Tag: housing development

Sareb Expects To Complete 22 Housing Developments In 2015

11 May 2015 – El Economista

The Asset Management Company for Bank Restructurings (Sareb) expects to finalise (the construction of) 22 housing developments during the course of the year; in the meantime it will study the selection of 60 other construction works with a view to their completion.

Sources at the so-called ‘bad bank’ have explained to Europa Press that the developments that will be completed this year are located in (the autonomous communities of) Cataluña, Valencia, Galicia, Castilla y León, Extremadura, Madrid and Cantabria, and they have indicated that “in theory” they will be available for sale.

In 2014, the company approved the launch of 52 housing developments and 30 of those obtained their First Occupancy Licence during the year. Investments in real estate assets during the year amounted to €35.6 million, primarily focused on the urbanisation of land and plots (of land) and on the progression and finalisation of work in progress.

Specifically, 19 developments were approved in Cataluña, 17 in Valencia, four in Galicia, three in Cantabria, three in Castilla y León, two in Castilla-La Mancha, two in Madrid, one in Extremadura and one in La Rioja. Of those, it is expected that the following developments will be completed this year: nine in Cataluña, five in Valencia, two in Galicia, two in Castilla y León, one in Extremadura, one in Madrid and two in Cantabria.

Maintain the rate of property sales

Sareb has set itself the objective of maintaining the rate of property sales at close to 15,000 in 2015 and retaining its position amongst the five largest players in the market. It is also seeking to increase the quality of services through its new “servicers”.

The ‘bad bank’ is looking to intensify its offer to those investors that specialise in adding value, as well as to sell a “wide range” of portfolios to institutional investors during the year.

The company generated income of €1,115 million during 2014, thanks to sales to specialist investors. It also closed eleven major transactions, primarily involving loans, which accounted for 84% of its wholesale transactions (during the year).

In this way, Sareb closed the sale of the following portfolios: ‘Kaplan’ (loans to SMEs secured by residential property and land); ‘Crossover’ (land in Alicante, Baleares, Barcelona and Madrid); ‘Dorian’ (rental housing); ‘Klaus’ (loans to SMEs); and ‘Pamela’ (loans secured by buildings in Madrid).

Other transactions included the sale of ‘Agatha’ (loans and rental property); ‘Aneto’ (loans secured by residential property and land); ‘Olivia’ (loans secured by residential and commercial property); ‘Meridian’ (loans secured by tourist assets); and ‘Corona’ (offices leased in Madrid).

Original story: El Economista

Translation: Carmel Drake

Cooperatives Queue Up To Buy A Plot That The Treasury Purchased 30 Years Ago

16 February 2015 – El Confidencial

All eyes are focused on one plot of land in Madrid. A plot of land, which the Treasury purchased from a group of nuns for 800 million pesetas in 1985, could now, three decades later, be sold for several million euros. It is one of the largest and rarest gems left in Madrid and many of the large housing cooperatives have already expressed interest. These same cooperatives were responsible for some of the most talked about transactions in the country last year; and this deal would allow them to offer hundreds of low cost homes in the centre of Madrid, just a few metres from the Paseo de la Castellana, something that was unthinkable a few years ago.

The plot measures just over 15,000 square metres and is located at the intersection of Calles Padre Damián and Fray Bernardino Sahagún, very close to the Castellana and ten minutes away from the Santiago Bernabeu stadium and the Torres KIO. It is owned by State Heritage (Patrimonio del Estado), which in turn reports to the Treasury (Ministerio de Hacienda). The land has its own history…it used to house a convent, which was demolished shortly after the plot was acquired by the Government. Three decades later…., the plot may come back onto the market in a perfect transaction for the public coffers, thanks to the increase in land values during the intervening period.

