Valdebebas: Supreme Court Ruling Undermines Construction Plans

28 March 2016 – El Confidencial

Madrid’s High Court of Justice (TSJM) has dealt another fatal blow to the PAU real estate developments of Ciudad Aeroportuaria and Parque Valdebebas, the area in the north of the capital, where around 12,000 homes are expected to be built. According to a ruling on 4 March, the Administrative Litigation Division has partially accepted the appeal filed by the Association for Responsible Urban Development and has declared null and void the Special Land Sub-division Plan.

The decision by the First Section of the TSJM’s Administrative Litigation Division, chaired by Francisco Javier Canabal, overthrows the approval agreed by the Town Hall of Madrid on 30 October 2014, which modified the detailed plan APE 16.11 for the Ciudad Aeroportuaria and Parque Valdebebas. Although the Town Hall, now chaired by Manuela Carmena, the Community of Madrid, led by Cristina Cifuentes, and the Valdebebas Compensation Board called for the dismissal of the appeal presented in February 2015, the fact is that the ruling calls into question the urban development once again even though it had already been approved by the various administrations.

The plaintiffs allege that the Special Plan, dated 30 October 2014, modified the buildability of the area to include a large shopping centre in the development, with the allocation of space amounting to 145,794 m2 and an annex to it, measuring 36,488 m2 for other tertiary use. The Court emphasised that the Association “was right” when it said that this plan “modifies the structural organisation”, since land transformation operations inherently require an appropriate relationship between public space and collective amenities, and population density. (…).

The Town Hall and Community of Madrid must now decide whether to submit an appeal against this decision, a position that is difficult to adopt given that the new heads of Ahora Madrid and the PP in the aforementioned institutions have inherited a lawsuit fought by their predecessors, Ana Botella and Ignacio González. Moreover, they should take into account that in May the resolution is expected of a previous appeal against improprieties conducted by the Town Hall of Madrid, with the correction of the General Urban Plan (PGOU) approved in August 2013, an emergency action through which the Town Hall corrected the legality of Valdebebas, which had been suspended months earlier, following a ruling issued by the Supreme Court in September 2012.

Pryconsa, in question

But, the factor that calls everything into question, above all, are the plans of Pryconsa, which in December 2015, purchased 14 plots of land from the Valdebebas Compensation Board for €56.7 million. It acquired 92,000 m2 of buildable land, where it plans to build between 900 and 1,000 social housing properties (VPPL). Pryconsa paid just over approximately €600/m2 for the land, a price that is significantly below the €800/m2 that the Compensation Board obtained for one of the VPPL plots that it put up for auction after the summer and which was sold to the cooperative Esta Gestión 100, backed by the architect Enrique Toboada.

That operation ate up the last residential land assets owned by the Compensation Board and practically used up all of the land allocated to social housing in this urban development, given that now less than 5,000 m2 of land remains available. Moreover, following the transaction, only one third of the residential land is available in this area. The plots awarded are located next to one of the main squares in the new neighbourhood, close to the future shopping centre and JOYFE school, whose land also formed part of the assets sold by the Compensation Board, and where construction work is expected to begin soon.

Following the TSJM’s decision, all of these plans have been thrown back up in the air, a real setback for the developers that have bought land in this area of Madrid, located to the south of La Moraleja neighbourhood and to the north of the IFEMA exhibition grounds.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Only 12,000 More Hotel Beds May Be “Opened” In Barcelona

11 March 2016 – Expansión

Yesterday, the government of the mayoress, Ada Colau, approved the Special Urban Plan for Tourist Accommodation (Peuat), which will prohibit the opening of more tourist apartments in Barcelona; will limit the opening of new hotels to areas beyond the centre of the Catalan capital; and will allow the “opening” of just 12,000 more (hotel) beds across the city as a whole.

According to the Town Hall, the objective of this indefinite moratorium (which will be reviewed every six years) is to put an end to the problems caused by tourist congestion in the centre of Barcelona and the difficult coexistence of tourist apartments and conventional homes. The regulations will be implemented by area, and the centre of Barcelona will face the greatest restrictions. The legislation will be more relaxed the further away from the centre you go.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Cogesa Paid c. €2,200/m2 For The Final Plots In Montecarmelo

25 September 2015 – El Confidencial

Some people regard it as an Urban Planning Action Plan (‘Programa de Actuación Urbanística’ or Pau) for “rich people” only. But, Montecarmelo, the smallest of the three new neighbourhoods in the north of Madrid – together with Sanchinarro and Las Tablas – has become the talk of the sector. And it is no wonder. The neighbourhood has starred in the most expensive land operation to be closed since the burst of the real estate bubble, and although it did not trigger alarm bells per se, it did raise concern amongst the main players in the market, for whom the memories of the worst excesses undertaken during the boom are still fresh and vivid.

Less than three months ago, at the beginning of July, the company Cogesa, which forms part of Grupo Dragados and is led by Enrique Pérez, the brother of Florentino Pérez (the President of Real Madrid Football Club), paid an “exorbitant” amount for the final few residential plots in Montecarmelo. Specifically, Cogesa paid just under €2,200/m2 for the land, i.e. significantly more than the figure (€1,400/m2 – €1,500/m2) the experts consulted by this newspaper consider should have been paid for the launch of a profitable development, unless, of course, it is developed as a cooperative.

Montecarmelo, which is located next to Monte del Pardo, the Colmenar motorway and the M-40 ring-road, was conceived at the beginning of the 1990s. With more than half a million square metres of land allocated for residential use – 8,500 homes, both unsubsidised and subsidised – it became the destination of choice for hundreds of young couples who saw the neighbourhood as a good place to live that allowed them to travel into the city centre each day to work. It was born as a commuter town (neighbourhood), just like Sanchinarro and Las Tablas, but is now witnessing the “overheating”  of land prices that seems to be happening once again. (…).

Knight Frank…estimates that there is only around 50,000 m2 of buildable space left in the development, i.e. 5% of the total, since the remaining 95% is under construction or has already been built. (…).

Cogesa’s bid took the other participants in the tender completely by surprise: Construcciones Amenabar and Grupo CP, two companies that have been involved in previous projects, as well as Momentum and the cooperative DMS have said as much…none of the other offers even came close to the figure that was put on the table by the Grupo Dragados’ company, to acquire the last large plot for sale in Montecarmelo. The company already has a presence in the neighbourhood, with around one thousand homes in several developments. At one of them, Las Terrazas de Montecarmela, the company has been selling homes for just under €3,000/m2.

“Cogesa already has interests there. It owns several plots, which means that by paying the amount it has done for this plot, it has also increased the value of its own portfolio there” says an expert consulted by this newspaper. (…).

However, the most recent land operations are raising concerns that the segment is “overheating”. In fact, the numbers do not add up for some developers. “A those prices, they would have to sell the homes for more than €3,500/m2, and not only is it going to be difficult to find buyers willing to pay that much, the figure also leaves minimal scope for profit. A logical price would have been €1,400/m2-€1,500/m2, because even if the cost of the land attributable to the final price of the homes was 50%, they could be sold at €3,000/m2 and not lose money”, explains a source at one developer, who prefers to remain anonymous.

“At these prices, the only thing that would make sense is a development on a cooperative basis, a formula that this company has adopted in the past. The developers need to make a profit of between 15% and 20%, however, in a cooperative, the manager does not earn any more than 10% and the risk is diluted amongst the cooperative”, says Ernesto Tarazona, Partner and Director of Residential Property and Land at Knight Frank, who believes that the lack of supply in the area benefits any project that is undertaken in Montecarmelo. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Carmena Halts The Sale Of 2,000+ EMVS Homes

29 July 2015 – Cinco Días

Manuela Carmena, the mayoress of Madrid has announced that the Town Hall of Madrid will not sell any of the 2,086 rented homes, owned by the EMVS (Municipal Company for Land and Housing or ‘Empresa Municipal de la Vivienda y Suelo’), to vulture funds and that it will put a stop to 70 planned eviction processes. Her statement came after a meeting on Tuesday with the “Yo no me voy” platform, supported by more than 220 residents in five of the affected buildings in the ‘Centro’ neighbourhood of the city.

The beneficiaries of the social housing rental properties owned by the EMVS across the city started to receive notifications and visits in 2012, informing them that their contracts would not be renewed. Previously that was something that had happened automatically, every two years, provided two requirements were fulfilled, in accordance with Decree 100/86: the household income must not exceed a certain level and the tenants must not own any property in the Community of Madrid. In total, 2,086 contracts of this type are currently in place across the city’s 21 districts.

The EMVS started proceedings against tenants who refused to leave their rented homes. “To date, there are 70 processes underway, but these families have now recovered their homes. No-one is going to be kicked out on the street. The Town Hall of Madrid is going to withdraw all of those processes. For us, the right to housing, as recognised by the Constitution, is fundamental”, said Carmena. The EMVS’s commitment extends to 2,086 homes. (…).

Manuela Carmena said that the Town Hall is now “making contact” with residents who are currently “confused” because they think that their social housing contracts are going to be terminated and that their homes are going to be sold. We will explain to them that the contract “is valid and that they will not lose their homes”.

The councillor has not denied the “immense distress” that these tenants have gone through, after finding out that they had to leave the homes they had lived in for more than 20 years. (…).

Original story: Cinco Días

Translation: Carmel Drake

Idealista: Rental Prices Rose By 1.8% In Madrid In Q1

8 May 2015 – El Confidencial

The property crisis; the difficulties faced by thousands of citizens when it comes to buying a home; and the havoc wreaked by evictions have all resulted in a significant boost to the (residential) rental market in Spain. Over the last seven years, many citizens and families have been forced out of the property market and, given their need or desire to become independent or start a family, their only exit has been through the home rental market.

Thus, although owned homes still win by a landslide over rented homes – 78% to 22%, i.e. a very similar level to the one seen at the end of the 1980s – the fact is that in recent years, the balance has tipped a little less towards the property side and although, many experts consider that it is unlikely that we will reach the levels seen in other parts of Europe, where rental properties account for 50% of the residential market in some countries, it is clear that something is changing. “The rental market is here to stay and not just as a lifestyle option, but also as an investment”, says Fernando Encinar, Head of Research at idealista.com.

The rental market in the Community of Madrid is showing the first signs of recovery, as too is the sale and purchase market. Similarly, some areas are sparking greater interest than others in terms of demand, which, in turn, is starting to create a certain amount of tension in terms of prices.

The differences between neighbourhoods are clear. It does not cost the same to rent a flat in the centre of the capital or in the neighbourhoods of Chamberí and Salamanca, where the price per square metre is around €14/m2 (€1,120 for an 80m2 flat) as it does in Villaverde, Carabanchel or Puente de Vallecas, where the price per square metre barely exceeds 8€ (640€ for an 80m2 flat).

These price differences are explained, in part, by the location of the homes – clearly, it does not cost the same to live in the centre of the city as it does in the suburbs – but also due to the excess supply, in places such as Carabanchel and Vallecas, and the strong demand, in areas such as Sanchinarro and Las Tablas, where the experts detect a lot of activity due to the presence of Telefónica and the future arrival of BBVA.

(….)

The tension in terms of rental prices is palpable. Madrid ended the winter with a quarterly increase in rental prices of 1.8%, taking the average price per square metre in the capital to €11.60, however, that represents a cumulative decrease of 15.8% from its record high of €13.80/m2 in 2008.

Moreover, during the first three months of the year, the increase in rental prices was generalised, with rises in almost every district in Madrid, with the exception of Villa de Vallecas and the neighbourhood of Salamanca, according to the data from idealista.com, which also reflects significant increases in the districts of Barajas (5.8%), Retiro (4.7%) and Hortaleza (3.6%).

(….)

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Spain’s Top Cities Show Signs Of Housing Recovery

21 January 2015 – WSJ

Spain’s residential real-estate recovery is a tale of two cities: Madrid and Barcelona.

Barcelona is the only city in Spain to post an annual increase in home prices during 2014. Prices in the city rose 2.8%, with some neighborhoods gaining as much as 8%.

Madrid, too, has fared better than most. While it hasn’t enjoyed price gains, Madrid’s decline of 4.9% last year was better than the 5.7% drop for Spain overall, according to fotocasa.es, a Spanish property website.

The price performance in Madrid and Barcelona helps explain why Spain’s construction sector is expected to make a comeback in 2015 after seven comatose years, as demand grows amid a modest economic recovery. Most of the building will take place in Spain’s two biggest cities.

“You have to look at Spain as if it were two countries,” says Fernando Rodríguez de Acuña of real-estate consulting firm R.R. de Acuña & Asociados in Madrid. “There’s the Spain that’s recovering. That’s the Spain that has the big cities and wealthy coastal areas. Then there’s the Spain where we went crazy during the housing boom, and that’s not going to recover for at least 10 years.”

New housing permits in greater Madrid were up 26.4% in the first 10 months of last year compared with the same period in 2013, according to the latest available data from Spain’s Ministry of Public Works. Most of the residential construction, investors say, is apartment buildings. Loans to build residential housing in Spain overall were up 25.6% in the third quarter of 2014 from a year earlier, according to Spain’s General Council of Notaries.

No one expects a surge in building comparable to the boom days. Nearly the same number of building permits in greater Madrid were issued in June 2006, at the height of the building frenzy, as in the first 10 months of 2014.

The construction comes as Spain tries to digest an estimated one million unsold empty houses, which can seem “counterintuitive,” says Fernando Encinar, head of research at idealista.com, a Spanish property website. “In 2015, there will be a high level of housing stock at the national level, but a deficit of housing in certain markets that will allow for the construction of new homes.”

Even within Madrid and Barcelona, there are major differences. Home prices in an exclusive neighborhood of Madrid, Chamartín, fell 2.2% in 2014, while another neighborhood south of the center, Villaverde, saw declines of 14.6%, according to data from fotocasa.es.

Spaniards who didn’t lose their jobs during the country’s downturn and have been waiting for house prices to slow their decline are among the most likely buyers, analysts and investors say. Banks also have been more willing recently to issue home mortgages to buy the newly built houses.

(…….)

Fernando Moliner Robredo, Chief Executive of Actívitas Inversión Inmobiliaria SL, the developer of a 105-unit apartment building in the Villaverde neighborhood of Madrid, says a postcrisis building lull created a need for housing. “In Madrid, new housing stock won’t cover demand for more than six or nine months,” he says.

Luis Martín Guirado and César Barrasa, executives at Sareb, Spain’s “bad bank,” say they also are seeing an uptick in demand for land beyond Madrid and Barcelona, including along the Mediterranean Coast and the Balearic Islands.

The expectations for construction growth in Spain break from the norm in other European cities hard hit by the financial crisis. Residential property development in Europe has generally remained sluggish.

“The standout would be Germany, which has been able to maintain robust levels of capital investment,” said Simon Rawlinson, head of strategic research at construction-consultancy Arcadis . “Most others have not.”

Before the crisis, cheap mortgage lending helped drive housing construction in markets like Spain and Ireland. Spain’s construction sector started to collapse in 2008, as the market was clogged by the building boom. The bust saddled banks with billions of euros in bad loans, forcing lawmakers to request a €41 billion bailout from the European Union to shore up confidence in the stability of the country itself.

The signs of life in Spain’s building sector come as the number of unemployed has declined and as the country’s economy—the fourth-largest in the European Union—is expected to grow more than 2% in 2015, among the strongest performers in the region.

But the country’s recovery is a modest one. Unemployment is still a staggering 23.7%, the highest in the EU after Greece.

An increase in construction now “doesn’t mean that everything is going well in the real-estate sector,” says Mr. Rodríguez de Acuña. “Construction is happening in very specific areas and at very competitive prices, which is why they are able to sell it.”

Original story: WSJ (by Jeannette Neumann in Madrid and Art Patnaude in London)

Edited by: Carmel Drake