Private Companies Start Building VPO Rental Homes Due to Lack of Public Resources

11 June 2019 – Idealista

Housing and the need for public-private partnerships to build affordable homes was one of the hot topics during the recent election campaigns. But the reality is that the public administrations do not have the resources to fund any substantial residential programs.

In addition, Spain has traditionally been a country of homeowners and so most of the few affordable homes that the state has been building have been sold rather than put up for rent. This represents a major problem for the growing population of renters in the country, which some estimate currently account for 23% of total demand, compared with the European average of 34%. The Bank of Spain’s official figure for 2017 was 16%. Regardless, private companies are entering the market to fill the gap.

One such example is Azora, which has been managing social housing for rent since 2004 through its fund Lazora. It estimates that Spain needs 2.5 million mostly affordable rental homes to bring it in line with the European average. That would require an investment of approximately €300 billion over the next few years, a mammoth figure.

Azora actually sold its Lazora portfolio, containing almost 7,000 homes (private and social) to CBRE and Madison in 2018. They committed to continue investing capital in the sector and have already committed more than €200 million in various projects to build 1,200 more homes.

Azora still manages almost 14,000 social and private rental homes across the country and has recently been joined in the sector by the property developer AQ Acentor, the real estate arm of the German fund Aquila Capital. Specifically, AQ Acentor is planning to build 1,450 VPO rental homes in Villaverde, Barcelona, Valencia and Málaga. The numbers are not huge but they will go some way to plugging the gap.

Meanwhile, in the public sector, according to data from the Ministry of Development, 5,167 VPO homes were built in 2018, of which just 353 (6.8%) were dedicated to rental. In 2017, 4,938 VPO homes were constructed, the lowest absolute number since records began, of which 355 (7.1%) were dedicated to rental. Madrid accounted for most of the new VPO homes in 2018 (2,418, of which just 78 were dedicated to rental).

Azora considers that more institutional investment is required to make up for the housing deficit and that “to attract such capital, we need solutions and policies that promote and facilitate the construction of new rental homes”. It remains to be seen whether the politicians can put their ideological differences aside and come up with a clear and consensual housing policy for the benefit of the country at large.

Original story: Idealista (by P. Martínez-Ameida & Ana P. Alarcos)

Translation/Summary: Carmel Drake

Ministry of Development Reactivates the Logistics Area in Puerto Seco de Antequera

22 April 2019 – Mis Oficinas

The Ministry of Development is reactivating its plans for a logistics area in Puerto Seco de Antequera. The project was first announced ten years ago but has been suspended on several occasions since then.

The first phase of the project will span 102 hectares of mainly logistics space and will cost more than €37 million to develop. It will include the construction of an electrical substation and an intermodal terminal between the railway and the road.

The second phase will involve the expansion of the logistics area by an additional 232 hectares. In total, the project will result in the creation of 7,000 jobs.

Original story: Mis Oficinas 

Translation/Summary: Carmel Drake

Ministry of Development: Real Estate Activity is Non-Existent in 40+ Spanish Municipalities

21 April 2019 – El Confidencial

There is barely any real estate activity in more than 100 Spanish municipalities with more than 10,000 inhabitants. In 42, not a single building permit to construct a new home was issued in 2018. Not one. And in another 100, fewer than five permits were issued, whilst in 200, fewer than ten permits were issued.

That is according to data from the Ministry of Development, which reveals the extent of the disparity between the booming areas of Madrid, Barcelona, the Costa del Sol and the islands, amongst others, and the complete dearth of activity in other parts of the country.

Asturias and Murcia are the autonomous regions that are suffering the most where construction activity has been all but suspended. The driving factors are multiple, but a lack of demand is key. Moreover, even where there is buyer interest, there is not enough buildable land to develop, construction costs are high, financing is hard to come by and qualified labour is scarce.

Even at the national level, although 100,000 new home permits were issued last year, that figure is still eight times lower than it was in 2006, when 865,561 new build permits were awarded. And although the experts agree that a healthy market will never see a return to the pre-crisis figures, the volume of new home construction is still well below the 150,000-200,000 benchmark that property developers consider sustainable.

By contrast, in certain parts of the Community of Madrid, lots more building permits were granted last year than during the height of the boom, for example, in Tres Cantos (657 in 2018 compared with 6 in 2006) and Rivas Vaciamadrid (1,345 compared with 831 twelve years ago). There was also a lot of activity in Boadilla del Monte, San Sebastián de los Reyes and Alcobendas. Beyond the capital, more new build permits were granted last year than in 2006 in Pamplona, Lasarte and Santiago de Compostela, amongst others.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

The Market for Land Makes a Come Back in Valencia

25 March 2019 – El Mundo

The stars are aligning in the real estate sector in Valencia. Investors and developers alike are keen to get there hands on the raw material there – land. Activity in the segment is still well below its peak of the boom but the recovery is now well underway.

According to the latest figures from the Ministry of Development, during 2018, the number of land sale operations increased, as did the total surface area sold and the total amount of the transactions. The market for land is still on the rise, even though the average prices being paid for plots has decreased.

In this way, 1,884 land sales were completed in the Community of Valencia during 2018, up by 11.1% YoY, when 1,687 sales were recorded. That is the highest figure since just before real estate bubble burst – 3,199 operations were recorded across the three provinces in 2007.

In total, 3.9 million m2 of land was sold last year, compared with 3.35 million m2 in 2017. Not since 2007 has more land been transacted in a single year – 5.4 million m2 of land was sold in 2007.

In total, investment in urban land amounted to €373.5 million last year, compared to €345.7 million the previous year. That is the highest figure since 2009 when €512 million was invested.

Moreover, the outlook for the year ahead is positive. More and larger land purchases are forecast, although the stock of plots with the most potential is starting to run out.

In terms of prices, the average price per square metre fell by 18% in Q4 2018 in YoY terms to €149.6/m2. Nevertheless, the average price rose by 21.7% to €217.9/m2 in those municipalities with more than 50,000 inhabitants in Alicante. That price compares very favourably with the average for municipalities with more than 50,000 inhabitants across the rest of Spain, where prices increased by 6.3% to €292/m2.

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

Translation/Summary: Carmel Drake

Property Developers are Building 18,000+ Homes in Andalucía

18 March 2019 – ABC Sevilla

The real estate market in Andalucía is booming, and in a good way. According to the latest figures from the Ministry of Development, 12,363 permits were granted in 2017 for the construction of new homes, compared with the record before the burst of the bubble of 156,483 in 2006. Construction activity is responding to real demand in the market and is featuring some new players that are planning to build thousands of new homes in the region over the next three years.

Two markets

The investors, which include international funds and local property developers alike, differentiate between two markets – the eastern (Málaga) and the western (Sevilla) – the former accounts for 70% of new developments.

Aedas Homes currently leads the regional ranking by number of homes planned and investments forecast in the autonomous region. The property developer controlled by the US fund Castlelake plans to invest almost €1.3 billion in the region in the construction of 5,150 homes, primarily in the provinces of Málaga (2,600 homes) and Sevilla (1,800).

It is followed by Neinor Homes, which owns a portfolio of 29 plots for the construction of 3,628 homes; Metrovacesa, which has 2,300 homes in its Andalucían portfolio at various stages of completion; and Vía Célere, controlled by another US fund Värde, which is building 1,975 homes across 21 developments.

Meanwhile, ASG Homes has buildable land in Andalucía for the construction of 1,700 homes; Habitat Inmobiliaria, owned by the US investment fund Bain Capital, is working on the construction of 15 developments containing 1,621 homes; and the Sevillan property developer Insur is working on 17 residential developments comprising 1,136 homes at various stages of completion.

Finally, Q21 Real Estate, the property developer created from the alliance of the US fund Baupost and the owners of the former Pinar group, is also constructing almost 500 homes in the region, bringing the total number of homes under construction to more than 18,000.

Original story: ABC Sevilla (by Encarna Freire)

Translation: Carmel Drake

Ministry of Development: 100,733 New Build Permits were Granted in 2018

28 February 2019 – Idealista

In 2018, 100,722 building permits were granted to construct new homes, 25% more than a year earlier; a figure not seen since 2009, when 110,849 permits were granted, according to data from the Ministry of Development. Of the total figure, 79,453 were granted to build blocks of flats and 21,254 to build houses.

In this way, building permits have now recorded five consecutive years of increases. In 2013, they hit a historical low (34,288 units), a figure that represented a decline of 96% from the peak year of 2006 when 865,561 permits were granted.

Despite the good results in 2018, the construction sector considers that a healthy market is one that is capable of generating around 150,000 new work permits per year.

Why is it so hard to build 150,000 homes per year?

Daniel Cuervo, Director at Asprima, points to several factors:

– Building permits take a long time to be granted (…). In general, Town Halls take 14 months to grant a licence, on average (…).

– Financing has returned to the real estate sector, but it is not immediate (…).

– Urban planning in Spain is paralysed due to the high level of legal uncertainty (…).

Meanwhile, Daniel del Pozo, Director at Idealista/News, provides some additional explanations:

– Lack of awareness about how the market works and of the real demand by the Public Administration (…).

– The main land portfolios are owned by the banks, Sareb and the funds (…) which are all waiting for prices to rise before releasing the most sought-after plots.

– The political uncertainty, the threats of interventionalism and/or changes in regulation in the real estate market also play their role (…).

Original story: Idealista 

Translation: Carmel Drake

INE: Mortgage Lending Rose by 16.5% YoY to €42.7bn in 2018

27 February 2019 – La Vanguardia

Last year, 345,186 mortgages to purchase homes were signed in Spain, up by 10.3% compared to 2017, but the banks again refrained from fully opening the financing tap: the average loan amount increased by just 5.6% to €123,727, according to data presented on Wednesday by Spain’s National Institute of Statistics (INE).

The growth in the average amount is only slightly higher than the increase in house prices (which rose by 3.9% on average last year, according to data from the Ministry of Development, albeit by much more in the large cities and their metropolitan areas, where the bulk of demand is concentrated). “The banks are adopting a conservative strategy, that’s for sure”, said Oscar Gorgues, Manager of the Chamber of Urban Property in Barcelona – “because they are still very mindful of the excesses of the boom years. For that reason too, we can say that the real estate market is healthy and there is no risk of a bubble”.

The data from INE shows that after five years of recovery in the real estate sector, the number of mortgages granted is still 71% lower than the 1.24 million mortgages granted by the banks in 2007, the last year before the burst of the real estate bubble.

According to real estate firms, the caution on the part of the banks means that the main factor causing families, and especially young people, to rent, is the fact that it is impossible for them to obtain a mortgage loan. By contrast, according to the real estate firm Forcadell, around one third of homes are now purchased without a mortgage, in operations undertaken by investors (…).

According to data from INE, the value of all of the new mortgages constituted to purchase homes last year amounted to €42.7 billion, up by 16.5% compared to 2017, due to the combined effect of increases in the number of operations and the average loan amount (…).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

Ministry of Development: Ibiza was Spain’s 2nd Most Expensive City for Buying a Home in 2018

22 February 2019 – Eje Prime

Change is afoot in the ranking of Spain’s most expensive cities for housing, and Ibiza is rising fast. In 2018, the Balearic city was ranked as the second most expensive place in Spain to buy a home, with an average value per square metre of €3,537.40. In this way, in just one year, Ibiza has surpassed Barcelona, Sant Cugat del Vallès and Santa Eulalia del Río to be ranked in second position, just behind San Sebastián.

According to data from the Ministry of Development published yesterday, house prices in Ibiza rose by 20.4% in 2018, compared with an increase of 4.5% in the case of San Sebastián. Meanwhile, prices per square metre in Barcelona rose by 10.1% in 2018; by 8.8% in Sant Cugat; and by 7.3% in Santa Eulalia del Rio.

Madrid retained its position as the sixth most expensive city for buying a home in 2018 with a price per square metre of €3,103.80 and a YoY increase of 8.5%. It was followed by Pozuelo de Alarcón, which exceeded Majadahonda, Getxo and Calvià in 2018 with a price rise of 20.4%, the same as in Ibiza.

Only three municipalities of the twenty most expensive in Spain saw their prices decrease in 2018 (Getxo, Calvià and Leioa) with reductions of 1%, 4.6% and 0.1%, respectively. On the other hand, Avilés, Narón and Alcantarilla were the municipalities with more than 25,000 inhabitants where house prices decreased by the most in 2018, with drops of 11.6%, 8.9% and 8%, respectively.

Moreover, besides Ibiza, the Madrilenian municipality of Torrejón de Ardoz saw its prices rise by the most in 2018, also up by 20.4%. It was followed by rises of 19.8% in Ciutadella de Menorca, 19.6% in Esplugues de Llobregat and 18.9% in Leganés.

House prices in many other places also rose by a lot more than the national average, of 3.9%, including in Móstoles (18.5%), Cornellà de Lloregat and Palencia, with rises of 18.2%, and Martorell (17.4%).

Original story: Eje Prime (by C. de Angelis)

Translation: Carmel Drake

Foreigners are Driving the Housing Market in Spain

31 January 2019 – Eje Prime

Foreigners are boosting house sales in Spain. The number of transactions undertaken by foreign residents in Spain is on track to set a new record, with almost 70,000 sales during the 9 months to September 2018, according to the latest data available from the Ministry of Development.

Since 2010, the purchase of homes by foreigners has more than tripled, from just 21,576 transactions during the first nine months of that year. The major boost came with the approval of the so-called golden visa in 2013, a measure to facilitate visas for real estate investments in Spain amounting to more than €500,000.

Since then, real estate investment by foreigners has doubled. The País Vasco, Cataluña and Castilla-La Mancha have been the regions where transactions have been boosted by the most since then, with multiples of six, five and four, respectively.

In the last year, the drivers have been the sun and the beach, and the central area, with double-digit increases in Murcia and the Castillas. Meanwhile, on the islands and in Cataluña, the number of operations involving foreigners has decreased.

The promise of the golden visa

(…). The PP Government introduced the golden visa model in Spain, in which thirteen member states of the European Union currently participate (…).

In fact, it is the most used element of that legislation: until October last year, it was used by 546 people, according to the Ministry of Foreign Affairs, almost equalling the figure for the whole of 2017, when 563 residency permits were granted to foreigners acquiring property for more than €500,000.

At the end of last year, the European Parliament started to place the focus on this visa policy, warning that it was opening the door to crimes such as tax evasion, corruption and money laundering.

In a report, compiled by the MEPs Ludek Niedermayer (Europe’s Partido Popular) and Jeppe Kofod (Socialists and Democrats), the European Parliament warned that the economic benefits of such programs do not compensate the “serious risks” of money laundering and tax evasion, and called on the Member States to withdraw from these types of schemes “as soon as possible”.

Original story: Eje Prime (by C. De Angelis)

Translation: Carmel Drake

Neinor & Vía Célere Lead the Ranking of Forecast House Deliveries for 2019

28 January 2019 – Cinco Días

Year after year, the new major players in the house construction sector are seeing the numbers in their growth plans increase. During 2019, the largest property developers created since 2015, and some of those reborn from the ashes during this latest upwards cycle, are expected to approach their cruising speed, above all, the listed companies Neinor, Aedas and Metrovacesa, which have been called to lead the residential construction sector together with Vía Célere. Even so, the sector is still very fragmented with lots of small companies.

Neinor Homes and Vía Célere have become the two entities with the largest number of home deliveries this year. In both cases, 2,000 clients will receive the keys to their homes, according to figures provided to Cinco Días by around twenty property developers. In these forecasts, the companies have detailed three concepts for their plans for 2019: homes that they will launch onto the market, homes that they will start work on and forecast deliveries.

Neinor Homes, created in 2015, and led by Juan Velayos (…) expects to start work on 3,000 homes this year, coming close to the cruising speed that it defined during its IPO, and it will start to market another 2,000 units.

Meanwhile, Vía Célere, controlled by the US fund Värde Partners, is in the middle of integrating the assets of Aelca, the other property developer owned by Värde, which has now emptied its portfolio (…). It is the only one of the large players that is not yet listed on the stock market; its plans in that regard were postponed last year.

The listed firm Aedas, also created in 2017 with land from another US fund, in that case, Castlelake, is also perceiving an upwards turn in its numbers. This year, it will hand over 1,055 homes, start marketing 2,500 homes and start building 3,000 homes, just two years after first appearing on the stage, with David Martínez as its CEO.

Meanwhile, Metrovacesa, the other large listed company, controlled by Santander (and in which BBVA holds a minority stake), clearly leads the business plans, with up to 4,500 homes to be newly marketed and whose construction will be launched. This one-hundred-year-old real estate company, which was cleaned up by the banks following the crisis, launched its new project in 2017 with Jorge Pérez de Leza, from Grupo Lar, as the CEO.

In terms of those entities backed by funds, the rescued firm Habitat also stands out, reactivated last year by Bain Capital, and which is planning to market 3,000 homes this year. Similarly, Cerberus took control of Inmoglacier in 2017 (…). That firm declined to provide its forecasts to this newspaper, but it is also set to play a significant role, given that it has become one of the real estate arms of the US fund, one of the most active in the purchase of assets from the banks and which also owns Haya Real Estate as its servicer.

The group of twenty-odd companies consulted will hand over almost 16,000 homes this year, will start work on 34,000 units and will begin marketing another 30,000 properties. These figures reflect the enormous fragmentation in the sector, which in the last 12 months has started 103,000 homes in total, according to figures from the Ministry of Development as at October 2018.

Small specialist property developers still carry a lot of weight, unlike in other countries where large players exist. Moreover, even though the rate of residential construction has taken off since 2014, it is still well below the peak of 2006 when 865,000 building permits were granted.

In terms of the new players also boosted by the international funds, they include other developers with a high rate of house sales: AQ Acentor (owned by the German fund Aquila), which is going to put 1,700 homes up for sale; Kronos Homes (backed by several European and US investors), which will market another 1,600 homes; and ASG Homes (backed by the British firm ActivumSG), which plans to add another 1,000 homes.

In terms of the survivors of the crisis, Amenabar stands out, the Gipuzkoan company, which expects to start work on 3,608 homes next year and to hand over 1,245 units. Another of the stalwarts is the Madrilenian firm Pryconsa, owned by the Colomer family, which has already reached a high number in terms of house starts: 1,285. In more modest terms, other important firms include the Basque entity Inbisa and the new entity Áurea Homes, the residential subsidiary of the Navarran construction group ACR (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake