Tag: Invermax

26 Spanish Real Estate Experts Share Their Predictions for 2018

6 January 2018 – Expansión

House prices will rise by more than 5% on average this year, with increases of more than 10% in the large cities. These gains will happen in a context of great dynamism in the market, in which house sales will grow by more than 10% to exceed 550,000 transactions. Rental prices will also continue to rise.

Those are just some of the predictions made by 26 real estate experts for Expansión.

Aguirre Newman: “House prices will grow by more than 10% in Madrid and Barcelona”.

“In our opinion, house prices are going to continue to rise in 2018, reaching average growth rates of 6%-7%”, says Juan Riestra (pictured above, top row, second from left), Director of the Residential Area at Aguirre Newman. “In Madrid, Barcelona and the coastal cities, we expect to see double-digit growth, driven by the supply of new homes that the property developers have announced, which will result in an even more intense increase in prices than seen in 2017 since new build home are typically more expensive than second-hand properties”, he adds (…).

Fotocasa: “New build homes will have a higher profile in 2018”.

“New build homes will have a higher profile in 2018, as we have already seen during the last quarter of 2017. And that, combined with the return of confidence to the housing market, will continue to push prices up if the economic context is maintained and the situation in Cataluña is resolved”, says Beatriz Toribio (pictured above, bottom row, second from left), from Fotocasa, who thinks that this effect will drive up house prices by more than 5%, but not reaching double-digits (…).

Universitat Pompreu Fabra: “Everything depends on the situation in Cataluña”.

“The upward momentum in the market will be accentuated in 2018 due to the improvement in the new build market since the homes that started to be built two years ago are now being sold”, said José García Montalvo (pictured above, top row, second from right), Professor of Economics at the Universitat Pompeu Fabra. “The major change is that new homes now account for 20% of the market, whilst before they represented 60%” (…). But “everything depends on the political uncertainty in Cataluña” (…).

Arcano: “Demand for investment in housing will continue to grow”.

“There is still a very significant imbalance in terms of demand, spurred on by the ECB’s policy and labour improvement, and a supply that is still restricted by the very low level of new house starts. Moreover, demand for housing as an investment will continue to grow. In this context, prices will rise by more than 5%”, says Ignacio de la Torre, Chief Economist at Arcano (…).

Notaries’ Centre for Statistical Information: “We expect house prices to increase by more than 5%”.

“On the basis of our analysis of the available information, we expect house prices to grow by between 5% and 10% in 2018 (…). Although we expect the housing stock to increase, due to greater investment and employment in construction in recent months, which may lead to price rises being contained, we also expect an increase in demand, given the dynamism of economic activity and the behaviour observed in the labour market”, says Milagros Avedillo, at the Notaries’ Centre for Statistical Information. In her opinion, the growth in mortgage loans will be single-digit.

Asprima: “Very few new homes will be built”.

“I don’t think that the volume of transactions will increase by more than 10% and the forecast for price growth will be below 5%”, says Carolina Roca, Vice-President of Asprima. “The most important macro-factor is income”, she laments. Therefore, prices cannot rise by much, in her opinion, although they will increase in certain areas. “New builds will recover in 2018, but not by much (…)”.

Tinsa: “The reduction in the unemployment rate will boost the market”.

“The residential market will record moderate price growth in 2018 (of between 3% and 4%), similar to that seen in 2017, with different speeds, depending on the region”, says Pedro Soria (pictured above, bottom row, second from right), Commercial Director at the appraisal company Tinsa. “The recovery will expand to more areas; the large capitals will continue to be the drivers, although the rate of growth will soften”, he adds. “The reduction in the unemployment rate and continuing investor interest, due to the prolongation of the low-interest rates, will increase house sales by between 10% and 15% (…).

Sociedad de Tasación: “New house prices will rise by 5.4%”.

“Applying our predictive model to the data from the Ministry of Development, we estimate that 14.1% more house sales will be completed in 2018 than in 2017 (…)”, says Consuelo Villanueva (pictured above, top row, far left), Director of Institutions and Key Accounts at Sociedad de Tasación. “The result (…) indicates growth of 5.4% in the price of new homes under construction for the average of provincial capitals in 2018 (…)”.

Gesvalt: “Mortgage lending will rise by around 15%”.

“According to the forecasts at Gesvalt, we predict moderate growth in second-hand house prices of around 5% at the national level, although there will be notable differences between provinces”, says Sandra Daza (pictured above, bottom row, far right), Director General at Gesvalt. (…). And by how much will mortgage lending grow? “By around 15% and there will be a slight increase in the number of mortgages that exceed 80% of the total property value”.

Foundation of Real Estate Research: “The political uncertainty will weigh down on Barcelona”.

The President of the Foundation of Real Estate Research, Julio Gil, believes that house prices will rise by “between 0% and 5% in 2018. “We will move to a three-speed market”, he thinks, referring to consolidated areas, cities in recovery and provinces with a surplus supply and/or limited demand. “And I think that Barcelona will perform less well than Madrid, weighed down by the political uncertainty”, he adds (…).

Pisos.com. “Mortgage lending will rise by more than 10% for the fourth consecutive year”.

According to Ferran Font, Head of Research at Pisos.com (…) “Historically low interest rates and the decrease in unemployment mean that we expect mortgage lending to grow at double-digit rates in 2018, like it has done for the last three years”.

General Council of Real Estate Agents: “The rise in rents will lead to tension in sales prices”.

“House prices will grow by around 5% in 2018, driven more by the refuge effect of savings than by objective economic variables”, says the President of the General Council of Real Estate Agents, Diego Galiano. “Savings are not being rewards and housing is recovering a certain degree of stability and offering good prospects for investors (…)”.

TecniTasa: “Prices will grow by around 5%”.

“On average in Spain, we estimate price growth of around 5%, but we highlight that that figure represents an average of a very heterogeneous market, by area and asset class. In some regions and for certain types of high-end homes, the increase will amount to between 5% and 10%, and may even exceed 10% (for example, in the Balearic Islands). Whilst in small towns and for cheaper homes, prices are barely expected to rise at all in 2018”, says José María Basáñez, President of TecniTasa (…).

Civislend: “The mortgage war will intensify”.

“The growth that we will see in terms of mortgage lending is going to continue to reflect double-digit rates and the war in terms of granting loans by financial institutions is going to intensify”, says Manuel Gandarias, Director and Founder of the real estate crowdlending platform Civislend (…).

Acuña & Asociados: “80% of sales will be made in 400 towns”.

“Given the current situation, the expected growth in prices at the national level for 2018 will amount to around 5.5%”, forecasts Luis Rodríguez de Acuña. However, “demand for housing is not behaving in a homogenous way across the country, and transactions are only being recorded in 1,300 of Spain’s 8,125 municipalities”. In other words, in one out of every six. And 80% of transactions “are being closed in just 400 municipalities (…)”. (…).

CBRE: “The sale of new homes will continue to gain weight”.

The value of homes will increase “by around 5% YoY at the national level, with higher rises (between 7% and 10%) in certain markets such as Madrid, Valencia, Málaga and the Balearic Islands”, predicts Samuel Población (pictured above, top row, far right), National Director of Residential and Land at CBRE (…). “Sales of new build homes are going to increase their relative weight (with respect to second-hand homes) as a result of the recovery in construction output; nevertheless, the recovery will not have an immediate impact on transaction volumes given the time lag associated with new build developments”, he says.

BDO: The land market is preventing soaring construction output”.

“We are facing a very favourable macro context (GDP and employment, above all) and therefore, an upwards cycle is likely, which will have different regional rates”, explains Alberto Prieto, at BDO. (…). “The launch of new build projects by the new large players will start to be felt in 2018, and then more intensely in 2019”, he adds. “The situation in the land market makes it unfeasible for the volume of new build homes to soar for the time being”, he says.

Foro Consultores Inmobiliarios: “Fixed-rate mortgages will play an important role”.

Carlos Smerdou, CEO at Foro Consultores, believes that “new build homes will drive the market and that recent land transactions indicate that the trend in terms of prices will be upward, of between 5% and 10%” (…). In terms of fixed-rate mortgages, “they will play an important role”, despite the fact that “interest rates are forecast to remain negative”.

MAR Real Estate: “Banks are still reluctant to grant the necessary financing”.

Rosario Martín Jerónimo, representative of MAR Real Estate in Marbella, believes that house prices will grow by more than 5% in Spain this year, on average (…). Nevertheless, she does not think that sales or mortgage lending will be as high in 2018 as they were in 2017 and that the growth rates will remain below 10% in both cases. “Buyers are willing but the financial institutions are still very reluctant to grant the necessary financing”, she explains. “Many property developers are completely financing their projects using money from private investors/buyers, without any support from the bank”, she says (…).

uDA (urban Data Analytics); “Prices will rise by more than 10% in the large cities”.

“House prices will rise by around 6.9% in 2018, although the behaviour will be tremendously heterogeneous”, warns Carlos Olmos, Director of urban Data Analytics. In other words, there will be “some large cities with growth rates of more than 10% and many other capitals with small decreases” (…).

Gonzalo Bernardos, Professor of Economic: “House prices will rise by 11% and sales volumes by 23%”.

“I think that house prices will rise by 11%”, says Gonzalo Bernardos, Director of the Real Estate Masters at the Universidad de Barcelona (…). Moreover, in macroeconomic terms, it is the best scenario for the residential market: high (economic) growth (around 3%), the creation of employment, scarce new build supply (new build permits will amount to 125,000 in 2018), very low interest rates and bank willingness to grant mortgages”. “House sales will rise by around 23% and mortgage lending will increase by 17%”.

Irea: “House prices will rise by more than 7% in consolidated markets”.

Mikel Echavarren (pictured above, bottom row, far left), CEO of the real estate consultancy and advisory firm Irea, forecasts that house prices will rise by between 5% and 10% in 2018 with respect to 2017. “In consolidated markets, the increases will be closer to 7%”. (…). In the mortgage market (…), “in theory, financing conditions will continue to be very beneficial for buyers and property developers”, he adds.

College of Registrars: “Mortgage lending will grow by around 20%”.

The registrars believe that house prices will rise by less than 5%. “Taking into account our data and the slowdown that is already being seen in Cataluña, which accounts for approximately 17%-18% of the Spanish housing market (…), we think that it will be hard to exceed a growth rate of 5% in 2018”, explains Fernando Acedo Rico, Director of Institutional Relations at the College of Registrars. (…). Something similar will happen with mortgage lending, which “will continue to grow at around 20%”.

Idealista.com: “Madrid will drive the price rises”.

According to Fernando Encinar, Head of Research at the real estate portal Idealista, house prices will rise by less than 5%. (…). “There will be cities that will experience a more acute recovery, such as Málaga, Valencia, Sevilla and the islands. But I think that Madrid is going to be the real driver, with even more accelerated price growth”. Why? “The Spanish capital is gobbling up talent and investment, and demand there indicates that prices are going to continue to rise. There is minimal stock left in Madrid (…)”.

Instituto de Práctica Empresarial: “In 2018, 550,000 homes will be sold in Spain”.

According to the Director of the Real Estate Chair of the Instituto de Práctica Empresarial, house prices will rise by 6.1% in 2018 (…). In Spain, 550,374 homes will be sold, which represents 14.5% more than in 2017, despite the sluggishness that may be seen in Cataluña.

Invermax: “Tourist areas may see price rises of 10%”.

Jesús Martí, Real Estate Analyst at Invermax, thinks that “house prices will grow by another 5%, with this average varying between the large cities and the traditionally touristy coastal areas, where they may rise by 10%”. “It is still a good time to buy a home, especially for investors”, he adds (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Buy-To-Let Properties Generate Returns Of 10%+ In Spain’s Large Cities

30 May 2017 – Expansión

Buy to let / The gross annual return from buying a home and putting it up for rent amounted to 4.3% in the first quarter of 2017, according to the Bank of Spain. If we add to that the fact that the price per square metre rose more sharply than during the previous quarter, then the total return exceeds 9%. And the equivalent figures are in the double digits in the largest provincial capitals.

After seven years of crisis and three years of recovery, investment in housing is now enjoying a new golden age. Without the excesses of yesteryear and with the lesson of the bubble very much learned, professionals and individuals alike have set their sights on the residential sector once again as the generator of profits. (…).

The major indicator in the sector nowadays is not so much house prices – which are still important – but rather returns. In the main Spanish provincial capitals, the average gross yield from rental homes is 5.93%, according to a study of the yield on rental homes in 2017, compiled by Invermax. (…).

That 5.93% is higher than the overall average for Spain, which amounted to 4.3% in the first quarter of the year, according to the Bank of Spain. If to this return, we add capital gains, the average gross rate of return per annum increases to more than 10% in Spain. To calculate the return from capital gains, the Bank of Spain uses house price data from INE, which will be published on 8 June. But, taking into account the registrars’ statistics, which revealed an increase of 7.7%, the analysts are convinced that the average return, including capital gains, now exceeds 9%. Moreover, in the large cities, these figures are comfortably in the double digits. For example, the annual return in Barcelona is 17.7% and in Madrid, it is 13.4%, if we combine Invermax’s yield data by city with the local prices published by Tinsa. (…).

The economic environment “is completely favouring the yields on these kinds of assets…” said Jesús Martí, author of the report compiled by Invermax, a company that belongs to the Enacom group. “The reasons driving the increase in the gross rental yield are….the fact that house prices in Spain’s major cities have bottomed out, demand is continuing to rise, especially for rental properties…”. Also, unemployment rates in the provincial capitals stand at around 10% and there is a persistent shortage of available homes for rent. (…).

According to Beatriz Toribio, Head of Research at Fotocasa, “The rental market still has a lot of potential in Spain. The country mainly comprises homeowners, but consumers are gradually opening up to the rental culture, as a result of the economic, socio-demographic and employment changes that are happening across Spanish society”, she said. (…).

According to data from Fotocasa, the most profitable autonomous regions for buying a home and subsequently renting it out are Cataluña, Madrid, the Canary Islands and the Balearic Islands, where yields amount to more than 6%. In some towns in Cataluña and Madrid, that percentage increases to 7% in certain areas and even to 8% in one district in the capital, specifically, Villaverde. (…).

And so we ask the million-dollar question once again: Is now a good time to buy a home and put it on the rental market to obtain returns? The general answer from the real estate experts is a resounding “Yes”, with increasingly less hesitation. However, the choice of investment (area, size, features and the level of demand for rental housing, amongst other factors) is fundamental.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Housing: Which Provinces Offer The Most Attractive Returns?

23 May 2017 – Expansión

Madrid, Barcelona, the Costa del Sol and the Balearic Islands clearly stand out as the most attractive areas.

The Spanish real estate market is enjoying a sweet moment once again. The average price of a home in the country rose by 2% in April with respect to the same month a year ago, which means that so far in 2017, prices have risen by 5% with respect to December 2016, which saw the third consecutive annual rise.

And the outlook for the future is more than promising: Samuel Población, National Director of Residential and Land at CBRE, explains that on average in Spain, price increases of between 4% and 5% are expected, and those percentages will be more marked in Madrid and Barcelona, where increases of around 10% are predicted.

In the case of yields, the panorama is similar. The net return on a rental home (the rate that includes the increase in the price of a home over 12 months as well as the return from renting it out during the same period) now amounts to 8.8% in Spain. On average, rentals in Spain generate returns of between 4.5% and 6% (excluding the impact of capital appreciation), according to Ignacio de la Torre, Partner and Co-Head of the Capital Markets team (at Arcano).

However, the figures reveal that the real estate market is not experiencing a similar boom across the whole of Spain. The best areas for investing in housing are Madrid, Barcelona and their respective suburbs, as well as Málaga and the Costa del Sol, the Balearic Islands and Alicante. Valencia, influenced by the latter, is also recovering and in Valladolid, Zaragoza and A Coruña, we are starting to see signs of improvement, according to José Luis Ruiz Bartolomé, Managing Partner at Chamberí AM.

In Madrid and Barcelona, house prices are rising due to an increase in demand in the context of limited supply, given that the construction of new housing is still a long way below the levels that the country can absorb. 60,000 homes are currently being constructed in Spain, compared to the 150,000 that the economy is capable of digesting.

Typical buyer profiles

The profile of a typical buyer in the city is a family with children and a stable income. They are looking for a home with between three and four bedrooms, measuring between 110 m2 and 140 m2. In the case of investors, they tend to buy properties with 2-3 bedrooms, according to Población. On the other hand, the average tenant is a young person, without children, who does not take out a mortgage either due to a lack of stable employment or because of the effect of the rental culture that is starting to spread amongst the new generations.

Jesús Martí, real estate analyst at Invermax, added that buyers, and above all renters, are increasingly focused on the proximity of their future home to their place of work when it comes to deciding where to live.

The profile of a typical buyer on the coast is a foreign investor. Ignacio de la Torre, Chief Economist at Arcano, says that 15% of the total market for house sales in Spain involve buyers from overseas and that percentage increases to 30% in the case of Málaga.

When it comes to choosing a property for investment, the experts advise buyers to not get carried away by apparent bargains. It could be that the sales price of a property seems cheap, but in that case, it will probably also be hard to generate stable rental income from it.

It is worth considering that just one month’s delay in the payment of rent by a tenant can significantly harm the profitability objectives of a property.

Original story: Expansión (by R. Martínez)

Translation: Carmel Drake