Significantly Fewer Homes For A Much Smaller Population

7 March 2016 – Cinco Días

The real estate sector is preparing to undergo a comeback this year after the burst of the real estate bubble caused house prices to depreciate by 35% since 2008 and more than half of its productive fabric was destroyed. The cranes have returned, albeit, in moderation, for the time being. And the demographic projections support this caution, given that between now and 2029, Spain is expected to lose one million inhabitants.

In the face of some apparently overly optimistic estimations from certain players in the real estate sector about the evolution of the market this year, experts and other operators, such as the national trade association of property developers APCE emphasise the need for prudence and restraint when taking on new projects.

The truth is there are many reasons to be optimistic. House prices seem to have bottomed out across most of the country, sales are continuing to maintain the good tone with which they closed last year and the return of financing has resulted in a higher volume of solvent demand. If the improvement in the labour employment continues in the short and medium term, then property developers will be in no doubt that 2016 will be the year of the return of construction with figures showing the market taking off, after it lived the worst crisis of its recent history.

But, as always, there are risks and threats that cannot be ignored. The most short-term factors will be those relating to the good performance of the economy: employment, credit and interest rates are three key variables. Plus, the political climate. (…).

However, one of the variables that was critical during the previous real estate boom and which all Governments and economic agents must bear in mind is that of demographics.

At the end of this year, the National Institute of Statistics (INE) will update its long-term population projections, which it does every two years. The last update, at the end of 2014, drew devastating conclusions that the real estate market cannot ignore if it wants so avoid another phase of runaway growth, with the undesirable effects on price, supply, indebtedness, activity and employment. Thus, in 2015, INE’s first prediction was fulfilled. It was the first year during which the number of deaths exceeded the number of births, and so began the population decline that INE has forecast will happen over the next 15 years, which will amount to 1.02 million inhabitants (2.2%) in total and will amount to 5.6 million inhabitants over 50 years. In this way, there will be 45.8 million residents in Spain in 2024 and just 40.9 million in 2064.

The reduction in the population will happen as a result of this gradual increase in deaths over births, a trend which, if nobody remedies it, will become even more accentuated, above all from 2040 onwards, and which will not be mitigated even by the flow of migration. Not even considering that over the same period there will be a net positive migration balance of 2.5 million people  (the difference between immigrants who arrive in Spain and Spaniards who move overseas). The truth is that the baby boom generation, the largest in Spain’s recent history, explains to a large extent how the most prolonged period of rising prices and house sales last century was created from the end of the 1990s. (…).

Gómez-Pintado has already launched a study at APCE to calculate, in the most comprehensive way possible, what the demand for homes will be by autonomous region between now and 2017. “The purpose of the study is to establish ranges of need for housing and to avoid constructing in places where there is no demand”. (…).

Although the study has not been completed yet, Gómez-Pintado revealed that his projections will fall in the intermediate range, between the most pessimistic, i.e. those who calculate demand of just over 60,000 homes per year, and those who are convinced that almost 250,000 new homes may be built.

According to Josep Oliver, Professional of Applied Economy at the Universidad Autónoma de Barcelona, not even the pull on demand for housing from foreigners can justify the construction of 250,000 homes per year. (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Gómez-Pintado: Housing Stock Will Decrease By 25% In 2016

23 November 2015 – El Economista

After the summer, the stock of unsold homes in Spain amounted to 462,000 properties, i.e. less than half the number recorded in 2008 (1.2 million). Moreover, this supply is forecast to decrease by 24.5%, i.e. by one quarter, next year, down to 349,377 homes.

That is according to analysis published on Friday by Juan Antonio Gómez-Pintado, the President of Asprima (Madrid’s Property Developer Association) at a conference entitled “Economic outlook for 2016 and trends in the real estate sector”, organised jointly with Sociedad de Tasación.

This estimate, prepared using data from Spain’s National Institute of Statistics (INE), the real estate professorship at the Institute of Business Practice (IPE) and the Network of Qualified Real Estate Advisors (RAIC) indicates that 74% of the remaining stock is located in the Community of Valencia, Castilla-La Mancha, Andalucía and Murcia, and that next year, this percentage will decrease to 51%.

Meanwhile, the stock of empty homes in Madrid will decrease to 6,000 properties next year, whilst in Cataluña it will drop to just over 4,300 homes.

On the other hand, Gómez-Pintado, also indicated that, taking into account migration flows, the need for homes in Spain will amount to around 140,000 properties over the next few years, with Madrid playing a particularly important role, where the figure will range between 30,000 and 40,000 homes.

Original story: El Economista

Translation: Carmel Drake

Echegoyen Explains Sareb’s Performance 3 Years After Its Creation

4 November 2015 – Europa Press

Sareb was created in 2012 and has been granted a period of 15 years to manage and sell all of the assets transferred to it, almost 200,000 in total. It has until 2027 to liquidate them. (…).

Sareb’s President, Jaime Echegoyen, has acknowledged that the company’s progress is “quite slow” in terms of the divestment of assets, but he is confident that sales will be “greater” in the future. “The market is not ready and so, we have to wait”, he added.

Since its creation, Sareb has managed to reduce its volume of problem assets by €7,420 million, which in percentage terms represents 14.7% of its total assets.

Nevertheless, it is now waiting for the right moment to make further write-offs, according to the management team at the organisation.

Evolution of the portfolio

When it was created, the ‘bad bank’ received around 200,000 real estate and financial assets and 400,000 collaterals valued at €50,781 million.

Sareb stresses that its portfolio has transformed since then, with real estate assets gaining in weight, at the expense of financial assets. They explain that this is due to the transformation of the balance sheet, since the performing loans disappear from the portfolio once they have been fully repaid.

Sales to June 2015

During the first half of 2015, Sareb sold 5,345 units to retail clients, at a rate of 30 homes per day, compared with the average of 42 in 2014 as a whole. Moreover, it has seen renewed interest in land, whose sales have multiplied by 3.6x “although their financial impact is still insignificant” in terms of the company’s total revenues.

At 30 June, Sareb’s asset portfolio amounted to €43,361 million, of which 74% corresponded to loans and the remainder, 26% to real estate assets (primarily residential, land and tertiary property). (…).


The company’s activity during the first half of the year has been hampered by the entry into operation of four new ‘servicers’ or real estate managers, which has involved the migration of a “huge” volume of loans and properties from the nine originating entities to the servicers’ platforms.

According to Echegoyen, the migration has involved the transfer of all of the information and documentation relating to 162,000 assets, which represents for example, four million documents and 325,000 keys.

Since it began its journey three years ago, Sareb has reduced its volume of problem assets by €7,420 million, and has also repaid €5,400 million of the €50,700 million debt it had to issue in order to acquire the portfolios of loans and properties from the banks affected by the crisis. (…). As such, the company has reduced its perimeter by 14.7% and cut down its debt by more than 11%.

During the same period, Sareb has generated revenues amounting to €10,500 million, has sold almost 30,000 properties to individuals and has managed around 25,000 proposals from companies. Moreover, it has carried out 25 large operations to sell wholesale asset portfolios, mainly loans, an activity that represents just 20% of its turnover.

“Sareb has demonstrated its ability to divest assets and generate revenues”, says Echegoyen, who added that the model “works” and that the company “has become an international point of reference”, as well as an “example” for other countries facing similar crisis situations.

Original story: Europa Press

Translation: Carmel Drake

Barcelona, Madrid & Costa Del Sol Lead Residential Recovery

26 October 2015 – Expansión

Two terms are key in the residential market: “trend” and “it depends”. The first has a clear rationale: investment in housing is a long-term phenomenon and as such analysis should be kept as far away from the short-term as possible. The second serves as a wildcard, in one of the most fragmented markets of all. For example: Is now a good time to invest in a home? Well, “it depends” on where, because the real estate recovery is happening at, at least, two speeds.

On the one hand, we have medium-sized cities with a lot of stock and less established areas, which are weighing down on the results. On the other hand, we have the large real estate centres and main tourist destinations, which are experiencing a resurgence.

According to a survey conducted by the Network for Qualified Property Consultants (RAIC or ‘la Red de Asesores Inmobiliarios Cualificados’) for Expansión, 73.9% of the professionals in the sector think that the three main leaders of the real estate recovery will be Madrid, Barcelona and the coastal regions.

17.39% believe that the leaders of the real estate recovery will be Barcelona and Madrid only, whilst 4.35% put thier money on the cities in the north of Spain. A similar percentage back the Mediterranean Coast.

Madrid and, above all, Barcelona, are experiencing a new period of real estate expansion. House prices increased by 7.4% in Barcelona during Q3 2015 and by 0.2% in the capital, according to Tinsa.

The third most preferred region for investment, since it is recovering so well, is the Costa del Sol, which, unsurprisingly, is regarded as the “leading indicator” of the sector. When prices rise in Marbella and the surrounding area, prices in other areas tend to follow suit.

Javier García-Mateo, Partner in the Financial Advsiory team at Deloitte explains: “Crises always start on the coast, but so too do the recoveries, above all on the Costa del Sol. It was in Marbella that we first began to see price decreases in 2007”. He considers that now is a “good time” to buy on the coast of Malaga. “And the feeling there is even better than in many of the major cities. The coast is a much more volatile market, where the decreases are very acute, but so too are the increases. And demand there is European, not just Spanish”.

Foreigners are the main players. José Antonio Pérez, Professor of Real Estate at IPE, says that purchases by foreigners “are growing twice as quickly as those made by Spaniards, on the coast”. “For the most recent developments sold off-plan in the Costa del Sol and Levante, more than two thirds have been bought by citizens with 12 different nationalities; they demand and pay more, and almost always pay in cash”, added Pérez.

The coast in Alicante is starting to recover strongly too, according to Jorge Ripoll, Head of Research at Tinsa, the largest appraisal company in Spain.

The consultant José Luis Ruiz Bartolomé emphasises another major focus of the residential growth: the metropolitan areas of the large cities. “Opportunities in the labour market are clearly found in Madrid, Barcelona, Valencia and other large cities, and that is leading to migration, particularly young people, to the peripheries of these cities”, he says. “That is where homes need to be built”, he adds.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Sareb Sold 30 Properties Per Day In H1 2015

19 October 2015 – El Mundo

Sareb is continuing to push ahead with its property sales. During the first half of 2015, the so-called ‘bad bank’ sold an average of 30 properties per day through the retail channel alone, according to results published by the organisation itself.

Specifically, during the first six months of 2015, Sareb sold 5,345 properties to retail clients. These operations were primarily concentrated in Cataluña (18.2%), Valencia (13.7%), Andalucía (13.4%), Madrid (13.2%) and Murcia (10%).

Sareb’s half-year activity report also describes the initiatives the entity has launched to create value in its portfolio. In this regard, it highlights the completion of six developments where building work had been suspended, in addition to 24 other developments that have been finished since the entity’s creation.

Moreover, in this sense, Sareb has resumed work at 11 other developments, which have required an investment of €5.2 million. In addition, the company has approved the development of 13 plots of land in Andalucía, Valencia, Cataluña, Galicia and Madrid.

Sareb’s total turnover amounted to €1,629 million during the first half of 2015, 10% less than in 2014. In this way, the ‘bad bank’ closed the first half of the year with losses before write-downs of €92 million, 23% less than those recorded in 2014.

Sareb notes that “the progress of the business has been affected by the gradual entry into force of of the asset management agreements with the new servicers (Altamira Asset Management, Haya Real Estate, Servihabitat and Solvia). “The laborious migration process”, it adds, “which was concentrated during the first half of the year, has slowed down the rate of sales”.

Looking ahead to the future, Sareb expects “an improvement in turnover during the second half of the year, given the recovery in real estate activity, the signing of institutional transactions and the commercial campaigns that it expects to launch before the end of the year”. In line with the evolution of the real estate sector, Sareb’s business also exhibits a seasonal component, which involves an increase in activity during the second half of the year.

Original story: El Mundo

Translation: Carmel Drake