calle Fuencarral are going on the market for. The homes are going on sale in the building that GreenOak purchased, together with ASG Iberia Advisors (previously Activum), from the General Treasury for Social Security, for €21 million in a public auction – it was the only offer that the State received for this centrally-located property, whose renovation will combine luxury residential properties with retail space.

The operation, closed at the end of 2015, was led by John Carrafiell (GreenOak), hand in hand with the German real estate fund manager (ASG Iberia Advisors), which is led in Spain by Brian Bettel, the man who used to hold the reins at Cerberus in Spain.

According to sources close to the project, the plans, which have been developed with the utmost discretion since the acquisition, comprise the construction of 40 1-, 2- and 3-bedroom homes (measuring between 50m2 and 150m2), which will be sold for between €350,000 and €1 million, i.e. around €6,000/m2. In addition, the building will continue to house a sizeable retail space, as three of its six floors will be used for that purpose. The common areas will have a swimming pool, solarium and gym, however, it will not have any parking spaces, a major drawback for a project of this standing. Construction is expected to be completed by the end of 2018.

Sources consulted say that there is a long waiting list of people wanting to acquire these units, given that there are no other luxury new homes up for sale in the area to compete with this project. In fact, one of the developments that could compete in this market is located on Calle Fernando VI (in the Lamarca Building, just 500m away), which is owned by the Venezuelan Capriles family, has been completely sold already. GreenOak and ASG Iberia have engaged the luxury real estate company Gilmar and CBRE España to market the properties. (…).

The building, which is located just a short distance from Tribunal metro stop, has been completely derelict for several years. It has a total constructed surface area of almost 8,000 m2 spread over six floors and was constructed on a plot of land measuring 1,875 m2. (…).

This is GreenOak’s first major residential project in Spain, where it has previously focused more on the logistics, office and retail sectors; meanwhile, ASG Iberia has expressed much more interest in housing, along with the retail sector. In fact, that company has separate plans to construct more than a thousand homes in Madrid.

Last year, the fund manager purchased six plots of land from Altamira in Alcalá de Henares with a buildable surface area of 50,000 m2, on which it will build up to 650 homes. (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Demand For Off-Plan Homes Returns As Stock Runs Out

6 June 2016 – El Economista

The purchase of off-plan homes has returned to the stage after years of lethargy, driven by: the absorption of residential stock in many areas of Spain; the need for new homes; the improvement in the economy and in future employment; and the clear recovery of the real estate sector.

According to the President of the property developers’ association APCE, Juan Antonio Gómez-Pintado, the “stock” of homes, which has weighed down (on the sector) since the crisis, has been gradually absorbed and in certain areas, such as Madrid, Barcelona and the Costa del Sol, it is practically non-existent. (…).

The market, in general, has a view that residential stock has disappeared in many areas, leading to the activation of prices and the construction of new homes, said the CEO of Quabit, Javier M. Prieta. He added that housing permits soared by 42.5% in 2015, whereby confirming the need for new homes.

Exponential growth

Since 2013, the number of off-plan purchases has grown exponentially, especially in the medium-high and high end residential segment, according to the Director of the Development at Gilmar, Óscar Ochoa, who highlighted that after many years of crisis, there is a latent demand for newly built homes.

At present, buyers are looking to purchase homes to reposition themselves, say sources at Tinsa, who consider that one of the major challenges in the residential market will be to achieve the recovery of the employment market and the conditions that allow for that pent-up demand to become solvent.

Sources at Neinor Homes have also observed a significant revitalisation of the market in the last year and assure that off-plan buyers are looking for a type of home that has not been built yet or that was hard to find until now. Clients are very demanding and well-informed about what their homes should be like.

The property developer Vía Célere has also detected a substantial increase in off-plan sales, both in Madrid, where 90% of Residencial Célere Adelgas II has been sold with still a year to go before it is completed, and in Barcelona, where half of Residencial Célere Magoria, which was launched at the end of 2015, has already been sold.

These are clients who do not need a home in the short term and who are able to invest more in exchange for a new home in which they will not have to invest anything over the long term, said the Director of Gilmar. (…).

Clients who buy off-plan should always verify that the project has a building licence, that the contract includes a delivery date and that the amounts paid during the construction process are guaranteed by some kind of insurance policy or aval, say sources at APCE.

In terms of the benefits of buying off-plan, price is a fundamental aspect, as well as the possibility of customising the home, say sources in the sector.

Sources at Tinsa, APCE, Quabit, Gilmar, Vía Célere and Neinor all agree that off-plan buyers should only purchase from transparent and solvent firms with experience in the sector, and they recommend steering clear of apparent bargains. Off-plan buyers should also check that the property developer in question already owns the land on which the property is going to be built or that an aval has been constituted for the entire development.

Off-plan buyers should also demand a guaranteed individual aval to allow them to recover monies paid in the event that their homes are not handed over in the end.

Original story: El Economista

Translation: Carmel Drake