Nevertheless, before the plot is auctioned, some administrative hurdles will need to be overcome to change its intended use. The State Heritage department has proposed a one-off amendment to the General Urban Plan for Madrid because, for this land to be attractive in the market, and for the Treasury to obtain the maximum price for its sale, its use must be residential; currently it may only be used for the collective services of the Public Administration. (…)

This one-off amendment is awaiting provisional approval by the Town Hall of Madrid and definitive approval by the Community of Madrid, according to sources from the Treasury who say that until this happens, the plot will not be put up for sale. (…)

(…)

Under the spotlight of the management cooperatives

“The size of the plot, its location, its environment, its intended suitability for construction, its scope, the potential appeal of the project that could be developed makes this plot of land a clear target that is going to generate a lot of interest”, said Leopoldo Morena, the CEO of the Ibosa Group, the cooperative manager that was responsible for one of the most important land transactions in the capital last year, when it was awarded ownership of Metro de Madrid’s depots in Cuatro Caminos for €88 million. That project, Residencial Metropolitan, which will bring more than 400 homes onto the market, with prices upwards of €2,600 per square metre, has almost all been sold (95%).

Nevertheless, the operation of the year was, without a doubt, the sale of a plot of land on Calle Raimundo Fernández Villaverde by the Ministry of Defence in a bid that was won by the cooperative manager Domo. Its offer for €111 million exceeded those made by Ferrovial, Pryconsa and Construcciones Amenabar; all of the homes in the development have already been sold. The sales price of the 355 homes was expected to start at €3,300 per square mete.

These two transactions boosted the market in 2014. According to data from the real estate consultant Irea, transactions involving land in Spain amounted to €346 million last year, which represented just 4% of the total investment in the market. A low percentage, however, in 2013, there weren’t any transactions involving land above five million euro, the threshold that Irea uses to prepare its analysis of investment in Spain (and so the deals closed in 2014 did represent a move in the right direction).

“Transactions such as the one in Calle Raimundo Fernández Villaverde, the Metro de Madrid and more recently, Amenabar’s purchase of various plots of land from Sareb, without financing, were unthinkable a few years ago”, explains Mikel Echavarren, the CEO at Irea.

In his opinion, the main players that may sign land-related transactions in Spain this year will continue to be domestic companies, developers and cooperatives, which are capable of financing their land purchases with their own funds: “There are scarcely six companies in Spain at the moment with sufficient financial capacity to finance land purchases”….

The role of international investment funds in the direct purchase of land will be practically zero, but they will be involved in the acquisition of portfolios of debt that contain land or residential developments as underlying collateral.

The plot of land in Madrid has also attracted interest from prospective house buyers, as evidenced by the fact that some managers have received requests from more than 2,000 interested parties. And it is no wonder: if the land falls back into the hands of cooperatives, they may build homes right in the centre of Madrid at very competitive prices, especially compared with those in private developments, such as the one that will start soon in Calle Juan Bravo, 3, where the prices of the luxury homes that are going to be built on the site may reach €9,000 per square metre, significantly higher than the less than €4,000 per sqm being charged by both the Ibosa Group and Domo Gestora for their recent acquisitions in Madrid.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Housing In 2015: More Sales And Higher Prices

9 February 2015 – Expansión

Forecasts / This year the construction sector will emerge from negative numbers in all of the major indicators.

If 2014 was the turning point for the housing market, then it looks like 2015 will be the year 1 a.c (after the crisis). After seven years of hell, the residential sector is seeing the light again with positive data across all of the key indicators. That is the main conclusion drawn from the 21st Edition of the Real Estate Heart Rate Monitor (la XXI edición del Pulsímetro Inmobiliario), which will be published by the Institute of Business Practice (el Instituto de Práctica Empresarial or IPE) in the next few days.

The report has been prepared by MAR Real Estate, the real estate arm of IPE, in collaboration with the Network of Qualified Property Consultants (la Red de Asesores Inmobiliarios Cualificados) (around 600 professionals from all over Spain have participated in the study). And their predictions indicate that a period of great prosperity is upon us: sales, prices, mortgage lending, construction, stock…everything will improve in 2015. From low levels, yes, and still with limited strength, but this can only be good news when we are talking about the impoverished residential market, where the metastasis has been more devastating than in any other sector.

