Tag: peak

Ministry of Development: Housing Stock Still Exceeds 500,000

23 July 2015 – El País

Spain is still slowly digesting the volume of unsold new homes that was left over following the burst of the housing bubble.

According to the Ministry of Development, the stock of newly constructed homes decreased by 5% last year with respect to 2013, to 535,734. The remnants of the bubble are concentrated in those areas in which developers constructed the most during the boom times, in such a way that the provinces with the highest number of vacant homes are: Castellón, Almería and Toledo. The sector warns that many of these properties, especially those in poor locations, will be very difficult to sell.

The stock of newly built homes peaked in 2009, when the market came to a standstill, large companies in the sector collapsed and assets started to move onto the balance sheets of the financial institutions. That year, the country registered almost 650,000 new homes without a buyer. Since then, the volume of unsold homes has declined at an annual rate of 3.6% per year. “A decline of 5% still represents a tiny amount” says José García Montalvo, professor of Applied Economics at the University of Pompeu Fabra (UPF).

The slow rate of decline is due to two main factors. Firstly, house sales are recovering, but in a very uneven way: whilst sales involving second-hand homes have increased by 42%, according to the National Institute of Statistics (INE), sales of new homes have decreased by 37%. This means that barely 20% of sales related to new homes, whereas between 2008 and 2013, they accounted for half of all sales.

The second reason is that the market has written off some of that housing stock as unsellable. “Some of the stock will never be sold” says García-Montalvo. Moreover, Bankinter’s study service estimates that around 150,000 homes will fall into that category, above all those located in ‘ghost’ towns and neighbourhoods, and in coastal areas where there is little or no demand.

This explains why the provinces with the highest volumes of vacant new homes are located on the Mediterranean Coast and in Castilla La Mancha. In relative terms, the provinces with the most unsold stock are Castellón (6.45% of the total), Almería (5.47%), Toledo (5.39%) and Albacete (4.31%). In Madrid and Barcelona, where the cranes have now returned to start new projects, that proportion stands at 1.4% and 1.7%, respectively. And according to the Ministry of Development, the stock is non-existent in Cantabria and Extremadura. (…).

The stock of empty homes still exceeds 10,000 units in around twenty provinces. In general, the decreases amounted to around 5% on average, except in Málaga (16.4%) and A Coruña (8.3%). At the other extreme, the volume of unsold homes actually increased in Álava, Bizkaia, Ceuta and Melilla, albeit from relatively low levels. (…).

Original story: El País (by Lluís Pellicer)

Translation: Carmel Drake

11% More RE Companies Were Created In 2014

8 July 2015 – El Economista

10.9% more companies were created in the Spanish RE sector in 2014 compared with 2013, according to data published by Infoempresa.com. Specifically, the sector accounted for 3% of all new companies, with total subscribed capital of more than €1,200 million.

At the company level, subscribed capital amounted to €453,000 on average, an amount that was only exceeded by companies in the energy sector.

In this context, Madrid led the ranking with the incorporation of 1,428 companies in 2014, accounting for 21.5% of all new companies in the sector. It was followed by Barcelona, with 868 new companies (13.1%), then Málaga, with 619 (9.3%), Alicante, with 409 (6.2%) and Valencia, with 351 (5.3%).

Increase of 23% since 2011

5,354 new companies were registered in the real estate sector in 2011, but that number had increased to 6,634 by 2014. The figures represent an increase of 23.9% during the period.

In total, 26 Spanish provinces have experienced an increase in the number of companies dedicated to real estate activities between 2011 and 2014.

The new companies in the real estate sector in Spain include private limited companies, which experienced a 24.3% increase between 2011 and 2014; and public limited companies, which increased by 15.5%.

Nevertheless, the figures for 2014 still fall a long way below the levels seen during the years before the crisis – more than 100,000 new companies were registered in the sector in 2008. Thus, from those maximum levels, Madrid has experienced a decrease of 40.7%, followed by Málaga (28.9%) and Alicante (19.6%).

Original story: El Economista

Translation: Carmel Drake