Pisos.com: Buyers Offer 23% Below The Asking Price

27 January 2016 – Cinco Días

Data is regularly being published about the rise in the number of house sales, how the fall in property prices is being mitigated, the gradual return of credit to the market and the impact of the overall economic recovery as the driver behind the real estate market overcoming the crisis. Nevertheless, the online portal Pisos.com has gone a step further by cross-checking information about the prices that purchasers are willing to pay and the asking prices being set by vendors; and they are checking the differences between them (…).

In its study, which is based on figures from 2015, the real estate portal notes that the differences between asking prices and offer prices have decreased in line with the improvement in the labour market (as soon as job destruction came to a halt, house sales began their timid recovery) and the relaxation of conditions to access finance.

This alignment of positions has been made possible thanks to the fact that house prices now seem to have bottomed out, at least in the majority of regions, “and buyers’ budgets have increased, thanked to increased savings and the return of credit to the market”, explain sources at Pisos.com.

In this way, during 2015, the average house price in Spain amounted to €138,150, whilst the most sought-after home (by buyers) cost €112,500 on average and had a surface area of 90 m2. The portal understands that the difference between these amounts, i.e. €25,650, represents the difference that currently separates demand and supply, which is equivalent to 23% of the most sought-after price.

Pisos.com has been performing this cross-check of supply and demand since 2009 and in its study, it shows how the relationship has evolved during the crisis and the start of the recovery. In 2009, the difference amounted to 55%, which is explained to a large extent by the sharp decline in the number of house sales; the transactions that did materialise were accounted for with a sizeable discrepancy.

Since then, the positions have moved towards each other to narrow at 20% in 2013. Nevertheless, in 2014, they increased again, to 25% and then last year, that gap moderated slightly to the aforementioned 23%. The evolution varies by region, which is to be expected in the housing market. (…).

Starting prices

Prices in six autonomous regions increased, namely: Andalucía, Aragón, the Balearic Islands, Galicia, Navarra and País Vasco. The highest average asking price is still found in País Vasco, at €232,500. At the other end of the spectrum, citizens in Murcia, Valencia, Castilla-La Mancha and the Canary Islands searched for homes with a average price of €67,500. Navarra is the only autonomous region where the price that buyers are willing to pay exceeded the asking price. The autonomous regions in which asking and offer prices were the closest were: Cantabria (9%), País Vasco (9%) and Cataluña (12%). By contrast, the largest differences were found in Murcia (where the difference still amounts to 39%), Asturias (37%) and La Rioja (36%).

In terms of other variables in the market, such as the number of transactions and the evolution of prices, the General Council of Notaries published its study yesterday, which showed that (house) sales grew by 14.7% YoY in Q3 2015, following their significant growth in the previous quarter (16.8% YoY). Moreover, the notaries highlighted that all of the autonomous regions, with the exception of Navarra, contributed to this result. (…). Meanwhile, prices grew by 2.7% YoY during the same period, just below the rate of growth seen in the previous quarter (3.6%). (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Club Noteges Predicts House Price Stabilisation In 2016

11 January 2016 – ABC

House prices rose by 5.42% in 2015 following three years of sharp decreases, according to actual sales data compiled by Club Noteges, the leading national industry trade association, which comprises 135 companies.

Despite the positive trend in 2015, Club Noteges notes that the difference between asking prices and offer prices amounted to 32% at the national level, and was as high as 46% in some areas of Spain.

In this way, the autonomous regions that recorded the smallest gap in terms of (asking/offer) prices during the year were País Vasco and Madrid with a difference of 20%; and Navarra with a difference of 21%. They were followed by Extremadura with a difference of 30%; Cataluña with 32%; Castilla y León with 33%; Andalucía with 34%; the Canary Islands with 36%; and Cantabria, Murcia and Galicia with 37%.

The regions with the largest gap in prices were Castilla-La Mancha with 43%, Valencia with 45% and the Balearic Islands, which led the ranking with 46%. The most significant price decreases in recent years were seen in 2012 and 2013, when prices fell by 15.30% and 14.38%, respectively. They were followed by a slight decrease of 2.31% in 2014 and an increase of 5.42% in 2015.

According to Club Noteges, the highest average sales price this year was recorded in Madrid at €196,749 and the lowest was recorded in Castilla-La Mancha at €69,976. Similarly, the average discount that owners have had to accept to complete sales was the highest in the Balearic Islands, with a reduction of €87,103 on the initial price and the lowest was in País Vasco, with a discount of €36,449.

The actual sales data corresponding to the 3,054 homes that Club Noteges sold in 2015 for more than €384million, show that two spikes were observed during the year; they coincided with the regional and municipal elections in the Spring and with the Catalan and general elections in the Autumn.

Price stabilisation

In this way, the data confirms that the two spikes recorded in 2015 were caused by “electoral expectations in the Spring and Autumn rather than by structural changes in the market, which returned to its original position following the election periods”, explains the CEO of Club Noteges, José Luis Jimeno.

After the first round of elections, prices returned to the path of stabilisation that we have observed since 2013 and according to Club Noteges, all of the data “shows very similar forecasts for 2016, when house prices will once again stabillise following the general elections”.

For Jimeno, “the stabilisation of house prices will continue for at least another decade, due to the lack of demand and the excess stock generated following the explosion of the real estate bubble in 2007”.

Club Noteges brings together 610 real estate agents from 135 associate companies with 165 offices throughout Spain; some of the companies also have a presence in Argentina, Colombia, Mexico and Panama. The trade association currently leads the country’s real estate sector with a sales rate that is 248% higher than the sector average.

Original story: ABC

Translation: Carmel Drake

Bankia Will Get Best Price For Its Stake In Realia Regardless Of Who Wins Bid

9 March 2015 – Expansión

Battle for the real estate company / Slim has committed to pay Bankia the difference between the price agreed for the purchase of its 24.9% stake and the eventual winning bid.

Bankia will win regardless (of who turns out to be the evenutal victor) in the takeover war being waged by Carlos Slim and the Socimi Hispania Real for Realia. The financial institution, a historical shareholder in the real estate company, together with FCC, will obtain the same profit as the other shareholders, despite having sold its stake to the Mexican tycoon last Wednesday.

According to information submitted by Inmobiliaria Carso to the CNMV, the company controlled by Slim has guaranteed Bankia a payment to cover the difference, if the evenutal successful offer (price) for Realia is higher than the amount received by the bank.

The entity chaired by José Ignacio Goirigolzarri sold Slim the 24.95% stake that it held in Realia for €0.58 per share, and therefore it received €44.48 million. The offer exceeded the only firm acquisition proposal made up until that point by 18%, which had been submitted by the Socimi Hispania; its offer for 100% of Realia amounted to €0.49 per share.

Both proposals fell significantly below the average trading price of Realia’s shares on the stock exchange. On Friday, after Expansión published that Slim was negotiating an agreement with Hispania to take control of the real estate company, its share price decreased by 3.33% to €0.725, bringing its market capitalisation to €222.8 million.

Hispania’s takeover bid values Realia at just over €150 million, compared with Slim’s offer, which places a value of €178 million on the company.

Both takeover bids are voluntary in nature. Nevertheless, the CNMV may force both candidates to improve their respective offers and bring them closer to the average share (trading) price recorded in recent months. That happened in the case of Deoleo, when the regulator forced the venture capital fund CVC to increase its offer from €0.38/share for the oil group to €0.395/share. On that occasion, the fund also extended the higher bid price to the financial institutions from which it had previously purchased shares in Deoleo.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Slim Negotiates A Deal With Hispania To Take Control Of Realia

6 March 2015 – Expansión

ALLIANCE / The businessman is building bridges with the Socimi, which has an agreement in place with the group’s creditors to restructure its debt. Slim may transfer some assets or engage the management of the real estate company to his rival.

The takeover war being fought between Hispania Real and Carlos Slim’s real estate company Carso, for the control of Realia may end with the waving of a white flag. On Wednesday, the Mexican businessman announced his acquisition of a 24.953% stake in Realia’s share capital from Bankia and “in addition” that he would be launching a takeover bid for 100% of the company’s shares at a price of €0.58/share.

The businessman’s offer exceeded the one made by the Socimi in November for €0.49 per share, by 18%. That takeover bid is still pending approval by the CNMV.

In his favour, Slim’s offer does not only win on price. The Mexican businessman is also the largest shareholder in FCC, which in turn owns a 36.9% stake in Realia. After Slim joined the construction group, FCC announced in February that it would be suspending the sale of its stake.

Agreement

Nevertheless, Hispania still has an ace up its sleeve. The Socimi created by Azora’s managers, Fernando Gumuzio and Concha Osácar made an agreement with Fortress, King Street and Goldman Sachs before launching the takeover bid. The three funds have lent €793 million of the total debt (€1,097 million) held by Realia. Those loans, sold by Sareb, Santander and CaixaBank last year, are due to mature soon: on 30 June 2016. Moreover, when the funds agreed to purchase the debt, they also agreed with Realia that, in the event of a change in more than 30% of the shareholders, then the whole debt amount would have to be repaid “immediately”.

On 21 November, Hispania made an agreement with the creditors in which the funds agreed not to exercise their shares and not to demand the full repayment of the financing that would result from the application of the change of control clause. In exchange, Hispania purchased 50% of the receivables that each one of the funds possessed, at a discount of 21%. This partnership makes Slim’s assault on the real estate company more difficult, and so the Mexican has not wasted any time building bridges with his competitor.

The main obstacle facing Slim is that Hispania and the funds agreed an exclusivity period of seven months for the execution of the agreements, extendable up to ten months if a competing offer were presented. “During that exclusivity period, neither of the parties may initiate, encourage, lead, trigger, conduct or respond to any offer, proposal, contact, conversation, negotiation or approximation of any kind, with or from any third party, regarding the implementation of any operation that may be similar or incompatible with the execution of transfer of the loans resulting from the financing to Hispania Real”, says the agreement. This means that Slim and the funds may not make any agreement until 21 September without taking Hispania into account.

Against this background, the Mexican businessman has chosen to forge an alliance with his rival, to reduce this period. In exchange, according to close sources, Slim is offering the Socimi some capital, some assets to increase its own equity or the opportunity to participate in Realia as its manager. Inmobiliaria Carso, the vehicle that Slim wants to use to acquire Realia, does not have either the structure or the knowledge of the Spanish market held by Hispania’s managers, and therefore a deal between the two cannot be ruled out.

Consideration

The prior agreement with Hispania places the creditor funds in an advantageous situation in the context of the new offer. In the event that the Socimi does decide to raise the price of its takeover bid, Fortress, King Street and Goldman Sachs would receive €38.25 million more for 50% of their debt. If, on the other hand, the Socimi decides to withdraw from the process, the funds shall pay Hispania €5 million “provided that the rights of creditors’ loans have satisfied the nominal”.

Original story: Expansión (by R. Ruiz, D. Badía and C. Morán)

Translation: Carmel Drake