Land Prices and Production in Ribera del Duero Continue to Increase

5 August 2019

The Ribera del Duero wine region is in the midst of a boom, with production fully sold before harvest. The area produced 133 million tons of grapes, the second largest haul in  history from a total of 23,200 hectares of vineyards and 8,300 wine growers. The grapes supplied 315 wineries classified under the Denomination of Origin (DO).

While some investors think that the price of land in the region has risen too far too fast, the profile of buyers these days is undergoing a sea change as more professional winegrowers and entrepreneurs are looking to buy land. Thus, prices are expect to continue to increase, but at the more sedate, estimated range of between 5 and 6 percent per year.

Original Story: El Confidencial – Graciano Palomo

Adaptation/Translation: Richard D. K. Turner

High Land Costs Drive up House Prices in the Balearic Islands

27 February 2019 – Diario de Mallorca

The property market in the Balearic Islands is experiencing the perfect storm. Very high land prices are driving up the cost of the few new homes that are being built. As such, local residents are facing serious difficulties when it comes to affording a home.

Not only are land prices high; in many cases, the plots are owned by large business groups, which are opting to hold onto them to benefit from further capital appreciation rather than develop or sell them immediately. What’s more, the few new homes that are being developed are very expensive, beyond the reach of most local families.

These factors are compounded by the complete failure on the part of the public authorities to construct any social housing in recent years, which only serves to aggravate the housing shortage in the market.

There is a great deal of demand, not only from local families, but also from foreigners, who want homes of their own on the island, and from seasonal workers moving from other parts of the country. Moreover, supply is limited and as such, prices are soaring. This situation is made worse by the fact that many overseas buyers and renters can afford to pay more than most islanders, which is driving out the locals.

All in all, it’s a gloomy picture for island residents.

Original story: Diario de Mallorca (by F. Guijarro)

Summary/Translation: Carmel Drake

Ministry of Development: Land Sales Amounted to €3.6bn Between April 2017 & March 2018

17 June 2018 – Expansión

Land sales closed over the last year, between April 2017 and March 2018, amounted to €3.59 billion, up by 22.4% compared to the previous twelve months. That figure also represented a maximum for at least the last five years, according to data from the Ministry of Development.

The increase in land investments results from the growth in the number of land-based transactions completed and also from a rise in the surface areas sold, given that the prices recorded decreased.

The growth in the market for land has been driven by the investment plans that the main real estate companies are carrying out, especially listed firms such as Neinor, Aedas and Quabit. They are aiming to fulfil their home building targets, which include strategic plans to take advantage of the increase in demand and the boom in the sector.

Specifically, land sale operations sored by 17.5% in the twelve months to March 2018, to 21,255 transactions.

In these operations, a total of 29.50 million m2 of land changed hands, a surface area that exceeds the volume bought and sold during the previous twelve months by 26%.

Despite that acceleration in the land market, land prices continued to decrease. At the end of the first quarter, the average price of urban land per square metre amounted to €167.5 million, down by 2.6% compared to a year earlier.

The decrease is even greater, 7.8%, for urban land in large cities, those with more than 50,000 inhabitants, although there, land costs almost €300 (€297/m2) on average, and whereby doubled the average price.

Madrid and Barcelona

Madrid is the most expensive place to buy land, given that at the end of March, the average price per square metre in the Community of Madrid amounted to €477.8. That amount also represented an increase of 4.8% with respect to the start of the year and a jump of 10.1% compared to the previous year.

The Spanish capital whereby returned to first position, which had been occupied by Barcelona at the end of 2017. The Catalan capital was ranked in second place, with an average price of €436/m2, which, by contrast, represented a decrease of 7% with respect to the end of 2017 and 5% over the last year.

The price of land in the two large Spanish capitals is almost three times that of the national average.

After Madrid and Barcelona in the ranking come the Balearic Islands, where land costs €397/m2 on average and Valencia with an average price of €337.5/m2.

At the opposite end of the spectrum, the most populated cities with the lowest land prices are Albacete (€79.5/m2), Castellón (€93.2/m2) and Lleida (€99.7/m2).

Original story: Expansión

Translation: Carmel Drake

Fiatc to Invest up to €18M in a New Nursing Home in Tarragona

7 June 2018 – Eje Prime

Fiatc is attacking the residential sector. The insurance company, led by Joan Castells, now owns land in Tarragona for the development of a project in the ‘services for the elderly’ sector. The group’s intention is to construct a 160-bed nursing home, with an investment that will range between €14 million and €18 million.

The plots acquired by the mutual are located next to the Reus motorway, opposite a shopping centre, in an area that also houses sports facilities for the upcoming Mediterranean Games. The complex will have a constructed surface area of 12,000 m2, including 4,000 m2 of space underground.

Through its subsidiary Inverfiatc, the insurance group owns three nursing homes for the elderly, which it operates directly. Those nursing homes are located in Cornellà de Llobregat, Sant Cugat del Vallès and Mollet del Vallès and contain more than 450 beds.

Castells says that Inverfiatc is on the lookout for sites for new nursing homes and that in its analysis, it takes into account factors such as the existence of demand for beds in the area and the price of land, according to Expansión.

The urbanisation work will begin once the Mediterranean Games are over (the event is due to finish on 1 July) and the facilities could be fully constructed by the end of next year. Fiatc recorded turnover from insurance premiums of €577.19 million in 2017, up by 7% compared to 2016.

Original story: Eje Prime

Translation: Carmel Drake

Galicia Awards 1.1 million m2 of Industrial Land Supported by Aid from La Xunta

6 June 2018 – Eje Prime

La Xunta is promoting the sale of industrial land and Galicia is whereby reaching pre-crisis occupancy levels in the logistics sector. In total, 1.1 million m2 of logistics land has been awarded in the autonomous region, which represents almost 40% of the total available land for sale in 2015.

Amongst the measures adopted by La Xunta in 2018 include the elimination of regional taxes for the purchase of industrial land from the administration, with a 100% deduction of the Property Transfer Tax and Documented Legal Act Tax, according to Inmodiario.

The intention of the territorial government is, in addition to promoting the entry of new players into Galicia, facilitate the reactivation of disused industrial plots. In those cases, La Xunta adds discounts to the land prices of between 30% and 50%.

The Councillor for Infrastructure and Housing at La Xunta, Ethel Vázquez, anticipates that 2018 “will continue along the same path”. Not in vain, her portfolio has received a significant increase in budgeted aid, of 16.5%, achieving an additional €60 million taking the total fund to €424 million.

Original story: Eje Prime

Translation: Carmel Drake

Land Oligopoly: 10 Cities Account for 55% of the Developments Underway in Spain

31 May 2018 – Eje Prime

The data is conclusive: ten cities account for 55% of the residential developments underway in Spain. They constitute a municipal land oligopoly, which is now showing signs of tension on the demand side given the lack of buildable land available for development and the delays by the public administrations when it comes to approving building permits. “The concentration of the population in the major cities is a phenomenon that is going to increase over the next few years”, predicts Sergio Gálvez, Director of Strategy and Investment at the property developer Aedas Homes in the context of the Madrid Real Estate Fair (SIMA) conference on land and its strategic market.

The executive of the listed Spanish company also explained that the delays in the granting of licences in certain cities are lasting for up to ten months. Gálvez regrets that “any delay suffered in the production chain clearly results in a higher sales price for the end client”.

The Director of Aedas, who believes that “the public administrations still have a long way to go in terms of the agility of the licence-granting process”, was accompanied at the roundtable by Ignacio Ocejo, Partner at Kronos Homes. The director of the Spanish property developer turned the spotlight onto financing: “the situation in the financial world has changed drastically with the new cycle; in the past, the supply could have been four times larger”.

Nevertheless, Ocejo was favourable of the fact that land financing is now “much more controlled” because capital can still be obtained under reasonable conditions. “I do not think that it is a problem, the banks themselves are being proactive when it comes to financing; the problem is more that there are fewer entities”, said the Director of Kronos.

Meanwhile, the Commercial Director of the appraisal firm Tinsa, Pedro Soria, seemed more concerned than his roundtable colleagues about land and its overheating (…) “In some places, we are already seeing price caps on land”, says Soria, “the only option left if we want to achieve the desired returns is to raise house prices”. In the event that land prices continue to rise, the Tinsa executive sees a “risk”, nevertheless, the market could be more profitable on the land investment side than when it comes to house building itself.

Spain is seeing an improvement in its new home permits once again, but the figures are still well below the more than 800,000 permits granted in the most active years of the boom in the 2000s. In this regard, Ocejo explains that “in a scenario of stability and compared with the previous cycle”, an increase in new builds at a rate of between 25% and 30% would be “positive”. “A healthy market for me would see the construction of between 130,000 and 160,000 new homes each year in Spain”, added the Partner of Kronos Homes.

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

Spain’s Large Property Developers Own Land to Build 1,500 Homes in Valencia

16 May 2018 – Levante EMV

The four Spanish property developers backed by investment funds that make up the Big Four have acquired large batches of land in Valencia and now own plots on which to build 1,500 homes over the next few months.

The property developers in question are Neinor, Aelca, Aedas and Vía Célere, and they share financial muscle in common, which has allowed them to outperform the competition. The key is that the four firms are listed or are aspiring to make their debuts on the stock market and so they need to quickly grow their portfolio of homes to attract investors. The latest major operation has just been closed by Aelca, which is going to invest €7.5 million in the construction of 62 homes on the PAI de Moreras.

Sources in the sector warn that there is hardly any buildable land left in Valencia and they lament the fact that this is going to result in a “reheating” of prices. The same sources state that land in Patraix, which cost around €200/m2 two years ago is now being sold for €450/m2 due to the voraciousness of the large property developers. “Aelca purchased land in Patraix for €425/m2 and is now costs €450/m2. The large property developers have driven up prices because they need to take positions ahead of their stock market debuts”, say the experts.

In other areas, such as Malilla, Neinor paid €600/m2 for a plot with capacity for 400 homes, and the US fund Harbet Management Corporation (HMC) and its local partner Momentum Real Estate Investment Management (REIM) purchased 30,000 m2 of land in Nou Campanar and Alfahuir for €800/m2. The problem is the impact that this is going to have on the final prices of those homes, given that, according to the experts, they will have to soar above €2,000/m2 to be profitable. “We are going to see homes costing upwards of €220,000. Who can pay those prices in Valencia? What happens to permanent employees who are 40-years old and who can only be granted mortgages of up to €160,000?” ask the same sources.

Aelca – 368 homes

Aelca is a property developer founded in Madrid in 2012. Four years later, a fund from Minneapolis (USA), Värde purchased 75% of that firm. The company arrived in València with two developments comprising 192 homes in Patraix (own) and Nou Campanar (owned by Sareb). Now it is building 44 homes in Malilla (on Calle Isla Formentera), 70 homes in Nou Moles (on Calle Brasil) and 62 homes in the PAI de Moreres. Aelca is also preparing its stock market debut.

Vía Célere – 22 homes

Vía Célere is another property developer linked to the fund Värde that is also preparing to debut on the stock market. Its first development in València is a 22 home building with a swimming pool at number 55 Avenida de la Petxina. The cheapest home there costs €310,900 (€348,703 including costs).

Aedas – 399 homes

Aedas is a listed property developer, controlled by the US fund Castlelake. The firm currently has three developments underway in València where it is going to build 399 homes. The company is going to construct an urbanisation containing 220 homes on a plot on Avenida Maestro Rodrigo (…). In addition, it is building 59 homes in Quatre Carreres. Also, the company has just acquired another plot on Avenida Antonio Ferrandis to build 120 homes (…).

Neinor – 713 homes

Neinor arrived in València in March 2017 and has become the largest landowner in the city with a portfolio for the construction of 713 homes. The property developer, whose main shareholder is the Israeli fund Adar Capital, is currently marketing a 49-home development in Malilla and another 216-home development in Nou Benicalap. It is also working on a 416-home development in Malilla (…) and a 100-home development on Avenida Antonio Ferrandis in Quatre Carreres.

Original story: Levante EMV (by Ramón Ferrando)

Translation: Carmel Drake

Adif Sells Plot in Madrid for 80% More than its Original Asking Price

2 January 2018 – El Confidencial

It has been, without a doubt, the clearest example of the overheating in the prices of buildable land in Madrid. Adif has just concluded the auction of several plots in Dehesa Vieja, San Sebastián de los Reyes, which it launched at the beginning of October. The asking price was set at €9 million and in the end, the state-owned firm has obtained proceeds amounting to €16.3 million, in other words, 80% more than initially expected.

The plots, which have a buildable surface area of 10,500 m2, sparked interest amongst much of the property development sector, given that they are located in one of the most sought-after and rapidly growing areas of the Community of Madrid. Up to 13 property developers participated in the first auction held on 3 October, including some of the industry stalwarts.

From Gestilar to Amenábar Promociones, and including the renewed Acciona Inmobiliaria and Pryconsa. Other participants also included Monthisa, Aelca, the listed firm Neinor Homes, Procisa and Solvia. And one cooperative: SS de los Reyes Sociedad Cooperativa, owned by the Asentis group, which after going head to head with the real estate company owned by the Entrecanales family over the last month, has ended up acquiring the sought-after plot. And the reality is that, after a couple of years on the back burner, cooperatives have returned to the market with a bang and are showing that they are capable of competing, economically speaking, in spaces where traditional property developers cannot or do not want to operate.

Adif’s auction is a clear example. SS de los Reyes Sociedad Cooperativa has won the bid with an offer of €16.3 million, compared to the figure of just over €16 million that Acciona Inmobiliaria was willing to pay and which represents a land (impact) price of €1,550/m2. Just too high, in the eyes of many of the interested parties who threw in the towel along the way and who marked a top price of around €1,200/m2.

To give us an idea, the price paid by the cooperative (…) means that the future homes that are going to be constructed on the site will have to be sold for around €2,400/m2, or around €2,900/m2 if the aforementioned offer had been presented by a property developer, since it would have to include its margin to sell the homes and ensure it did not make a loss (…).

“It is important to consider that the homes planned for the site are large, measuring between 130 m2 and 140 m2 and that if we exceed prices of €400,000 for a three-bedroom home, then no matter how much prices rise by, middle-class families start to have limitations in terms of financing, and, therefore,  problems when it comes to buying such homes”, according to sources at one of the property developers that participated in the bid.

And it is not the only land operation to have raised the alarm. For months now, the market has been seeing sales of buildable plots of land at prices that were unthinkable just a couple of years ago. Recently, the Mutualidad de la Policía (Mupol) managed to sell three plots of buildable urban land – in other words, ready to build on – for around €2,250/m2 to another cooperative manager, Gesvieco, which has placed between €40 million and €42 million on the table for the plots that span 5,500 m2. The traditional and conservative property developers such as Pryconsa and Vía Célere were not willing to pay that price (…).

To give us an idea, 24 months ago, according to data from Foro Consultores, buyers were paying €800/m2 for buildable land. In other words, in two years, land prices have doubled. This (impact) price means that the price of homes for end users has increased from around €2,300/m2 to €3,100/m2.

Operación Calderón, the next major operation

Nevertheless, if there is an operation that can break all records, it is the one involving the plots that Atlético de Madrid owns next to the Vicente Calderón Stadium. The club is asking around €200 million for that package of land, in other words, around €3,500/m2, which would give rise to homes with prices of €6,000/m2, well above the price for the area, which ranges between €3,000/m2 and €4,000/m2 (…). The interested parties have already submitted their binding offers, now the club just needs to choose the best suitor.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Land Shortage Causes House Prices to Soar in Madrid

5 November 2017 – El Mundo

House prices are on the rise in Madrid, due to the shortage of available buildable land and the high pent-up demand (the Spanish capital is capable of absorbing around 10,000 new homes per year and just as many second-hand homes). That was one of the main conclusions from the meeting organised last week by El Mundo in collaboration with Distrito Castellana Norte (DCN) to analyse the likely impact of the 11,000 new homes that are being planned as part of Madrid Nuevo Norte, the official name for the project more commonly known as Operación Chamartín.

According to Luis Corral, CEO of Foro Consultores, Madrid Nuevo Norte is an “absolutely essential project for that area of Madrid”, because both of the existing urban developments, namely, Valdebebas and Arroyo del Fresno, as well as the neighbouring municipalities, Alcobendas and San Sebastían de los Reyes “have run out of land”. In his opinion, “anything that places this part of Madrid on the market is a good thing, even if it causes price inflation, as seen in Valdebebas, where homes now cost more than €3,000/m2″.

Beyond its importance from a residential perspective, “Madrid Nuevo Norte also involves a major urban regeneration project, which offers a golden opportunity to position Madrid as one of the greatest capital cities in Europe”, according to Carolina Roca, Vice-President of the Association of Property Developers in Madrid (Asprima). In this sense, the final plans – which will probably be approved during the course of next year – include the construction of a large business centre, as well as a major refit of Chamartín station (which will house the future headquarters of Adif and Renfe).

Although this is an ambitious project from every perspective, “the area to the north of Madrid has capacity to absorb much higher figures than the 11,000 homes currently forecast”, says Samuel Población, Head of Residential and Land at the consultancy firm CBRE. “The absorption rate that we have seen in Valdebebas in just five years serves as an example”, he adds.

Moreover, the current rates of house building confirm that demand is continuing to grow right across the Community of Madrid. Based on the number of construction permits granted, the region is currently building 22,000 properties per year, a figure that contrasts with the 80,000 properties that are going to be built in Spain as a whole in 2017. According to Roca, “property development is performing well in Madrid, but the same dynamism is not being replicated across the country and so, we are still a long way off the 150,000 homes per year that need to be built”. That means that the region “has doubled its weight, something that is not positive because Madrid cannot cope with the real estate business of the whole of Spain”.

But the main problem, according to the head of the Madrilenian property developers, is that the municipal authorities are not responding to this increase in demand by offering new plots of land. “The available buildable land will have been used up in three or four years and no one is performing the repositioning that is necessary for after that period”. (…).

The main consequence of the shortage of raw material in the hands of property developers “is a significant rise in the prices of plots, which end up being passed on in the form of more expensive house prices”, explains Población (…).

In this context, Corral also stressed the need to promote new urban developments as “generators of homes for the most disadvantaged households, as shown by the more than 2,200 social housing units included in Madrid Nuevo Norte (…).

Original story: El Mundo (by Rubén G. López)

Translation: Carmel Drake

Ministry of Development: Urban Land Prices Rose By 11.7% In Q2

25 September 2017 – Eje Prime

The average price of urban land is continuing to soar quarter after quarter. The average price rose by 11.7% in cities with more than 50,000 inhabitants during the second quarter of 2017, according to statistics from the Ministry of Development. This increase means that the price of such land now stands at €326.3, the highest level since Q3 2015 (€331.1).

At the national level, average urban land prices have risen by 1.8%, to €166.4. With respect to the first quarter, the QoQ variation was slightly negative, with a decrease of 0.7%.

The highest average prices were recorded in the provinces of Granada (€510/m2); Barcelona (€491.5/m2) and the Balearic Islands (€321.5/m2). The lowest prices were observed in the provinces of Albacete, Ourense and Tarragona (€60/m2, €117.6/m2 and €130.6/m2, respectively).

Meanwhile, the number of transactions undertaken during the second quarter of 2017 amounted to 5,998, up by 36.3% compared to Q1 2017, when they amounted to 4,401, and up by 35.2% compared to Q2 2016, when 4,435 plots were sold.

In total, the total surface area sold during the second quarter of 2017 amounted to 7.2 million m2, for a total value of €1,073.8 million. With respect to the second quarter of 2016, the YoY variations represent 28.6% more in terms of surface area sold and 43.0% less in terms of their value.

Original story: Eje Prime

Translation: Carmel Drake