Tag: house building

Foro Consultores: Land Prices Soar In Certain Pockets Of Madrid

13 February 2017 – El Confidencial

Land prices are soaring, house prices are rising, the buying frenzy is gaining momentum in some areas and in certain developments…Is history repeating itself? Are we witnessing the gestation of a new real estate bubble, albeit not on a national scale, but nevertheless in certain areas of the country. That is what seems to be happening in some neighbourhoods of Madrid. But, the answer, for the time being at least, seems unanimous: not yet.

Buildable land, in other words, land that is ready to be built upon, is running out and, across Spain, there is barely enough land left upon which to construct the 1.5 million homes estimated to be required to supply the market for the next 8.6 years. In Madrid, the land will run out in just over 6 years, according to the latest report from the appraisal company Tinsa. It identifies a worrying shortage of this type of land in areas of expansion to the north of Madrid, as well as in certain specific points of the metropolitan area, such as Pozuelo, Villanueva de la Cañada, Coslada and Rivas. In some of these areas, according to warnings from Tinsa, there will be no buildable land left within 12-24 months. This situation has, unsurprisingly, led to sharp increases in land prices in certain areas. And these rises are concerning the sector. Where are these first warning signs starting to sound?

Valdebebas

The large real estate development in the north of Madrid, which was launched at the height of the crisis and which has fallen victim to numerous legal setbacks, has become, in the eyes of the residential sector, a clear example of the extent to which land can become a very sought-after, as well as a very dangerous, asset.

“Without doubt, it is one of the areas where land prices have grown significantly. In 2014, they ranged between €750/m2 and €900/m2, whereas nowadays operations are being closed for more than €1,200/m2 and €1,300/m2, and the perception in the market is that land can no longer be sold for less than €1,400/m2”, explained Vicente Quintanilla, Director of the department for Investment and Land at Foro Consultores. According to this expert, “this trend generates significant tension in terms of the prices of new builds, which are being sold for €3,000/m2 in certain developments”. (…).

Pozuelo, Aravaca…

Another market where prices have also risen significantly is the municipality of Pozuelo de Alarcón, where Sareb sold land for around €1,000/m2. (…).

Indeed, the supply of land in Pozuelo has completely run out and families in need of homes are heading to other markets, such as in Boadilla del Monte, a cheaper alternative. According to data from Foro Consultores, the gap in prices is very significant. “To give you an idea, a family home or chalet in Boadilla costs around €450,000 on average, compared with between €700,000 and €1 million in Pozuelo.

Scarce and sought-after plots of land have also seen sharp price increases in recent years. “In El Camino de Barrial, in Aravaca, land prices have risen from €1,200/m2 in 2014 to around €2,000/m2 now. (….).

Boadilla del Monte, at boiling point

Boadilla del Monte is another one of the markets that has experienced a huge boom over the last two years. And there, it has not been due to the scarcity of land, but rather because of the strong demand from families who, as described above, cannot find homes in Pozuelo de Alarcón.

“For family home plots, land prices have increased from €400-500/m2 in 2014 to €800-900/m2 in2016, say Foro Consultores. (…).

Euphoria in Méndez Álvaro and rises in El Cañaveral

In the heart of the capital, where land is noteworthy due to its absence, land prices have increased considerably. In 2014, buyers paid €1,000/m2 and in a recent operation, whereby Adif and Renfe sold a plot to Vía Célere, the price paid amounted to around €1,900/m2. (…).

This increase in land prices is not exclusive to the area to the north of Madrid (…). The price of more affordable land and cheaper homes has also risen significantly in recent months.

Such is the case of El Cañaveral, in the east of Madrid, where “last summer, land prices amounted to around €360-370/m2 and now plots are going for €450-500/m2” (…).

Finally, all of the experts lament the fact that during the crisis, no agreement was reached to manage land, which has resulted in this significant shortage and in the inevitable increase in prices. They advocate greater agility in terms of urban planning, especially where the shortage is leading to a bottleneck in the market.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Ebrosa Buys Ministry Of Defence’s Last Auctioned Plot In Madrid

9 February 2017 – Expansión

The Ministry of Defence is continuing with its real estate divestment plan. Its last major sale was completed yesterday with the sale of an urban use plot that has a surface area of 3,569 m2 and a buildable surface area of 9,865 m2. The plot is located in the former central park of the engineers in Villaverde, in the neighbourhood of Los Angeles, in the south east of Madrid.

Like in the case of the Administration’s other assets, the sale has been conducted through a public auction, which was publicised through the real estate portfolio addmeet. Specifically, the Ministry of Defence had planned to carry out two simultaneous auctions, for an initial asking price of €4.7 million (in the first round of bidding) and a second asking price of €4.28 million (in the second round). In the end, the second round was not necessary as the initial bids exceeded the initial asking price, and the plot was awarded to the real estate company Ebrosa, which bid €5.04 million.

This Zaragoza-based property developer will use the land, for which planning permission has already been granted, to build a block of flats similar to those projects that it is already developing in other areas of Madrid, such as in Las Tablas and Sanchinarro, in the north east of the city, as well as in Ensanche de Vallecas.

Ebrosa’s new development will be located next to “residential developments that are being sold at a good rate”, according to information included in the addmeet advert. Specifically, one hundred homes that Inmoglacial is promoting together with the investment fund Aquila Capital, in the same central park of the engineers in Vallaverde, after it was awarded nine plots of land from Sepes in July 2015, covering a buildable surface area of 120,000 m2. That project, which is being completed in nine phases, involves a total investment of almost €200 million to construct more than 1,200 homes, whose first phase is due to be completed in the spring of 2017.

According to the most recent annual accounts, corresponding to 2015, Ebrosa generated a profit of €31.38 million, compared with €4 million the year before, from a turnover of €16.68 million.

Divestment plan

The sale of the plot in the neighbourhood of Los Angeles was included in the real estate asset sales plan that the Ministry of Defence launched in 2013, with the aim of divesting some of its land, premises, rural estates and homes.

The most high profile sales in this plan include the sale of the former Precisión Workshop, located on Calle Raimundo Fernández Villaverde, next to Paseo de la Castellana and Nuevos Ministerios. In November 2014, the Ministry of Defence awarded those unused plots to the housing manager Domo for €111 million, which acquired them with the aim of constructing a 320-home development on the site, with an average price of €325,000.

Currently, the Ministry of Defence has two other plots of land up for sale, in Alcalá de Henares and in the Campamento area. The latter, whose sales price has not been revealed, is one of the most attractive sites for construction in the capital, given its location, between the Somosaguas area and the former land of Campamento, whose sale is also being considered by the Ministry.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Quabit Will Build 1,700 Homes With Funding From Avenue

30 December 2016 – Expansión

Yesterday, the listed real estate company Quabit signed an agreement with Avenue Europe International Management, whereby the fund will provide a line of credit amounting to €60 million, which Quabit will use to increase its portfolio of residential projects.

Specifically, the funds obtained through this line of credit will be used to acquire buildable urban land for the development of 1,700 homes next year, in Madrid and surrounding areas.

The funds from Avenue will finance 70% of the land acquisitions, whilst the remaining 30% will be financed by own funds from Quabit. Moreover, the real estate company may increase the amount of the credit line to €85 million.

Business plan

This agreement forms part of the business plan that the real estate company chaired by Félix Abánades set for the period 2015 to 2020, which includes returning to residential development, after years focusing on the sale of finished stock and on its financial restructuring.

To this end, during the first nine months of 2016, the listed real estate company has acquired plots of land in Boadilla del Monte (Madrid) and Guadalajara, and has launched five new developments, containing 304 homes in total. Under this plan, Quabit expects to hand over more than 3,000 homes, including assets from its own portfolio as well as those coming from new investments, with a forecast turnover of more than €950 million.

During the first nine months of 2016, Quabit recorded sales of €25.7 million and losses of €10 million, down by 23% compared to the same period a year earlier. Its EBITDA was negative (-€6.9 million), although it improved by 9.1% compared to the third quarter of 2015.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Madrid Leads Spain’s Property Development Drive

23 October 2015 – Expansión

The Barcelona Meeting Point, which has been held this week and the Autumn edition of SIMA, which starts in Madrid today, are both proving to be of particular interest to the Spanish real estate sector. And it is no wonder, given that those two regions are leading the way in terms of property development at the moment. But the reactivation of the real estate sector is not proving to be homogeneous: it is slow, uneven and focused on certain large urban areas. Investment funds and real estate companies have acquired offices and commercial assets amounting to €10,800 million so far in 2015, already exceeding the total figure invested in 2014 (€10,200 million). And investors’ interest, which began in the tertiary sector, is now extending to the residential sector, at the hands of a winning formula: the partnership of large investment funds and local property developers.

Interest in ‘ready-to-build plots’ (‘suelo finalista’) has been increasing in Madrid since the end of 2013, however, given the shortage of land in the capital, attention is now starting to focus on other development land (‘suelos con gestión de desarrollo previo’), according to findings from CBRE in its latest report Market View Residencial. The lack of property developments to meet future demand is already a concern for the sector, and that perception has only increased since the change in the municipal government, given that the brakes seem to have been put on several projects: Chamartín, Mahou-Calderon and Canalejas.

According to Servihabitat’s latest report about the residential sector, house sales will have increased by 25.6% by the end of this year, to total more than 400,000 operations. The entity expects the rising trend to continue in 2016, with more than 460,000 house sales, up by 14.5%. As a result, it expects house prices to rise by 2.6% this year and by 6% in 2016. All of the experts agree that the lack of land will end up impacting house prices.

In the centre of the capital, large one-off operations continue to abound, such as the ones closed last year by Domo Gestora, which acquired a plot of land on Raimundo Fernández Villaverde for €111 million; and Ibosa, which was awarded the former Metro depot in Cuatro Caminos. Another highly anticipated operation is the sale of a plot of land on Calle Padre Damián, 52, owned by the Ministry for Foreign Affairs, measuring 15,000 m2, where 200 homes are going to be built. The auction date has not been set yet, but Domo, Larcovi (with Ruiz-Larrea Architects), Comunidades Santa Gema, and the strong partnership between Los Jardines and El Olivar, have created four cooperatives interested in this plot worth around €100 million.

In terms of other future projects, within the M-30 radius, all eyes are focused on Operación Chamartín (17,500 homes), Operación Campamento (10,700 homes) and the smallest project of all Operación Calderón (2,000 homes). For Samuel Población, National Director of Residential Property and Land at CBRE, all three are very interesting projects and, in his opinion, Chamartín is the most necessary. “It will be the vertebral axis between the Castellana and the developments in the North, it has the blessing of the owners and it will take almost 20 years to complete. It doesn’t make any sense, either commercially or development wise, to delay it any longer”. However, the new mayoress of Madrid considers that this urban planning project cannot be resolved “in two months” and has said that no decision will be taken until after the general elections. This uncertainty, which will exist until the final version of the General Plan for Madrid is reviewed and the new Town Hall’s plans are presented in more detail, is not good for the sector, at a time when real estate investment has shot up by 51%, says Samuel Población, who also points out that, the project now known as Distrito Castellana Norte is planned in several phases, which means that its launch is not incompatible with subsequent adjustments.

Scarcity on the horizon

The lack of supply has been felt most notably in the PAUs (‘Proyectos de Arquitectura y Urbanismo’ or Architecture and Urban Planning Projects)  in the north of Madrid: Sanchinarro, Las Tablas, Montecarmelo and Arroyofresno; and is starting to become apparent in Valdebebas. Currently, around 5,000 homes (unsubsidised and subsidised) have been delivered or are about to be in that development alone, out of a total projected number of 13,500. The Junta de Compensación is selling new plots for the construction of social housing, with plans for 1,000 subsidised homes to be built; after that, the supply of protected land in Valdebebas will have run dry.

In the south of the city, the Ensanche de Vallecas area is also showing signs of the shortage: in 2007, there were almost 3,000 homes for sale there, and now there are just 150.

In the southeast, other important developments are planned, such as Valdecarros (48,000 homes), Los Ahijones (15,400 homes) and el Cañaveral (15,000 homes), however there is not yet sufficient demand in those areas to match the vast supply.

Madrid’s residential market is a very polarised and so, despite the fact that there appears to be stock, there are pockets where scarcity is just around the corner.

Luis Corral, the CEO of Foro Consultores, reminds us that  improvisation does not work in the housing sector: “To develop homes, land needs to be created and that takes time, which means developers need to have developable land in their portfolios”.

Original story: Expansión Special ‘Casas’ Supplement (Loreta Ruiz-Ocaña)

Translation: Carmel Drake

Increase In Number Of Homes Promoted By Public Sector In 2015

11 May 2015 – El Economista

The construction of 170 homes, promoted by Public Administrations, was completed in Spain during January and February, which represented an increase of 24% with respect to the same period in 2014.

In this way, homes promoted by the public sector began 2015 on a positive note, whereby bringing an end to the negative trend experienced in recent years, according to data from the (Ministry of) Development, compiled by Servimedia.

In 2014, Public Administrations promoted 482 homes, down 27.8% from a year earlier and far below the 5,652 homes recorded in 2010.

In terms of the weight that the public sector has over the total number of finished homes, it accounted for 2.5% of the total (6,807 homes) during the first two months of the year.

Original story: El Economista

Translation: Carmel Drake

Santander, BBVA & Sabadell Start To Build Homes Again

11 May 2015 – Expansión

Property development / The large financial institutions are constructing homes once again in light of the improved macroeconomic outlook, demand in certain areas and the aim of generating profits.

Real estate development is no longer a forbidden phrase in the world of banking. Several major banks have decided to resume the construction of new homes in light of the macroeconomic improvement and the need to capitalise on property inherited from the crisis.

Entities such as Santander, BBVA, Sabadell and Popular are now not only focusing on selling the homes that were foreclosed during the crisis, they have also started to construct new developments over the last few months. Most of these developments are located in Madrid, Barcelona and to a lesser extent, on the coast, where there is still a large stock of homes to sell.

Another catalyst of this new trend has been the reduction in the losses recorded by the real estate arms of these banks. During the first quarter, Santander’s real estate division lost €95 million, the smallest loss since it was created three years ago; and BBVA recorded a loss of €154 million, 37% lower than during the same period in 2014.

Thanks to this, the group chaired by Francisco González announced on Friday that it is studying 25 developments to construct 2,000 homes, and that it has already started another 12 developments to construct 630 million. This statement was made by Lorenzo Castilla, Commercial Director at BBVA Real Estate-Anida: “This is not about filling Spain with cranes, but rather about projects that make sense”, who spoke during Madrid’s International Real Estate Fair (Salón Inmobiliario Internacional de Madrid or SIMA).

(…)

Full balance sheets

As the BBVA director indicates, financial institutions still had more than €83,000 million foreclosed assets (on their balance sheets) at the end of 2014, of which more than €31,000 million related to land and €4,000 million to buildings under construction.

To reduce this burden, the entities are nowadopting two strategies: the sale of homes through their commercial networks, a channel that has accelerated over the last year; and the transfer of portfolios and joint ventures with institutional investors.

For the time being, the entity that has announced the most ambitious housing development plan has been Santander, which reported that it is developing 300 real estate developments, at its most recent results presentation.

Banco Sabadell is also stepping on the accelerator in this sense. Its real estate arm, Solvia, currently has 1,400 homes under construction, primarily in Madrid, Andalucía and Valencia.

Aliseda, the real estate company that renders services to Popular, has also announced an ambitious plan to enter the market for real estate development.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake