FAI: More than 8,000 Mortgages Paralysed by Supreme Court Ruling

26 October 2018 – Eje Prime

Real estate companies are warning of the impact of the legal battle over mortgages. The Federation of Real Estate Associations (FAI) estimates that more than 8,000 mortgage operations have been paralysed across Spain as a result of the decision taken by the Supreme Court that it should be the banks that pay the Documentation Registration Tax (AJD).

Similarly, the body has warned of the consequences generated by the delays and has asked entities to act “responsibly” towards their clients, given that “they may incur breaches in any “contratos de arras” they have already signed because of the delays in the signing of the mortgage loans”, according to Europa Press.

In this sense, the President of the FAI, Nora García Donet, stated that in light of the “uncertainty” generated, “the banks have delayed more than one third of the signings planned for the coming days”.

The FAI, constituted in March 2013, comprises twenty regional and local real estate associations from all over Spain. Currently, the entity groups together more than 850 real estate agencies and 3,730 professionals.

Original story: Eje Prime

Translation: Carmel Drake

Socimi Elix VRS to Acquire 4 Assets in Barcelona for €14M

23 October 2018 – Idealista

The Socimis are continuing to grow their portfolios with the acquisition of new assets. Following the purchase of four residential buildings in Barcelona for €34 million, Elix VRS, the Socimi owned by the property developer Elix and the funds KKR and Altamar, is finalising the purchase of new assets amounting to €14 million, as explained by the group in a statement filed with the Alternative Investment Market (MAB).

The company has carried out an update of its forecasts as a result of the upcoming purchase of four assets in Barcelona involving an investment of €14 million. In this way, the company is planning to grow revenues to €578,000 in 2018 and to €1,809,000 in 2019, which represents an almost tripling of the figures following the update. “These forecasts have been prepared on the basis of prudent criteria, taking into account only the assets in the portfolio and the assets committed contractually”, explain sources at the group.

The four residential buildings that Elix’s Socimi purchased are located in the Catalan capital, in the Born neighbourhood, on Calle Comerç and Calle Ribera, as well as on Avenida Gran Vía de les Corts Catalanes and Calle Notariat. The acquisition was financed in part (35%) using the company’s own funds and in part (65%) using a mortgage loan secured by the four assets granted by Caixabank.

In just one year, the Socimi owned by KKR, Elix and Altamar has launched 25 projects (six new builds and 19 renovations) in Madrid and Barcelona. In this way, the group is planning to launch more than 300 homes onto the market.

The plans for Elix VRS involve debuting the entity on the stock market in 2019 and purchasing around forty buildings over three years, which it will subject to a comprehensive renovation before placing the newly renovated homes on the rental market.

Original story: Idealista (by Custodio Pareja)

Translation: Carmel Drake

Tinsa: House Prices Rose by 15.6% YoY in Madrid in Q3

9 October 2018 – ABC

Whilst most Spanish provincial capitals have reached what the experts define as “a turning point” with the stabilisation of house prices, Madrid is still the most dynamic city in the whole country. It is leading the house price rises once again with increases of 15.6% in Q3 with respect to the third quarter of last year. That rise in value reflects the tensions that demand for homes in the Spanish capital is exerting on certain areas. The scarce supply of new build homes is not helping to balance a panorama where the pressure on house prices is now moving towards the peripheral neighbourhoods. Some areas are recording price increases of more than 20%, well above those seen even in the traditionally most sought-after districts. All of the districts, without exception, have seen an increase in their price per square metre. Of the 21, only three saw price rises in the single-digits – Usera, Chamartín and Villa de Vallecas-. In this context, the average price in the Spanish capital now amounts to €2,876/m2.

That is according to the latest local market report on finished housing – new and second hand – published by the appraisal company Tinsa at the end of the third quarter. In it, Madrid ranks as the third most expensive provincial capital to buy a home after Barcelona (€3,383/m2) and San Sebastián (€3,151/m2), both with more discrete YoY growth rates. Despite the warning that the consecutive increases generate, a priori, the capital is still a long way from the maximums that it reached in the third quarter of 2007 (27.6% lower), which marked the start of the crisis. The real estate situation has changed little since the middle of the year, although the trends that some experts, such as Pedro Soria, Commercial Director at Tinsa, were indicating in June have been confirmed: high prices in the city centre are pushing buyers to focus outside of the M-30.

The furore to purchase properties is still defined by a striking fact: it only takes 2.6 months to sell a property in Madrid at the moment. That period is still the lowest in Spain, even though it increased by one tenth with respect to the second quarter. Even with property developer activity below what the sector considers healthy for the real estate sector, demand for second-hand products is extremely high. And it is not exactly a favourable scenario for buyers. One piece of evidence that a major problem is starting to emerge in terms of access to housing in the capital is in the financial effort that families are having to make to live in Madrid. This has exceeded what is considered to be the “sustainable” limit. Those that have purchased a home in the last quarter are having to spend 26.1% of their gross household income (before taxes and other deductions) to service the first year of their mortgages. The national average stands at 17.2%. The experts consider that the red line, which has always recommended spending no more than one quarter of a household’s income on the mortgage, is now being passed. In districts such as Arganzuela, which has become one of the most attractive areas of the capital, household’s financial efforts now amount to 27.6% and the figure reaches 41.5% in the case of Salamanca neighbourhood. Once again, house prices in that area are the most expensive in Spain, at €4,762/m2. Chamberi is ranked in third place, after the Barcelona neighbourhood of Sarrià-Sant Gervasi, with €4,521/m2 (…).

The most expensive municipalities

The municipalities that generate the most interest include Pozuelo de Alarcón, which registers the highest price of €3,017/m2, followed by Alcobendas, at €2,847/m2 and Majadahonda, at €2,537/m2. By contrast, the municipalities of Arroyomolinos and Aranjuez registered the lowest prices: €1,337/m2 and €1,446/m2, respectively, of those analysed by the appraisal company (…).

Original story: ABC (by Adrián Delgado)

Translation: Carmel Drake

VBare Acquires Residential Building in Central Madrid for €10.5M

4 October 2018 – Eje Prime

VBare is on a roll. The Socimi has purchased a residential property in Madrid for €10.5 million. It is the largest investment made by the company in a single asset to date, according to a statement filed with the Alternative Investment Market (MAB).

The building, located at number 20 Calle Luchana, has a surface area of 3,285 m2. VBare forecasts that the net yield will amount to 4% once the renovation work has been completed and the property has been leased.

The company has subscribed a mortgage loan amounting to €5.25 million, granted by Banca Pueyo. The rest of the purchase price was financed using own funds.

VBare is a real estate investment vehicle specialising in the acquisition and management of residential assets for their rental. The company, which has been listed on the MAB since 23 December 2016, was created in March 2015 and currently owns a portfolio containing 272 assets.

In July, the Socimi made its debut in Málaga with the acquisition of a block of residential assets for €1.35 million. That operation formed part of the company’s growth plan after it carried out a capital increase amounting to €3.2 million in June.

Original story: Eje Prime 

Translation: Carmel Drake

Ministry of Development: House Sales Return to Pre-Crisis Levels

1 October 2018 – Voz Pópuli

There is no doubt about it. House sales have been reactivated. The clearest evidence yet is the latest data published by the Ministry of Development. According to the figure, in the second quarter of the year, more than 160,000 homes were sold, which represents an increase of 11.5% YoY. That volume has not been seen since the second quarter of 2007, before the outbreak of the financial crisis, when 227,000 units were sold.

Over the last twelve months, between July 2017 and June 2018, almost 560,000 homes were sold, up by 12.1% compared to the previous twelve months.

All of the autonomous regions recorded increases – in the second quarter – with the exception of the Spanish islands and Ceuta and Melilla. Nevertheless, based on the cumulative figures for the year, all recorded positive results. By municipality, Madrid registered the most sales during the second quarter, with 12,949.

In terms of home type, second-hand homes continued to dominate, accounting for 91% of the total. New home transactions only accounted for 8.5% of all house sales.

Mortgages

After a decrease in March, July brought with it the fourth consecutive monthly YoY increase in the field of mortgages, which exceeded double digits once again. Mortgages recorded three months of decreases with respect to the interest rate, whilst on an annual basis, they have now accumulated a decrease of more than 6%, making it more attractive to take out credit, according to explanations provided by the Head of Research at pisos.com, Ferran Font.

The signing of fixed-rate mortgages also returned to just above the 40% threshold in July, which has only happened twice so far during 2018.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

Savills & HomeAway: Spain is the Most Attractive Market for Buying a Second Home

29 September 2018 – Finanzas.com

According to an international study compiled by the real estate consultancy Savills and HomeAwayTM, a global expert platform for holiday rentals, Spain is the most attractive destination for investing in a second home, according to 19.3% of those surveyed, followed by Portugal (13.2%) and France (13.1) in third place.

Spain is attractive for overseas investors

According to the survey, 44% of owners of second residences in Spain are foreigners. The main countries of origin of those owners are the United Kingdom (19%), Germany (12%), The Netherlands (4%), France (3%) and Belgium (2%). The remaining 56% of owners are Spanish.

The main areas where second homes are located in Spain include the Canary Islands (12%), the Costa del Sol (9%) and the Balearic Islands (9%).

Where are they buying homes?

People’s behaviour when it comes to acquiring a second home is different depending on where the buyers come from. The study reveals that British and Dutch owners are those who buy the most second homes outside of their own countries, nevertheless, Spaniards, Italians and Portuguese citizens tend to choose their own countries as the destination for acquiring second homes (around 95%).

Second homes: for personal use and to rent

According to the study, 28% of Spanish owners cover some of their expenses with revenues generated from the rental of their properties and 38% obtain a profit.

Summary of second homes in Spain

The average price of the second homes acquired last year by the Spanish owners surveyed amounted to €245,000, 22% lower than the average acquisition price ten years ago. Moreover, 28% of those surveyed confirmed that they personally financed the acquisition of their second home, 52% acquired it using a mortgage and 8% inherited or were gifted the property.

In the same vein, Spanish owners of second homes obtain an annual income of €12,000 (from their properties) and they rent them out for 19 weeks a year, on average. 43% of owners had the same number of reservations in recent months as they did during the same period a year ago, 41% had more reservations and 16% had fewer.

Second homes, with some specific characteristics

Two-bedroom apartments are the most popular types of second home for the Spanish owners surveyed.

Features that owners are looking for when it comes to buying a second home include: proximity to restaurants and bars (88%), a balcony or terrace (88%) and proximity to the supermarket and shops.

According to Juan Carlos Fernández, Director General for Southern Europe at HomeAway: “The fact that Spain is the most attractive destination for foreigners looking to buy a second home indicates that Spain is a robust market that is very attractive to investors and that is something that we must take care of and promote”.

Owner profile

  • Average age when they acquired the property, in 2017: 51 years old
  • Average number of weeks leased during the year: 19 weeks
  • Typical property type: 2-bedroom apartment
  • Average acquisition price in 2017: €245,000.

Original story: Finanzas.com

Translation: Carmel Drake

Servihabitat: Spain’s Housing Market Continues on its Positive Trajectory

24 July 2018 – Eje Prime

The housing market in Spain is going to continue with positive figures across all areas in 2018. That is according to a report from Servihabitat, which indicates that prices are going to continue to rise this year, up by 5.4%; operations are going to soar, with a leap of 24%; and new build starts are going to rise by 16.6% (all figures compared to last year).

According to the report, these increases respond to a residential market that “is progressing with clear signs of consolidation”, which is explained by factors such as an improvement in consumer confidence, the containment of unemployment and the positive evolution of companies’ turnover.

These elements “are encouraging the start of housing projects and configuring an expansive cycle”. With a special focus on the largest populations in Spain, such as Madrid, Barcelona, Málaga, Valencia and Sevilla, in the case of homes for regular use, and on regions such as Galicia, La Rioja, the Community of Valencia and the Canary Islands, the number of new home starts will rise by 16.6% this year to 93,895 units.

Meanwhile, the number of finished homes will rise by 15.5% during the course of this year, according to Servihabitat’s forecasts, with a total of 63,744 homes delivered. Despite that, the pull of demand will reduce the new build stock by 4% to 454,939 homes, with a greater reserve in the communities of Cataluña, the Community of Valencia and Andalucía (the three account for 49% of the total stock).

The second major increase will be seen in the number of transactions, in other words, the sale of homes signed at the notaries’ offices. According to the report, the year will close with a total of 669,739 transactions subscribed, up by 24.3% compared to 2017.

Macroeconomic conditions, together with opening up of the financial sector to the granting of mortgages and demand for property investment (thanks to the returns that the rental market is offering) are the three main drivers of demand, which have reduced the average sales period for a normal home to 6.6 months.

Finally, the evolution of supply and demand will lead to a rise in house prices once again this year, up by 5.4%, compared with an increase of 6.2% with respect to the previous year.

Prices are expected to grow by the most in the Community of Madrid, with a forecast increase of 11.5%; followed by Cataluña, 9.6%; the Balearic Islands, 8%; and País Vasco, with an expected increase of 5.2%. By contrast, prices are forecast to rise by less than 1% in the autonomous regions of Extremadura and Castilla-La Mancha in 2018.

The report also reflects the opinions of the real estate agents who form part of Servihabitat’s own network of branches and its collaborating agents. In particular, 64.2% of that sample believes that the price of regular homes (primary residences) will remain stable in 2018, compared with 33.2% who think that they will rise and just 2.6% who consider that prices will fall. In the case of holiday homes, the dispersion is somewhat greater: 34% forecast that prices will rise this year; 62.6% think they will remain stable and 3.4% believe that they will fall.

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

Translation: Carmel Drake

Notaries: House Sales Rose by 7.6% in Q1 2018

16 July 2018 – Eje Prime

There has been a slight cooling off in terms of residential transactions. House sales rose by just 7.6% during the first quarter of 2018, representing a “small deceleration” in YoY growth with respect to previous quarters, which have been exceeding 10%, according to the General Council of Notaries.

House transactions rose in the majority of the autonomous regions, led by La Rioja, with an increase of 22.6%. It was followed by Murcia (+20.9%) and the Community of Valencia (+18.5%). At the opposite end of the spectrum were the Balearic Islands (-8.1%), the Canary Islands (-2.4%) and Extremadura (-1.2%).

As with the volume of operations, prices also showed signs of a decelerating trend, although they did rise by 1.4% on average. The national average price amounted to €1,377/m2, whilst in País Vasco, the Balearic Islands, Madrid, Cataluña and the Canary Islands, prices exceeded the average, at €2,208/m2, €2,157/m2, €2,146/m2, €1,646/m2 and €1,490/m2, respectively.

In addition, the sale of flats grew by 6.9% during the first quarter, somewhat lower than the increases of more than 10% seen in the previous eight quarters.

On the other hand, according to the General Council of Notaries, the “significant” increase in the number of mortgage loans to acquire homes, seen last year, continued at the national level (+10.9%) during the first quarter.

Original story: Eje Prime

Translation: Carmel Drake

Ibiza’s Real Estate Market is a “World of its Own”

11 July 2018 – Diario de Ibiza

The real estate market in Ibiza is not encouraging (for the majority): the available stock of homes “is residual”, the majority of homes bought there are rented out, the peak prices reached in 2017 have been exceeded…and all of this is being compounded by a distinct shortage of land. All in all, it is a troubling scenario for those wishing to live on the island all year round.

Tinsa’s Regional Director for the East and South of Spain, José Antonio López, warned on Wednesday that the lack of land, combined with the demand for housing “is generating a dangerous melting pot” in the Balearic Islands. As such, he is asking the administration to get involved to facilitate the availability of land for property developers.

Those were the words used by López in response to a question from participants at a Proinba-Tinsa real estate meeting held in Palma on Wednesday, where the situation of the residential real estate market was discussed, in particular, the market on the coast.

López warned that this situation may “lead to serious problems” on the islands, where “young people need primary residences” and they “need options”. “For this reason, land is required, and the administration needs to get involved”, said Tinsa’s Regional Director, before adding that the supply of urban land with building permission is “almost non-existent”.

What’s more, “the supply is going to decrease” and with the “surplus demand”, we are seeing “dangerous growth that cannot be met”. In this context, “rental is not an option because those circumstances are also being taken advantage of”. In fact, according to data from Tinsa, in areas such as Ibiza (town), many people are buying to let (…).

Based on data from Tinsa, the average monthly mortgage payment on the Balearic Islands is very high, €792, well above the average for Spain as a whole, €543/month. The financial effort being made by families on the islands is also greater, given that they spent 22% of their household income on mortgages during the first year, compared with the national average of 16.8%.

Ibiza and Formentera set a new record

Of the 12 coastal municipalities analysed on the Balearic Islands, Sóller leads the increase in prices over the last year, with price rises of 21%. Ibiza and Formentera towns came in close behind, with 17.8%, followed by Santa Margalida (17.7%), Palma (14.7%) and Llucmajor (13.8%).

Palma is one of the top five most expensive capitals in Spain, with an average price of €1,951/m2, and in the last year, its growing trend has exceeded the average for the autonomous region.

By contrast, the municipalities that have grown by the least are Sant Lluís and Mahón (3.7%), Ciutadella (4.5%) and Manacor (7.1%) (…).

Ibiza is “recovering too quickly”

According to data from Tinsa, the real estate sector on the coast in Mallorca is “clearly recovering”, whilst in Menorca, there are “signs of recovery” and in the case of Ibiza, there may even be an “excessive recovery”, in López’s opinion.

Prices have been “rising rapidly” on the white island, on a consistent basis for the last few years, and the YoY variation is well above the average. In fact, current prices have already exceeded the maximums seen in 2007.

On the basis of all of these indicators, the Regional Director at Tinsa said that Ibiza’s real estate market could be considered “a world of its own, set apart from other islands and provinces” (…).

Original story: Diario de Ibiza (by E.P.)

Translation: Carmel Drake

Galil Capital Raises Financing Worth €4.5M to Continue its Growth

12 July 2018 – Eje Prime

A larger cushion for Galil Capital’s growth plans. The Socimi has signed a double operation to raise more funds. On the one hand, the company has signed a bank loan amounting to €2.5 million and, on the other hand, it has agreed a €2 million loan with its majority shareholder. “With these operations, the company is strengthening its financial capability to fulfil its strategy of new real estate acquisitions and capex projects”, say sources at the company.

The mortgage loan amounting to €2.5 million will have to be repaid in 2038 and has a one-year (repayment) grace period. The agreed interest rate amounts to 2.1% until July 2019 and will revert to Euribor plus 2.1% for the remainder of the period, according to a statement filed by the company with the Alternative Investment Market (MAB). By way of collateral for the loan, Galil has granted a mortgage right over the property that it owns at number 23 Calle Bejar in Madrid.

The loan from the majority shareholder, amounting to €2 million, will have to be repaid in December 2019 and the interest rate, in that case, amounts to 3%. The company is led by Jerry Mandel, a former executive of Merrill Lynch, but the majority shareholder is Gil Avraham Shwed, who controls 54.81% of the share capital.

Galil Capital owns a portfolio comprising six properties, all of which are residential use buildings located in Madrid and Barcelona. The valuation of the six assets amounts to €31.36 million.

The Socimi’s plans when it debuted on the MAB involved carrying out two acquisitions during the course of 2018. Nevertheless, the Socimi has not undertaken any operations during the first half of the year.

The company is looking for residential buildings in Barcelona and Madrid, above all small and medium-sized buildings (with between ten and fifty assets per building), although it does not rule out investing “at least 25% of its funds in commercial assets in Madrid and Barcelona as well as in properties outside of those two cities”.

Original story: Eje Prime

Translation: Carmel Drake