There is a great atmosphere. To begin with, sales will increase by 7.5% this year, having closed 2014 with an increase of 2.6%, the first rise since 2010, the year in which the market was shaken by the removal of tax relief for buying a first home. According to MAR Real Estate’s forecasts, 344,000 residential properties will be bought and sold in 2015; 24,000 more than last year (320,063).

The second major indicator in the residential world is price, the eternal purchase thermometer. According to IPE’s report, house prices rose by 6.47% last year and are expected to increase by a further 2.5% in 2015. The average value of homes sold in 2014 was €141,718 and this year is expected to be €145,261, showing a return to 2012 levels.

Price rises

“The trend is rising, something which is evidenced by the fact that the vulture funds have now left Spain”, says José Antonio Pérez, Director of Real Estate at IPE. “The properties being sold are those in good locations, in prime areas that are nicely finished and ready to live in. Speculative purchases have practically disappeared”, he adds.

Furthermore, a phenomenon not seen since the years before the Great Crisis is now happening: homes are being sold off plan and prices are rising during the purchase process.

There are two examples that illustrate this. Both are on the Costa del Sol, which analysts regard as the area where the trends in the rest of the housing market are first seen (that was the case in the 1980s and 1990s and it is starting to be the case again now). In Estepona, the British company Taylor Wimpey put a development containing 44 properties up for sale. Off plan. They now have only three loft apartments left to sell – the original asking price for these properties was around €400,000….and they are now being sold for €500,000. A 25% increase. The majority of its customers, are foreign (around 85%-90%).

The second example is that of Inmobiliaria Sur, which has a strong position in the domestic market, away from luxury properties. To the extent that it has been putting homes up for sale – also off plan – in its developments in Marbella and Mijas-Costa, the prices of the best properties that it has not yet sold have increased from between €200,000-€220,000 to reach close to €300,000.

“In prime areas, prices are rising. In mid-market areas, prices will be stable in 2015 and in the areas that still have a lot of surplus, there will be further price decreases”, says Pérez.

In other words: good properties have already been sold; but structural stock, born out of the excesses of the real estate bubble, has not. In the case of the former, bargaining power has decreased, although there are still bargains to be had; in the case of the latter, there is simply no demand, aside from investors looking to obtain yields from their properties, or to renovate them and wait for better times. “Buy-to-let homes will continue to generate good returns and so money will continue to move from the financial system into the real estate market in 2015”, predicts José Antonio Pérez.

There are potential buyers in the market, but they cannot obtain access to credit. Experts believe that natural demand in Spain would generate around 400,000 transactions (per year), but it will be a while before we see that figure again, especially given that the construction of new homes is clearly following a downwards curve. The return to sustainable figures will depend heavily on financial institutions opening the mortgage tap, which is currently shut off to ordinary mortals, i.e. to anyone that does not fall into the vague category of “solvent”.

Mortgages

According to Pérez, we are now seeing a rise in the number of loans being granted for property purchases, but lending is still scarce. In 2014, 299,064 mortgages were signed, which is 2.3% fewer than in 2013, but we expect to see the first increase in nine years in 2015, with 306,639 mortgages being signed for urban properties. In 2006, the last year in which an increase was recorded, that figure stood at 1,816,878, i.e. 592% higher.

“The mortgage market will continue to be very restricted in 2015, very focused on the products that are marketed by the banks themselves”, says Pérez. Moreover, “two thirds of sales will be paid for in cash”, he adds.

The average mortgage size grew by 15.8% in 2014 (from €113,972 to €131,984) and will increase by 3.4% in 2015 to reach €136,447. The volume of these loans will increase by 6% to take total mortgage borrowing to €41,840 million by the end of the year.

One question remains unanswered: if everything is going to start growing again, will the cranes return to Spain’s urban landscape? And the answer is yes. Very slowly at first, but yes. In 2015, 40,255 new homes will be constructed, i.e. 7.5% more than in 2014.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake