Solvia: Buy-to-Let Returns Reach 11% in Alicante

3 March 2018 – El Mundo

If you want to generate some decent returns from your savings and are thinking about getting into the world of real estate, to buy a home and let it out, then the best options in Alicante can be found in the neighbourhoods of Carolinas Altas and Bon Repós, where rental yields currently exceed 11%. The lowest returns are being recorded in the centre and in the old town, with 5.8% and 5.6%, respectively. That is according to the report Solvia Market Overview: Alicante, the forecast for 2018, prepared by Solvia, the real estate arm of Banco Sabadell.

The analysis indicates that in the local rental market “prices are rising at a faster rate than sales prices, taking the average rent to €614/month, up by 9.6% compared to one year ago”. Tenants paid €6.6/m2/month. The stock of rental homes has increased to 3,297 units, up by 0.5% compared to the previous quarter. The average return on a rental property in Alicante amounts to 6%, which significantly exceeds the returns generated by other conservative investment options such as bank deposits and treasury bonds, whose yields are in tatters. The average return on rental properties across Spain is 6.1%.

The most expensive rental prices are located in the centre of the city: €8.65/m2/month, which means that for a 90m2 home, the monthly rent amounts to around €778 on average. Playa de San Juan is the second most expensive location, at €8.61/m2/month, which corresponds to an average monthly rent of €774.

The most affordable areas are La Florida Alta and Florida Baja, with rents of €5.64/m2/month and €6.23/m2/month, respectively. Moreover, the most profitable neighbourhood for a landlord to rent out a flat is Carolinas Altas. The €560 that can be obtained for the rent on average, taking into account the sales prices in the area at the moment (around €60,000 per property on average) allow for the generation of a return of 11.2%; that is much higher than, for example, the dividend yield of any company listed on the Ibex.

Upwards trend

In its report, Solvia highlights that the forecast for 2018 is that house prices “are going to continue to rise in the city, with an expected increase of 5.3%, slightly below the 6.1% that is forecast for the whole of Spain”.

Property prices in Alicante recorded a YoY increase of 4.1% at the end of 2017 to reach €1,258/m2, above the national average. Specifically, second-hand properties reached a sales price of €1,207/m2, whilst new build homes cost €1,653/m2. “The amount per square metre is still considerably lower than the highest peak, reached in 2007 in the case of second-hand homes (€1,765/m2) and in 2008 in the case of new build properties (€2,041/m2). The most expensive areas are in the centre (€2,250/m2), the old town (€2,126/m2) and Playa de San Juan, where prices have soared by 9.7% over the last year.

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

Property Developers Expect The Housing Sector To Normalise By 2019

31 August 2017 – El Mundo

Spain’s real estate developers estimate that this year will close with the construction of around 85,000 new homes and that the “normalisation” of the sector will happen at the beginning of 2019, when new home output will cover demand (between 120,000 and 130,000 units).

That is according to the General Secretary of the Spanish Association of Property Developers (APCE), Daniel Cuervo, who said that the data regarding the evolution of the real estate market is “reasonable” and in line with expectations, both in terms of transactions and prices.

According to the latest statistics from the College of Registrars, house prices in Spain rose by 4.4% during the second quarter of 2017 and 119,408 transactions were recorded (up by 10.7%). In a statement to Servimedia, Cuervo explained that this evolution is “what was expected”, and he added that 2017 would close with 500,000 house sales, mainly (between 80% and 85%) second-hand homes.

Although the weight of new build homes is lower than that of second-hand homes, the General Secretary of the APCE said that the evolution in terms of new builds is “positive” and that production will grow by around 15,000 properties this year, up from just over 60,000 in 2016 to around 85,000 in 2017.

In any case, Cuervo said that there is still a gap with respect to demand, given that the planned creation of new homes, estimated to amount to between 120,000 and 130,000 per year, exceeds production. Therefore, “there is still scope to continue building”.

The real estate world “has learnt its lesson”

The General Secretary of the trade association believes that the “normalisation” of the market, with similar levels of supply and demand, will be reached within two years, by the beginning of 2019.

Cuervo highlighted the need to achieve and maintain a “reasonable” output of housing, understood as a “sustainable” increase that may be “assumed” by demand and that “goes hand in hand with the growth in people’s wealth”.

In this sense, he says that the sector “has learnt its lesson” and is not planning to build homes that it cannot sell, and that the industry has to adjust to demand to “avoid generating stock that nobody wants”.

Original story: El Mundo

Translation: Carmel Drake

New Tax Rules Increase IBI Charge In 11 Provincial Capitals From 2017

5 December 2016 – Expansión

Property owners in some of Spain’s largest cities will start the new year with a tax blow. The Royal Decree that was approved by the Council of Ministers on Friday and published in the BOE on Saturday contains…a measure that will significantly increase the Tax on Real Estate Assets (IBI) in hundreds of towns, including in eleven provincial capitals, specifically: Valencia, Alicante, Badajoz, Cádiz, Córdoba, Teruel, Granada, Jaén, Huelva, Tarragona and Huesca.

This tax will accrue from 1 January 2017 and will depend on the cadastral values, given that they form the taxable base for the IBI calculation. The Tax Authorities have approved updates to these values in 2,452 towns, i.e. in almost one third of the towns in Spain.

The Town Halls set the cadastral values on the basis of value proposals performed by the Catastro. However, all of the property values (homes, garages, premises, offices, hotels, etc) affected by proposals made prior to 2004 will be revised upwards, with coefficients ranging from 1.03 to 1.08, according to the Royal Decree from the Tax Authorities.

For example, in Córdoba, whose valuations were last reviewed in 1995, the update will be 1.06. Thus, if a home had a cadastral value of €100,000 in 2016, it will have a cadastral value of €106,000 in 2017. The IBI payments will increase without the need to raise the tax rate. In Valencia, whose valuations were last reviewed in 1998, the coefficient will be 1.04.

Most of the towns that requested the review, which seeks to reflect property values to 50% of their market price, did so to increase their coefficients and, ultimately, to increase the IBI raised without changing the tax rate . Many of the affected towns have not reviewed their values since the real estate boom, or even earlier. In fact, numerous town halls have not updated their valuations since the 1980s.

The valuations last performed between 2005 and 2011 will be updated with a coefficient of less than one, of between 0.87 and 0.92. They include four provincial capitals: Almería, Santander, Lleida and Ávila.

The reason for the measure

(…) For the avoidance of doubt, the Royal Decree explains that the measure “is necessary given that it contributes to strengthening municipal financing, tax consolidation and budgetary stability for local entities”. In other words, it is a necessary measure to balance the deficit. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Ministry Of Development: Housing Permits Soared By 57% In Q1 2016

31 May 2016 – Expansión

More signs of acceleration in the construction sector. The number of permits to construct new homes have recorded their highest figure since 2011, although they are still a long way below the figures seen in 2006.

The number of housing permits granted by the college of architects to construct homes soared by 57% during the first quarter of the year to 16,782, the best figure recorded during the first three months of a year since 2011, according to the latest statistics from the Ministry of Development.

Despite the increase, the number of housing permits are still a long way below the highs recorded in 2006, at the height of the boom in the real estate sector (…).

The total number of permits granted for new builds, renovations and extensions during the three months to March amounted to 16,979, which represents an increase of 36% with respect to 2015.

By type of property, permits to construct housing blocks rose by 64%, to 12,425; whilst the number of permits granted to build family homes increased by 39% to reach 4,356 permits.

In terms of surface area, the average size of family homes amounted to 203.6 sqm, whilst the average size of flats stood at 118 sqm.

The number of permits granted started the year with a bang, up by 44% in January to 4,943. In February, the YoY increase amounted to 35%, with 5,663 permits, whilst in March the number doubled to reach 6,176.

Since the Ministry of Development began to compile these statistics in 1991, the number of permits granted hit a historical monthly low in August 2013, when just 1,585 licences were granted. The maximum high was recorded in September 2006, with 126,753 permits granted.

Original story: Expansión

Translation: Carmel Drake

Hogaria: Second-Hand House Prices Fell By 2.3% In April

10 May 2016 – El Economista

The price of second-hand homes decreased by 2.3% in April with respect to the same month last year and by 0.2% compared to the previous month, whereby recording their third consecutive monthly decrease, to amount to €1,575/sqm on average, according to

The five provinces in which second-hand house prices decreased by the most during the month of April were: Lleida (-1.2%), Ciudad Real and Burgos (-1.1%) and Lugo and Navarra, both of which recorded decreases of 0.9%.

By contrast, the provinces that experienced the highest price increases in April were: Almería (+1.1%), Madrid (+0.9%), Salamanca (+0.7%) and Alicante and Castellón (+0.6%, in both cases).

If we analyse the average prices in April in Madrid and Barcelona capitals, i.e. in the main markets in Spain, then prices in the former rose by 1%, whereas prices in the latter increased by 0.6%, to €2,963/sqm and €3,355/sqm, respectively.

In the case of Sevilla, the average price of second-hand homes increased in April by 0.6% to €2,047/sqm, whilst in Valencia the average price rose by 0.5% to €1,829/sqm.

Original story: El Economista

Translation: Carmel Drake

Meliá’s Profits Up By 18% Despite One-Off Impacts

26 February 2016 – Expansión

Meliá ended 2015 with a net attributable profit of €36 million, which represents a 18% increase compared with the previous year. The hotel chain said, however, that the two periods are not comparable, given that last year’s figures were affected by a higher tax rate, following the results of tax inspections launched in 2014 regarding corporation tax settlements made between 2009 and 2012.

In this regard, and in order to reflect the possible impact of these actions, Meliá made a provision amounting to €33 million. The hotel chain also clarified that having analysed the possible consequences in the years open to inspection, it does not expect any significant additional impact on the consolidated accounts in the future. “The company is cooperating with the authorities and hopes to reach a satisfactory agreement”, added the company in a document that it submitted to Spain’s National Securities Market Commission (CNMV).

Puerto Rico

Excluding extraordinary effects, such as a €29 million impairment on the Group’s hotel in Puerto Rico, and the provisions required for the aforementioned tax adjustment, Meliá’s net profit before tax amounted to €67 million, up by 200%.

In 2015, the company generated revenues of €1,738 million, which represents a 16% increase (compared with 2014).

The chain highlighted the strong performance of all its divisions in the hotel business, which allowed it to increase its revenues per available room (RevPAR) by 15.1%, thanks to the improvement in the general environment and economies in its key markets, as well as its strategy for branding and repositioning its products.

According to the financial plan, Meliá’s net debt amounted to €768.8 million at the end of the year, which represented a reduction of €216 million with respect to 2014.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

EU: House Prices In Spain Will Rise By 6% Before 2017 YE

23 February 2016 – El Economista

Spain and Ireland, two of the European countries that suffered the most from the burst of the housing bubble, will see their property prices rise again over the next few years.

That is according to the winter forecasts published by the European Commission, which expects real house prices to increase by 6.5% until 2017 in the case of Ireland and by 6% in the case of Spain during the same period. Malta, where prices are also expected to increase by 6%, completes the podium.

Although house prices are expected to recover, the EU notes that loans taken out to purchase homes continued to decrease (in Spain) in 2015, as well as in Latvia, Hungary, Portgual, Ireland and Greece. In the case of Spain, the decrease amounted to 4% in 2015, below only Latvia and Hungary.

At the other end of the spectrum is Greece, where the EU expects house prices to fall further, in that case by 1.5%. According to the Commission’s report, Greece was the only country not to experience improvements in the financing conditions for homes, which were seen across Europe in 2015. According to the EU, the improvements in financing conditions lie behind the recovery in property prices and only Greece remains at the side-lines. In most countries, the improvement began back in 2014, apart from in Croatia, Lithuania and Italy, which all relaxed their financing conditions in 2015.

Where will prices fall?

Besides Greece, the EU predicts that house prices will fall in three other countries, namely in: Belgium, France and Bulgaria.

The Commission says that the ratio of house prices to disposable income in Spain amounted to 10.1 in 2014, well below the figure of 15.6 recorded in 2007, when the ratio peaked and also significantly above the figure of 8.6 registered in 2000. Ireland has experienced a similar evolution to Spain; there, house prices represented 13x income in 2000, increased to a peak of 16.8x income in 2007, before decreasing to 11x income in 2014.

In 2014 in Portugal, house prices stood at their lowest level since 2000: then they represented 11.2x income, compared with 9x income in 2014. And Germany has also experienced a similar trend – house prices there have decreased from representing 8.6x income to 7.2x income in 15 years.

The property sector in Spain has changed

The reality is that the housing market in Spain has changed (significantly), not only in terms of the decrease in the income requirement to pay for a home, but also in other aspects. The first is the decrease in the number of operations being closed each year: According to INE, 354,132 transactions were closed in 2015, which represents a similar level to 2011. However, that figure represents less than half the number recorded in 2007 (when 775,300 homes were sold).

Another aspect that has changed significantly is the size of the mortgages being granted. In absolute terms, they have decreased from almost €300,000 million in 2006 and 2007, to just over €41,000 million in 2014. On average, the size of mortgages granted has also plummeted, by 37%, to €106,655 in November 2015.

Original story: El Economista (by Inés Calderón)

Translation: Carmel Drake

The Sale Of Homes Soars By 11.1% In 2015 On The Second-Hand Market

10 February 2016 – El Economista (Europa Press)

Second-hand home transactions increase by 37.2% in the year, reaching their highest level since 2007.

Home sales increased by 11.1% in 2015 with respect to the previous year, up to a total of 354,132 transactions, its highest level since 2011, the National Statistics Institute (INE) reported last Wednesday.

The second-hand market has been the driving force behind this annual growth, the second one produced after the home sales increase by 2% in 2014.

In the period of crisis, the worst year for housing transactions were 2009 and 2008, in which these transactions plummeted by 25.1% and 28.8%, respectively. In 2012 and 2011, double-digit declines were still taking place (-11.5% and -18.1%), while in 2013 the decline slowed to 1.9% due to the end of tax benefits for housing purchase.

Home sales hit the accelerator in 2015 in a context of low prices, although experts believe that the correction reached its lowest level last year and will moderately rise.

The recovery in home sales in 2015 was due to the growth experienced in second-hand home transactions, which rocketed by 37.2%, reaching 276,300 transactions, the highest figure since 2007. By contrast, transactions on new homes fell 33.7% last year, reaching just 77,865, the lowest volume of the series.

89.8% of homes transferred by merchanting last year were non-subsidized and 10.2% were subsidized. In total, the sale of non-subsidized homes increased by 11.1% in 2015, while subsidized home transactions increased by 10.8% reaching 36,077 transactions, after several years of decline.

Andalucía, ahead of housing sales

In 2015, the highest number of home sales per 100,000 inhabitants took place in Valencia (1,322) and the Balearic Islands (1,177).

Andalusia was the region performing the highest number of transactions during last year reaching 70,739, followed by Catalonia (54,571), Region of Valencia (51,788) and Madrid (50,373).

The regions that performed a lower number of sales were La Rioja (2,561), Castilla y León (4,298 transactions) and Navarra (4,313).

In relative values, home sales rose in all regions in 2015, except for Navarra, where they decreased by 1.7%. The regions where these transactions increased the most were the Basque Country (+ 17.2%) and Aragón (+ 16.6%).

Total properties transferred in 2015 increase by 4.6%

Adding the urban and rural properties (homes and other urban nature properties), the properties transferred in 2015 reached 1,634,670, an increase of 4.6% over the previous year, thus returning to positive figures after having fallen by 4.5% in 2014.

Properties transferred by merchanting increased by 8.1% with respect to 2014, while donations increased by 2%, exchange transactions fell by 9.2%, and those transmitted by inheritance advanced by 6.6%.

According to the INE, the number of rural property sales increased by 6.5% in 2015, reaching a total of 126,470 transactions, thus adding its fifth consecutive year of increase, while urban property sales increased by 8.4%, reaching 627,128 transactions.

In the last month of 2015, home sales increased by 6.8% with reference to December 2014, reaching 27,625 transactions and lowering by nearly seven points the 13.7% year-on-year increase registered in November. With the rise in December, home sales accumulates 16 consecutive months of year-on-year increases.

In month-on-month rates (December 2015 compared to November of the same year), home sales fell by 3.9%, compared with increases of 1.6% and 2.4% recorded in December 2013 and 2014, respectively.

Original story: El Economista (Europa Press)

Translation: Aura Ree

The Price Of Existing Homes In 2015 Recorded The Highest Increase Since 2006

4 February 2016 – El Mundo

The price of existing homes in Spain recorded, in the second half of 2015, an increase of 5.76%, representing the highest growth rate since 2006, according to XXII Market Report from Tecnocasa Group and the Pompeu Fabra University (UPF) in Barcelona. With this slight increase, the price per square meter has averaged in Spain the 1,560 euros.

As explained by the Head of Department of Reports Analysis  (DAII) of Tecnocasa Group, Lázaro Cubero, after a cumulative decline of 55.29% from the peak of the historical series (late 2006 – early 2007), the data the second half of 2015 shows that the market “is in a phase of slight growth.”

Seville is the only city that has not experienced a rise in the price (stays stable), while the highest increase was registered in Barcelona, ​​where house prices rose by 8.2% and now stands at 2,217 euros per square meter. It is closely followed by Madrid with an increase of 6.13% and 1,697 euros per square meter, and Zaragoza, where the price has risen by 4.29% and stands at 1,046 euros per square meter.

The average mortgage amount also grows

The average mortgage amount has also recorded a slight growth of 3.1%, following the change in trend that began in the first half of 2015 and now stands at 91,992 euros. Despite this increase, the monthly mortgage payment remains stable at 358 euros per month, due to the fall in the mortgages cost.

CEO of Tecnocasa Group, Paolo Boarini, has stated that credit entities begin to show more confidence and a trend towards more normal parameters as to granting mortgages, as drawn from the risk indicator analysis. For instance, from 2009 a tendency to grant shorter mortgages was observed, but in the second half of 2015 there has been a slight increase in the longest mortgages (mortgages to 35 years have gone from 2.3% to nearly 4% and 40-year mortgages from 1.4% to almost 3%).

Investment Buying remains steady

According to the DAI a 75.35% of buyers purchase housing to live in it, compared to 24.65% who buy it as an investment, a proportion that has remained stable for the past three years. The possibility of investing in housing “is still interesting due to the profitability offered by the market,” said Cubero, who added that the rent price “is rising in the big cities.”

José García-Montalvo, Professor of Economics at UPF and coordinator of the report, pointed out that the first-home buyer “has gained weight in the market thanks to the opening in the funding,” whereas investors in the current economic situation, have been found in housing “the only asset that provides positive returns.”

As for the first-time buyer, the majority (58.39%) uses a mortgage to pay off the property. The average profile of first-time buyer with a mortgage is that of a man (in 51.46% of cases) between 25 and 44 years (76.86%), Spanish nationality (76.42%) and with an undefined contract (78.20%).


The report has been performed with the data of intermediated operations by Tecnocasa Group, in particular with the purchases transacted through Tecnocasa and intermediated loans by Kiron, the intermediation financial network of Tecnocasa Group.

Original story: El Mundo

Translation: Aura Ree

Tinsa: House Prices Rose By 5%+ In Cataluña In 2015

19 January 2016 – Expansión

With an increase of more than 5%, Cataluna was the autonomous region where house prices rose the most in 2015, which saw the first nationwide increase since 2008. Specifically, according to data published by the appraisal company Tinsa, new and second-hand house prices rose by 1% in Spain last year; with the Community of Madrid and the Balearic Islands also helping to drive that increase, with rises of 3.3% and 2.7%, respectively.

The Catalan provinces reported the greatest increases. Most notably, prices rose in Gerona by more than 10%. In addition, prices in Barcelona and Lérida increased by 5%, whilst in Tarragona, the only province in the region where prices did not rise, they dropped by -1.7%. Significant increases were also recorded in other provinces, besides those mentioned above in Madrid and the Balearic Islands – they included Albacete (4.5%), Ávila (2.4%), Orense (2.2%) and Castellón (2.1%). Similarly, prices in Cuenca, Huelva, Toledo, Cádiz, Málaga, Cantabria, Salamanca, Alicante, Granada, Las Palmas and Santa Cruz de Tenerife rose in line with the national average, all recording increases of around 1%

At the other end of the spectrum, and in contrast to the behaviour seen in the other autonomous regions, house prices in Navarra dropped significantly, by -8.5% YoY. Prices also fell sharply in Murcia, by -4.5%, whilst in Aragón and Extremadura, prices fell by -3.6% and -3.4%, respectively. Meanwhile, prices in País Vasco dropped by -2% and in Asturias, the Community of Valencia and Galicia, prices fell by more than -1%.

In this context, house prices fell by the most in the province of Teruel: specifically, by -8.7%. Moreover, the decrease in Córdoba amounted to -7.7%, whilst in Palencia prices dropped by -7.1%, in Álava by -6.5% and in Zamora by -5.9%. Notable price decreases were also recorded in Ciudad Real, Almería, Burgos, Cáceres and León, where they dropped by more than 4%.

Tinsa’s IMIE index for the fourth quarter of 2015 also includes the behaviour of prices in cities: the ranking was headed by Barcelona, where prices rose by 8.7%. The second city was Badajoz, with an increase of 5.7%, and that was followed by Ávila, where the increase reached 4.3%. Prices in the capital of Spain rose by 3.8% and price rises of more than 3% were also recorded in Cuenca and Ciudad Real. In Palma de Mallorca, prices rose by 2%, in Segovia they increased by 2% and prices in Burgos, Málaga and Cádiz all rose by more than 1%.

The provincial capitals where prices decreased the most were Pamplona and Palencia, with a decrease of more than -10% in both cases. In Zamora, prices fell by -9.2%, whilst in León, they dropped by more than -8%. Huesca, Tarragona and Castellón all recorded price decreases of -7%, and prices in Vitoria fell by almost the same amount. In Murcia and Almería, prices dropped by more than -6% and in Zaragoza, Vigo and Lérida, prices decreased by between -4% and -3.2%.

Original story: Expansión (by Daniel Viaña)

Translation: Carmel Drake