Tag: land price

Ministry of Development: Average Urban Land Prices Rose by 7.8% in Q3

15 December 2017 – El Mundo

The average price of urban land per square metre rose by 7.8% in YoY terms during the third quarter of the year, to €162/m2, whereas it decreased by 2.6% with respect to the previous quarter, according to Land Price Statistics from the Ministry of Development.

In towns with more than 50,000 inhabitants, the average price of land per square metre rose by 5.6% in YoY terms, to reach €287.5/m2

With regards to those towns with more than 50,000 inhabitants, the highest average prices were recorded in the provinces of Madrid (€485.7/m2), Barcelona (€447.6/m2) and the Balearic Islands (€375.1), whilst the lowest prices were registered in Huesca (€48.4/m2), Cádiz (€115.3/m2) and León (€120/m2).

Similarly, the number of transactions completed during the third quarter amounted to 4,545, down by 24.2% compared to the number carried out during the second quarter of the year (5,998) and 2.4% fewer than the number performed during the third quarter of 2016, when 4,656 plots were sold.

By size, in towns with fewer than 1,000 inhabitants, 366 transactions were recorded, up by 3.4% compared to the same quarter in 2016; and in towns with between 1,000 and 5,000 inhabitants, 857 plots were sold, up by 6.1% YoY.

In towns with between 5,000 and 10,000 inhabitants, 763 transactions were recorded (up by 14.2% YoY) and in those towns with a population of between 10,000 and 50,000 inhabitants, 1,591 transactions were signed (+0.8% YoY).

Finally, in those towns with a population of more than 50,000 inhabitants, the number of plots sold in the third quarter of 2017 was 968, up by 5.7% compared to the third quarter last year.

17.8% more space sold

The statistics from the Ministry of Development also show that the surface area sold until September amounted to 6.3 million m2, worth €765.1 million.

With respect to the third quarter of 2016, the YoY variations represent a 17.8% increase in terms of the surface area sold and an 18% decrease in the value of those plots.

Original story: El Mundo

Translation: Carmel Drake

Gran Roque Capital Buys 3 Residential Plots Near The Calderón

16 October 2017 – El Confidencial

The Venezuelan Capriles family has closed another real estate operation in Madrid. Gran Roque Capital, the company controlled by Miguel Ángel Capriles and his cousin Áxel Daniel Capriles, has purchased three plots of buildable land from Prosegur just 500m from the site of the future Operación Mahou-Calderón. The Capriles family has paid around €25 million for this land, which does not require any kind of urban planning modifications, given that it is assigned for residential use according to the General Urban Planning Plan (PGOUM) for Madrid dated 1997, according to sources in the market.

The acquired land comprises three plots (measuring 592 m2, 593 m2 and 3,542 m2, respectively) spanning a combined surface area of 4,723 m2 and a buildable surface area of almost 8,800 m2. Two of the plots (the smaller ones) are vacant, but the largest one is currently occupied by a building that Gran Roque will have to demolish before it can build the new homes on the site. The land purchase operation has been advised by Knight Frank, which, nevertheless, declined to comment on the transaction.

The new residential project (…) will involve the construction of around 80 homes of different kinds, which will be sold for between €5,500/m2 and €6,000/m2, according to sources at Gran Roque, although, they emphasise that the project is still at a very embryonic phase. According to data from Idealista, the price of second-hand homes in the area stands at around €3,300/m2, however, some properties are currently on the market for between €4,000/m2 and €5,000/m2, whereby exceeding the peaks of 2007 (€3,980/m2 in the district of Arganzuela).

This operation represents an about-turn in Gran Roque’s investment strategy in the Spanish capital, where to date, it has opted for plots in prime locations and for projects involving super luxury homes. Its most recent project is in El Viso, opposite the bunker that constitutes the residence of the President of ACS, Florentino Pérez.

500m from the Calderón

This transaction is particularly important in the market given that the price paid for the land, around €2,900/m2, and the prices at which the future homes will be sold, will undoubtedly serve as a benchmark for the future sale of land in the so-called Operación Mahou-Calderón (…).

Experts in the sector consider that a price of between €1,500/m2 and €2,000/m2 would be appropriate for the area (…).

New build homes close to the Vicente Calderon are in short supply. One of the few projects underway is being led by Neinor Homes, which is constructing a 72-home residential project: Riverside homes, for €3,500/m2, a price significantly lower than the properties that Gran Roque is planning to build. Like most of the new builds currently being constructed in the capital, these homes are being targeted at middle and middle/upper-class buyers. Of the 51 homes that will comprise the future 20-storey tower, which will be 72 m tall, 49 units have already been sold.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Land Expropriations Will Be Cheaper After Latest Law Reform

3 February 2016 – Cinco Días

After everything that has happened in the real estate sector since property prices and the production of housing came crashing down, perhaps few will remember the major impact that resulted from the approval of the Land Law (8/2007 and RDL 2/2008). The new legislation was created with the aim of stopping judges from using their discretion in administrative litigation cases, so as to prevent them, in certain cases, from assigning fair values to plots of land subject to expropriation, on the basis that, spurred on by strong demand during the boom times, the values being assigned were leading to a speculative phenomenon that was having serious repercussions on the accounts and financial viability of numerous companies.

In this way, the legislator reduced the categories into which land had been divided historically and established the existence of just two classes: urban (plots) and rural (all others). As such, if land that had been used for agricultural production until that time, was going to be expropriated for the construction of a highway, then it would be valued as rural land (…) and not on the basis of the value of the asset to be constructed on it. (…).

In October last year, the new revised draft of the Land Law was approved, which is going to have an even greater influence of the original objective (to lower the cost of expropriations) and which is going to govern the conditions surrounding urban land in a more specific way. In terms of the valuation framework, it is based on a ruling issued by the Constitutional Court in 2014, which declared that setting the location coefficient (correction factor) at a maximum of two was null and unconstitutional.

In other words, the original law established that rural plots could be assigned a location coefficient to correct the value obtained by capitalising the income from the land. In these cases a correction coefficient (up to a maximum of two) could be applied, if the plots were located near to an urban centre or a centre of production or had certain environmental characteristics…. This represented a relief, in the event of an expropriation valuation, for those plots of land that many developers had stockpiled in outlying metropolitan areas of large cities in the hope of obtaining huge profits and which saw their value fall sharply as a result of the new legislation in 2008.

Nevertheless, the high court declared that the coefficient limit of two was unconstitutional and argued…that “it was not justified by the Law or by the preamble and could end up being whimsical, and prevent the real value of the land from being obtained. The court considers that…this limit is contrary to article 33.3 of the Constitution”. That article refers to the fact that “nobody can be deprived of their assets or rights, except on justified grounds for the public good or in social interest, provided proper compensation is paid and in accordance with the provisions of the law”. (…) .

According to Andrés Lorente, Director of Land at Tinsa, the method for valuing rural land involves dividing the land yield (calculated by capitalising the income from the land) by a capitalisation rate and applying that correction factor based on location to the result, where appropriate, where the correction factor may not exceed two.

“The provisions established in the new revised draft reflect higher rates, which means that the resulting land valuations could be significantly lower than those calculated under the previous legislation. Whereas before, the internal yield of the secondary market for public debt with a term of between two and six years was taken as the reference rate, now the average interest rate over the last three years on the State’s debt over 30 years is taken (3.663%)”, say sources at Tinsa.

As such, since the applicable rates have risen significantly, so the resulting land valuations are significantly lower. There are even cases in which expropriations now, under these new rules, result in a cost for the Administrations that is between five and six times lower than it would have been under the legal framework in force in 2008, says Lorente.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake