La Generalitat Approves a Law to Limit Rental Prices in Cataluña

21 May 2019 – Eje Prime

The executive led by Quim Torra has approved a royal decree to limit residential rental prices in Cataluña so that they will not exceed 10% of the reference index in neighbourhoods and cities with an “accredited lack of affordable housing”.

That percentage increases to 20% in the case of new or completely refurbished homes for the five years following the building work. Meanwhile, for flats with exceptional views, swimming pools or gardens, the percentage may rise to 25%.

The decree considers areas with a “tense housing market” to be those municipalities where the provision of affordable rental housing is at risk. In particular, it makes reference to towns where rental prices have grown sustainably by more than average and where the increase in the demographic density is not being matched by the growth in the housing stock, amongst other factors.

Original story: Eje Prime

Translation/Summary: Carmel Drake

Town Hall of Barcelona Looks for Private Partners to Promote Social Housing

30 January 2019 – Eje Prime

The Administration is looking for a private property developer. The Metropolitán Area of Barcelona (AMB) has opened a process to choose a partner for the public company Habitatge Metròpolis Barcelona, which is planning to build social housing in the city and its metropolitan area.

The entry of a new shareholder will be carried out through a capital increase whereby €12 million will be contributed, according to Expansión. Cevasa, Visoren, Neinor and Sogeviso are some of the interested companies. Meanwhile, the company’s existing shareholders will subscribe another €12 million capital increase in equal parts.

The bidding process will be open for two months. The objective is to raise capital, but also to increase awareness about the development and the management capacity of the stock of rental homes.

The objective involves constructing a stock of social housing properties comprising 4,500 units over the next ten years. The AMB will contribute two estates in Sant Boi de Llobregat and Montgat, and the Town Hall of Barcelona will contribute €6 million.

Original story: Eje Prime

Translation: Carmel Drake

S&P Warns of Deceleration in Catalan Housing Market

7 February 2018 – El País

The Spanish real estate market is going to continue growing, but the Catalan crisis may have a negative effect on the housing market in the region. “Although Barcelona has recorded some of the highest property prices since the start of the recovery, in 2018, Cataluña could see a recession in its real estate market”. That is what the ratings agency Standard and Poor’s (S&P) thinks, according to its report about the real estate market in Europe, which indicates that “economic growth should continue to be strong this year and next, but the political uncertainty may have a more negative impact on companies and consumers. The main risk is the impact of the Catalan crisis, given that it is the largest economic centre in Spain, accounting for 20% of the country’s nominal GDP”.

Leaving aside Cataluña, the agency indicates that the strong economic conditions in Spain will continue to drive up the volume of house sales and will help to reduce the stock of homes. In fact, it forecasts that the volume of transactions in Spain will grow by around 8% this year.

Moreover, although interest rates bottomed out at the end of last year, they will continue at very attractive levels for house purchases. Nevertheless, the agency points out that accessibility ratios continue to be high, even though the number of years of salary needed to buy a home has decreased from 7.7 years at the height of the boom to 6.6. years in 2016. And it adds that second-hand house prices are going to continue to increase, although to a lesser extent that over the last two years.

The S&P agency considers that the Spanish economy will exceed the figures recorded in 2017, when average prices increased by 4.2% YoY in the last quarter, according to data from Tinsa. The city of Madrid exceeded Barcelona with an annual increase of 17% compared to 14.8% in the Catalan capital, where prices fell by 1.7% during the last three months of 2017. The volume of transactions amounted to 455,000 during the first 11 months of the year, compared with 375,000 in the previous year. Purchases by foreigners accounted for 17% of the total.

Original story: El País (by S. L. L.)

Translation: Carmel Drake

Servihabitat: House Prices Return to Pre-Crisis Levels in Madrid & Barcelona

13 December 2017 – ABC

The real estate market has definitively overcome the crisis in certain parts of Madrid and Barcelona. According to figures from Servihabitat, house prices in some of those cities’ neighbourhoods are now above the levels seen just before the burst of the property bubble. And according to the real estate servicer, this growth is forecast to continue for the next few quarters at least. House sales will rise by 18% next year to exceed 550,000 operations, thanks to a boost from the sale of second-hand homes. Meanwhile, the price of transactions will rise by 4.7%.

Those are some of the forecasts reflected in the fifth edition of Servihabitat’s report about the “Residential Market in Spain”. The report highlights that house sales will close this year up by 17% and will grow by another 18% next year. The real estate company argues that this improvement is due to factors such as the “increase in solvent demand, policies for granting more credit, the increase in investor interest and the progress in the construction of new homes”.

This recovery will be more homogeneous than in previous years. The improvements in Andalucía, Cataluña and Madrid will be accompanied by increases in other regions such as Castilla-La Mancha and La Rioja, which are expected to record increases of 23.8% and 23.1%, respectively. “The differences between the regions are being mitigated. All towns with more than 100,000 residents are recording strong performances”, explains Julián Cabanillas, CEO of Servihabiat. In his opinion, in 2018, “the trends seen in previous years will be consolidated”.

Nevertheless, the great challenge of this recovery is still how to build enough new homes. Cabanillas acknowledges the fact that “some regions suffer from a lack of stock” for reasons such as a shortage of land, which is pushing up house prices in regions such as Madrid and Cataluña (…).

The impact of tourist housing

It is not only house sales that are expected to continue to rise next year, rental prices are also forecast to increase. Servihabitat highlights the “positive trend” in the rental sector, which according to its calculations will see an average increase of 2% during the second half of 2017.

“Rental has become an increasingly more attractive alternative in Spain, taking into account phenomena such as labour mobility and the upturn in house prices”, explains Cabanillas.

According to Servihabitat, the average yield on rental housing is 5.5%. In certain regions, such as Cataluña, the figure exceeds 6%. In this segment, the real estate company highlights the impact that tourist apartments are having on the market since they are leading to two-digit rises in rental prices in certain cities.

“It is a practice that is developing fast and that needs to be controlled somehow”, explains the CEO of Servihabiat, who points out that the rise in the rental market in recent months has not only been caused by the impact of tourist apartments, but rather by a “combination of factors”.

Original story: ABC (by Guillermo Ginés)

Translation: Carmel Drake

Barcelona From The Sky: 123 Cranes At Work In The Catalan Capital

7 November 2017 – Eje Prime

Cranes and new projects are drawing a new real estate business in Spain once again. According to the study Barcelona from the sky, compiled by the real estate consultancy CBRE, the Catalan capital has 187 projects underway, requiring 123 cranes altogether. Of the total number, 75% are dedicated to residential projects and 17% to tertiary projects, whilst 8% of the cranes are being used for other kinds of projects, according to the report.

By sector, the residential market is the most active in Barcelona with 107 new build projects and 34 refurbishment projects currently underway or due to start imminently. In total, the Catalan capital is currently decorated with 77 cranes working on the construction of new residential developments, led by the largest Spanish property developers, such as Neinor and Aedas, as well as some more local players, such as La Llave de Oro and Nuñez I Navarro.

Cuitat Vella and Eixample are the districts where the most refurbishment projects are being carried out, due to the age of the housing stock there. There are eight projects (24% of the total) and eleven projects (32%) underway in those neighbourhoods, respectively. Many of these renovation projects, especially those closest to the city’s nerve centre, such as along Passeig de Gràcia and Plaça Catalunya, are high standing affairs, such as the refurbishment of Casa Burés, located at number 2 Calle Girona.

In terms of new build homes, the districts of Sarria-Sant Gervassi, Horta-Guinardo, Eixample and Sant Andreu are leading the ranking, with 18, 15, 12 and 11 new build projects, respectively (…).

The tertiary sector is also building 

(…). In the office segment, there are twelve projects underway after several years of little construction activity due to the economic crisis, in general, and in the office sector, in particular.

“The greatest number of projects, both new build and renovations, are concentrated in the 22@ area, in the district of Sant Martí, where key projects include the future Parc Glòries and the Luxa Business Park, amongst others”, according to the study (…).

Several projects are also underway in the Sants-Montjüic area, including the construction of the Campus Administratiu, which the Generalitat de Catalunya will occupy and Can Batlló, very close to Plaça Cerdà. In addition, construction work is expected to start at the beginning of 2018 on the construction of the remaining two towers that form part of the Barcelona Fira District project, owned by Iberdrola (…).

In the retail segment, four renovation projects are underway in the Catalan capital, whilst one new space is being constructed, with the development of the Finestrelles shopping centre in Esplugues de Llobregat, which will open its doors at the end of 2018. This project is being executed by the Belgian property developer Equilis and has a gross leasable area of 25,700 m2.

Moreover, renovations are being carried out on several of the city’s main shopping streets, such as Las Ramblas, Fontanella and Paseo de Gracia, as well as in some of the large retail spaces such as the Glòries Shopping Centre.

Hotels and others 

“More than two years have now passed since the implementation of the hotel moratorium, which has negatively affected the number of hotel developments”, says CBRE’s study. Nevertheless, the construction of new hotels has not stopped in Barcelona, given that some players obtained their building permits in time. There are currently fourteen projects underway, with six cranes working on them in total (…).

According to CBRE, a small number of the projects currently being carried out in the city do not form part of the residential or tertiary sectors. Fifteen projects are underway at the moment involving twenty cranes to build or renovate parks, churches, schools, gyms, infrastructure work and nursing homes.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Idealista: Rental Prices Rose By 15.9% In 2016

17 January 2017 – Expansión

The price of rental housing underwent a recovery in Spain in 2016, ending the year 15.9% higher than it started it, taking the price per m2 to €8.2/m2/month. The rate of growth accelerated during the last month of the year, as prices increased by 8.2%.

Fernando Encinar, Head of Research at Idealista, said that “this is not a bubble but rather a significant increase in demand from Spaniards to rent in certain cities.

The Director of Idealista said that to encourage the growth of the rental market “policies to revitalise the sector must continue and new measures must be adopted to help to increase the housing stock”.

By autonomous region

All of the autonomous regions saw higher prices than a year ago. The largest increase was observed in Cataluña, where owners are now demanding 26.8% more to lease their homes than a year ago. It was followed by increases in Madrid (18%) and the Balearic Islands (13.8%).

Cataluña (€13.30/m2/month) also became the most expensive autonomous region. It was followed by Madrid (€12.90/m2/month) and Euskadi (€10.40/m2/month). At the opposite end of the spectrum, we find Extremadura (€4.1/m2/month), Castilla La Mancha (€4.5/m2/month) and Murcia (€5/m2/month), the cheapest autonomous regions.

By provincial capital

Valencia is the capital where rental prices grew by the most in 2016, with an increase of 20.3%, to €7.5/m2/month.

The increase recorded in San Sebastián was also noteworthy, with prices up by 17%, followed by Barcelona (16.5%) and Madrid (15.6%), which have returned to their historical peaks.

Barcelona consolidated its position as the most expensive Spanish capital (€17.9/m2/month), followed by Madrid (€14.4/m2/month) and San Sebastián (€13.6/m2/month). At the opposite end of the table, we have Lugo (€4.1/m2/month), and Ourense and Ávila (€4.3/m2/month in both cases), the cheapest provincial capitals.

Original story: Expansión (by Rubén San Isidoro)

Translation: Carmel Drake

Spain Needs To Build 150,000 New Homes Per Year

27 December 2016 – El Confidencial

The International Monetary Fund (IMF) issued a warning a few weeks ago: the greatest danger in terms of a new real estate bubble on the world scale is the lack of homes. Although it seems impossible, Spain, with its housing stock of 25 million – for a population of 47 million – of which approximately one and a half million are empty, needs more homes. In fact, it needs around 150,000 new homes per year in order to have a healthy residential market. Otherwise, there will end up being strong upwards pressure on prices (of both new builds and second-hand properties), which could lead to a new and much-feared bubble.

At least that is according to the majority of the experts in the real estate sector. From appraisal companies, to consultancies, to property developers, to cooperative managers. Everyone agrees that Spain needs more homes. But, how is that possible when the country has a surplus stock amounting to almost half a million units?

“The surplus stock, or rather, the census of unsold homes is not always in the locations in which there is demand. Homes are not bricks that can be moved from one place to another”, said Juan Fernández Aceytuno, Director General at Sociedad de Tasación. “Moreover, in some places in Spain, the stock is very low and new homes need to be built to satisfy demand”, added Julián Cabanillas, CEO at Servihabitat.

But isn’t the second-hand market sufficient to satisfy demand? “When making a major investment such as buying a home, families prefer to acquire a new build than a second-hand property” (…), said Ernesto Tarazona, Partner and Director of Residential and Land at Knight Frank.

The problem, according to the real estate experts, is that hardly any new homes are being built. Since the burst of the real estate bubble in 2007, house construction has been completely paralysed. Spain went from building 800,000 homes per year to just 35,000 homes in 2013 and 2014 (according to housing permit data from the Ministry of Development) and for the market to be healthy again, we should be building around 150,000 units per year.

“House prices and sales are definitely showing signs of improvement, but we cannot talk about the stabilisation of the sector until we see a recovery in terms of construction”, said Carolina Roca, Vice-President of the Property Developers Association in Madrid (Asprima). (…).

And that is not an easy task, according to Roca. “In order to reach that figure (of 150,000 new homes per year), we not only need land, but we also need to restore the productive and entrepreneurial fabric of the sector, given that the majority of the players in the property development and real estate sectors have disappeared. Very few property developers are actually building homes at the moment, and those that are, are doing so using own funds for the most part, given that although financing to individuals has recovered, it has not for property developers to the same extent. Not even with the entry of new players such as investment funds will we reach those figures”, laments Roca.

“The construction of 150,000 homes per year seems like a reasonable figure. Nowadays, around 500,000 homes are sold per year, of which, only 10% are new builds. During the boom years, new builds accounted for 50% of all house sales and it is likely that the percentage will end up stabilising at around 30%, which means that 150,000 homes per year seems reasonable”, acknowledged Juan Velayos, CEO at Neinor Homes, one of the new players in the sector. (…).

“Nowadays, everything that is built is sold. Off-plan homes are sold out in a matter of weeks”, said Ernesto Tarazona who, nevertheless, recognises that a very important segment of potential buyers is being left out of this timid recovery. “Nowadays, anyone wanting to buy a home for €160,000 in Madrid is going to be disappointed; they just can’t. There isn’t any land available to build houses at those prices”, comments Juan José Perucho, Managing Partner at the Ibosa Group. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

RR Acuña: House Prices Will Rise By 2.3% In 2016 & By 5% In 2018

20 December 2016 – El País

House prices will grow by around 2.3% in 2016 and will gradually increase to reach a growth rate of 5% in 2018. That figure will then remain stable until the end of the decade, according to forecasts presented in the twentieth edition of the Spanish Real Estate Market Statistical Yearbook for 2016, published by R.R. Acuña & Asociados. According to the report, the evolution of prices in each local market may “be very different from the rates expected for Spain as a whole”.

In 2015, price rises were recorded in just 46.8% of Spain’s municipalities, and price decreases are still expected to be seen in a decent number of them over the next few years. The consecutive decreases in prices over the last eight years arose due to the significant mismatch between supply and demand, which has characterised the performance of the Spanish real estate market, still weighed down by the high volume of stock.

Demand has strengthened in the main metropolitan areas and along the tourist coasts over the last two years, thanks to the expectations of economic growth and the significant improvement in employment. Similarly, growth has been observed in terms of demand and sales, and that trend is expected to last for the short term, at least, given the current economic forecasts.

The conclusions of the yearbook point to a return to equilibrium, thanks to an increase in sales and the recovery in prices in some areas of the market. In this way, the study predicts that the supply of new homes will reach a minimum of 40,000 finished homes in 2016, and that over the next two years, there will be sustained growth in specific areas of expansion across the country, where the stock of new housing is practically non-existent.

Demand for new homes

Meanwhile, demand for new homes will reach a minimum this year, with almost 82,000 homes. R.R. de Acuña forecasts that a quasi equilibrium between supply and demand will be reached in 2018, with a stock of 341,000 homes.

This would mean that the dissolution of most of the new home stock would be practically unfeasible over the long term and that the adjustment of the new home stock in areas of expansion will have been completed. Estimates indicate that a stock of 1.468 million empty homes was put up for sale in Spain in 2015. 218,000 homes have been dissolved since 2010.

In terms of second-hand homes, bequests of the net second-hand supply will continue to grow and will represent between 40% and 50% of demand for second-hand homes. The demand forecasts for second-hand homes indicate a dissolution of almost 330,000 homes each year until 2018, which will become increasingly moderate.

In 2015, the total housing stock amounted to 25.5 million, of which 18.6 million were primary homes, 4.4 million were secondary homes and 2.5 million were empty homes, resulting in a ratio of 1.4 homes per household, compared with the EU average of 1.12.

Original story: El País

Translation: Carmel Drake

Knight Frank: 150,000 New Homes Will Be Built Per Year By 2019

14 December 2016 – El País

The construction of new homes is going to continue to increase over the next three years to reach 150,000 units per annum. The activity will centre on Madrid, Málaga, Barcelona, País Vasco and the Balearic Islands, the provinces with the highest residential forecasts going into 2017, according to the annual Trends in the Residential Market in Spain report, compiled by the real estate consultancy firm Knight Frank. Over the next three years, new builds will gain ground to account for 30% of all sales, compared with second-hand homes, which will account for 70%. Currently, just 10% of sales involve new builds and there are only 11 units available for every 1,000 inhabitants. Moreover, the supply of new homes coming onto the market is getting completely absorbed, which means that no new home stock is being generated.

There will also be changes in terms of the type of new homes. Whilst in recent years, homes with three or more bedrooms have been the most demanded, the consultancy firm forecasts that homes with two or fewer bedrooms will start to lead the ranking once again. According to Ernesto Tarazona, Managing Partner for Residential and Land at Knight Frank, “the macro data supports this change in trend. We have fewer inhabitants and yet the number of households is growing. In other words, we have more households with fewer members; in Spain, 25% of households comprise one person and 30% comprise two people”.

Whilst the number of transactions involving second-hand homes is increasing in every autonomous community, the number of operations involving new builds is only growing in those regions with the greatest economic pull: over the last year, new build sales have grown by 40% in Madrid, by 18% in the Balearic Islands, by 5% in Barcelona and by 20% in País Vasco.

Price rises

In terms of prices, Spain registered a change in trend in 2014 and since then prices have increased by 3% on average. The lack of new developments has meant that new build homes have retained their value and have an average price of €1,750/m2, whilst second-hand homes cost around €1,500/m2. The provinces with the highest average prices (both for new build and second-hand properties) are Guipúzcoa, Vizcaya and Madrid.

The housing stock has been absorbed over the last three years, at an average rate of 20,000 new homes per year. Knight Frank calculates that just 2% of the total housing stock in Spain corresponds to new builds. Nevertheless, approximately 30% will be hard to sell due to location and conditions. (…).

The consultancy points out that the change in trend in the residential sector in Spain is already happening. “All of the segments (supply, demand, land and investment) bottomed out at the end of 2013 and started the road to recovery in 2014. This recovery was very slight in 2014 and 2015, but during 2016, the main indicators have experienced stable growth, and they have potential for improvement. As such, we are facing a new cycle of expansion in the residential sector”.

Original story: El País (by S.L.L.)

Translation: Carmel Drake

Servihabitat: House Prices Will Rise By 4.3% In 2017

7 December 2016 – Expansión

(…) According to Julián Cabanillas, CEO of Servihabitat, the findings from his company’s latest report show that “the trend  (in terms of house prices) will continue to rise in 2017, but at a more moderate rate”.

According to Servihabitat’s forecasts, house prices will rise by 4.6% this year and by 4.3% next year; moreover, all of the other indicators in the sector will continue to make significant improvements. For example, the stock of unsold new homes will decrease in 2017 to 315,000, the lowest figure since 2006, before the real estate bubble burst. In addition, the ratio of the number of years’ salary it takes to pay for a home will amount to six years – three years fewer than in 2007.

During 2016, the construction of new homes will soar by 20% and the gross rental yield (excluding capital gains) will rise to 5.4% (10% if we include capital gains over one year, which the Bank of Spain does in its calculations).

In 2016, property will register its highest price increases since the outbreak of the crisis. The rise of 4.6% predicted by Servihabitat is the highest annual figure since 2007. In 2017, the increase will slow down slightly (by three tenths of one per cent), but residential property prices will increase in every autonomous region. Extremadura will lead the price rises, with an increase of 7.3%. It will be followed by Aragón (+6.9%), Navarra (+6.7%), La Rioja (+6.2%), Murcia (+5.6%), Balearic Islands (+5.4%), Canary Islands (+5.4%), Community of Valencia (+5.4%), Castilla-La Mancha (+5.1%) and Asturias (+4.5%).

Thus, house prices will increase by more than average in ten autonomous regions next year, including Cataluña (+4.3%), and will increase by less than average in six regions, namely: Andalucía (+0.7%), Galicia (+1.2%), País Vasco (+1.5%), Cantabria (+3%), Madrid (+2.4%) and Castilla y León (+4.1%).

Three speeds

Cabanillas points out that the housing market is now operating at three speeds. “The first involves areas where demand is high and supply is at “technical levels””. That is the case in Madrid and Barcelona, where many more homes are being sold than in the rest of the country. (…).

The second speed is happening in “areas where demand is increasing and stock exists”, said the CEO of Servihabitat. In cities such as Málaga, Sevilla and Zaragoza, as well as in the vacation markets of the Balearic and Canary Islands and in the more traditional areas of the Mediterranean Coast. (…).

Nevertheless, residential prices are still recovering at a slower speed in many autonomous regions (the third segment), given that there, prices “are still decreasing (due to the crisis effect) or are stable, because the demand potential is much more contained and/or considerable volumes of stock are still available”.

To this end, it is worth nothing that 72% of the homes sold in Spain in 2016 had a price of less than €150,000. (…).

In this context, there are also considerable disparities in terms of the returns offered from leasing properties in the different regions. For example, buying a home and putting it up for rent would generate a return of 6.9% in Madrid, 5.8% in Cataluña, 4.1% in Galicia and 3.9% in País Vasco. (…).

Clearly, all of the regions offer more attractive average gross returns from rental than those generated by other investments, such as public debt and deposits. Not in vain, the average rental price will rise by more than 10% this year, according to Servihabitat, which highlights the seven most thriving markets in Spain at the moment, namely: Málaga, Balearic Islands, Barcelona, Girona, Alicante, Madrid and Murcia. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake