Arcano Buys EFE’s Former HQ in Chamberí to Build Luxury Homes

1 April 2019 – El Confidencial

Arcano has just acquired the property at number 32 Calle Espronceda in Madrid, which previously housed the EFE Agency for several decades.

The firm’s new real estate fund has just purchased the building, which spans 8,000 m2, for more than €40 million from the fund Eurostone, where it plans to promote 50 luxury homes. The property is distributed over seven floors and has more than 200 parking spaces. Moreover, it has already been granted all of the licences necessary for the redevelopment work.

The operation has been advised by Colliers, Doble Dígito and TC Gabinete Inmobiliario and partially financed by CaixaBank.

Original story: El Confidencial (by Ruth Ugalde)

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

Are Spaniards “Condemned” to Buying Second-Hand Homes?

4 February 2018 – El Confidencial

Only 18% of the homes sold last year were new build properties. 

It is the dream of thousands of Spaniards: to buy their own home and, wherever possible, for that home to be brand new. Nevertheless, it is a dream that now, more than ever, only a lucky few are managing to realise. In 2017 – based on data for the 11 months to November from the National Institute of Statistics (INE) – more than 350,000 second-hand homes were sold in Spain – comprising second and subsequent sales for statistical purposes – compared with just 77,500 new homes – first sales -. In other words, the latter accounted for just 18% of the total number of transactions.

That has not always been the case. At the height of the crisis – between 2008 and 2013 – and as a consequence of the huge stock of unsold new homes that was generated during the real estate bubble, sales of both types of homes were pretty much the same. However, all indications are that new homes are going to continue to be a scarce product and only affordable for the lucky few, given that estimates for the property development sector as a whole indicate that activity is going to normalise at an output rate of around 150,000-200,000 units per year, a figure which the experts consider corresponds to the natural demand for housing, in other words, to the creation of new homes. These numbers come in stark contrast to the 850,000 new homes that were approved in 2006, the highest figure in the historical series.

To put it in context, 81,500 (new home) permits were granted last year, up by 27% compared to the previous 12 months, but still only half the number that property developers expected to reach and 10 times fewer than at the height of the boom.

Property developers dream of reaching those figures in the short term, nevertheless, some voices have already started to warn about the possibility that they may not be able to achieve it due, on the one hand, to a lack of land – plans and urban development projects have been suspended all over Spain, and in particular in markets with lots of demand for housing such as Madrid – but also, and above all, due to a lack of financing.

There will not be financing for 150,000 homes

That was stated publically this week by the President of Property Developers in Madrid (Asprima), Juan Antonio Gómez-Pintado. “The problem is that the market is heading towards 150,000 homes per year, whilst bank financing looks set to provide for just 65,000 homes” (…)

Despite those storm clouds, if there does end up being enough money to go round, will people on the buy-side be able to afford the new homes? For months, real estate debates have been raging about the fact that the homes that are being built at the moment are not affordable for most buyers, which primarily constitute owners looking to reposition themselves – people who already own a home and who want to sell it to buy a better one -.

“The demand is not willing to assume future increases in house prices (…)”, said Ignacio Moreno, CEO of Inmoglacier just a year ago.

The lack of product for sale and the high costs of construction are being passed on in the final prices of homes and also in the prices of land. And all indications are that the rising spiral is set to continue and may even intensify. “Land prices are going to continue to rise, following in the footsteps of housing but multiplied by three. In other words, if house prices go up by 5%, land prices will rise by 15%”, calculates Mikel Echavarren, CEO at Irea.

Price gap

In this way, according to data from INE, during the third quarter of 2017,  the prices of both new build and second-hand homes rose by 7%. And it is the very lack of new build product that is inevitably pushing up prices. But that same shortage is also forcing demand towards the second-hand market, which is also pushing prices up, although, at the national level, the price gap between second-hand and new build homes has been increasing in favour of the latter (…).

Nevertheless, the price per square metre of a new build home is not always more expensive than a second-hand property. El Confidencial has compared the prices per square metre of new build homes in several districts of Madrid and Barcelona, as reported by Socieded de Tasación at the end of 2017, with the prices of second-hand homes, according to the real estate portal Fotocasa, and found that in some cases second-hand homes are more expensive.

How is that possible? The real estate portals show asking prices – not the prices at which operations are actually closed. According to a recent study performed by this real estate portal, in the last year, 71% of buyers obtained an average reduction (on the asking price) of €14,000, a figure that in the majority of cases represented a discount of 10% on the initial sales price (…).

On the other hand, for statistical purposes, when we talk about second-hand housing, we are not always taking into account the age of the property, but rather the number of times that the home has changed hands. Many developments in the hands of the banks are considered second-hand because there has already been a prior transaction involving that property – from the bankrupt property developer to the bank, for example – This means that when such a home is sold it is considered as a second-hand property, even though it may never have actually been lived in. And the prices of those units tend to be higher than those of homes that are several years old (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Property Developers Eagerly Await Blackstone & Cerberus’s Major Land Sales

26 February 2018 – Cinco Días

The residential market is going to undergo a real shake-up over the coming months. From the summer onwards, Spain’s residential property developers expect the main investment funds to place on the market the large land banks that they have been stockpiling following their purchases from the banks, whereby alleviating the shortage of plots for construction in those areas where activity has resumed. Thousands of millions in investments are at stake.

Specifically, the major stars are going to be Blackstone, which took control of Popular’s toxic property portfolio last year, and Cerberus, which did the same with assets from BBVA. Moreover, managers such as Bain Capital, with land proceeding from Liberbank, will also play a significant role.

The other major player that is going to star in this market over the coming months is Sareb, which is preparing its largest-ever land transaction under a new formula. It is looking to team up with a large property developer to contribute plots worth €800 million and integrate its residential business in exchange for entering the share capital of a company that will be listed on the stock market in the medium term. In fact, large funds are arriving to compete with the bad bank to supply land (…).

“Expectations are high”, says Pablo Méndez, Director of Capital Markets at the consultancy firm Savills Aguirre Newman. “We expect the funds to bring products onto the market during the course of this year. They are going to want to maximise the value of their land, and so they will sell it on a piecemeal basis. We do not expect to see large portfolios for sale, at least not in Madrid, Cataluña or Levante”, he explained. “Nevertheless, I think that we may see portfolio sales in other areas that are starting to reactivate and that are of interest to real estate companies, such as Galicia, Asturias, Santander, Burgos, Tarragona and other large cities”.

House building activity has reactivated timidly in Spain, with 80,000 new house starts last year and with the objective for the sector of reaching around 150,000 new homes per year as the healthy cruising speed. New companies, such as the listed firms Neinor and Aedas, together with others such as Aelca, Vía Célere, ASG, Amenabar and Metrovacesa (which returned to the stock market earlier this month) have boosted activity. But there has been a shortage of buildable land (plots with the necessary permits) in Spain’s large cities, above all in Madrid and Barcelona.

Simultaneously, the banks have been forced to divest property from their balance sheets, under pressure from the regulations set by the European Central Bank, like the entities that received public help did back in 2012, when they transferred their toxic assets to Sareb. In the funds, the banks have found the best partners for getting rid of their properties to start putting them on the market (…).

“We estimate that the large funds have land worth more than €15 billion”, calculates Samuel Población, Director of Residential and Land, at the consultancy firm CBRE.

Blackstone is going to become one of the key players over the next few months. The US fund purchased 51% of Popular’s portfolio worth €10 billion from Santander. Of that total, 42% corresponds to land. The agreement is not expected to be definitively closed until March. From then on, Aliseda will start to sell those plots. The new CEO of that servicer is Eduard Mendiluce, who is also continuing to serve as the head of Anticipa, the company that Blackstone uses to manage its housing portfolios.

Meanwhile, Cerberus acquired 80% of BBVA’s real estate portfolio for €4 billion. Almost 80% of those assets comprise plots of land. In that case, they are waiting until June, for the operation to materialise, before starting to place any portfolios on the market. That sales mandate will be entrusted to Haya Real Estate, the servicer that Cerberus is planning to list on the stock market. Note, the US fund also acquired a majority stake in the residential property developer Inmoglacier, which is expected to receive a small proportion of the plots to make it grow and become one of the new stars of the sector.

Finally, Bain Capital, on a smaller scale, acquired around €144 million of land from Liberbank, at the same time as taking over the Catalan property developer Habitat (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Valencia Puts an End to Land Speculation: Construction Work Must Start Within 2 Years

6 February 2018 – Eje Prime

Valencia is clamping down on land speculation. The reform of the Law governing Regional Planning, Urban Development and Landscapes (Lotup) which is being processed by the Ministry of Housing, Public Works and Structures (in the autonomous region of Valencia) has reduced the timeframe that owners are permitted to submit a town planning project from six to two years once they have committed to purchasing a plot.

That term may only be extended by the municipal regulations up to a maximum period of six years, according to Valencia Plaza. The legal text is being submitted to the Consell Jurídic Consultiu (CJC) for consideration.

The limit of two years will be “the supplementary or subsidiary rule” when a plan, program or municipal ordinance governing an urban development activity does not indicate any deadline for the submission of the project. In any case, the maximum term will be six years.

With the new modification of Lotup, the Law will allow private entities to urge the expropriation of plots in their favour when the owners fail to comply with the deadlines for development, a possibility that has already been considered in the past.

Original story: Eje Prime

Translation: Carmel Drake

Ministry of Development: New Home Permits Soared by 27% in 2017

31 January 2018 – Eje Prime

Permits for the construction of homes are skyrocketing. The residential sector is experiencing a sweet moment and that is reflected by the good data that the Ministry of Development has compiled regarding the number of permits processed for the construction of homes.

In 2017, around 81,500 permits were requested. Note, the total number of permits requested during the whole of the previous year (2016) was exceeded in November 2017, with 74,960 requests. Those figures represent a YoY increase of 27.2% and complete four consecutive years of growth.

Between January and November, the bulk of demand for permits was made for the construction of block housing, which accounted for 56,714 permits, up by 30% compared to 2015, and accounting for 75% of the total number of requests.

Meanwhile, detached homes recorded a YoY increase of 14%, with 17,941 such permits requested. Moreover, requests to extend homes also grew last year, by 8.9% with respect to 2016, to reach 2,039 approvals.

Original story: Eje Prime

Translation: Carmel Drake

Cepco: New Build Starts Could Reach 80,000 Units By Year-End

7 November 2017 – Cinco Días

With barely two months to go before the end of the year, forecasts abound about what is going to happen to house prices, house sales and construction activity in the residential sector. After three years (2014, 2015 and 2016) during which the sector has gradually emerged from the worst real estate crisis in recent history, 2017 is going to be remembered as the year in which the improvement in all the variables was consolidated, property developers returned to the stock market and overseas investment in the sector reached record levels.

The only but that continues to mark this recovery is its heterogeneity, given that prices are not rising by the same amount in every autonomous region and homes are nowhere near as easy to sell in Cáceres as they are in Madrid (for example); moreover, cranes are not expected to return to certain regions for a long while yet.

Nevertheless, 2018 can be summarised by the fact that we expect to see more of the same. Prices will continue to recover, even reaching double-digit growth rates, above all in Madrid, Barcelona and certain parts of the Mediterranean Coast; transaction volumes may exceed the 500,000 unit threshold; and the number of new homes started will amount to 80,000 units, if the current rate continues.

And that is because the statistics in aggregate terms reveal some very significant increases, both in terms of transaction volumes and new home starts. For example, between January and August 2017, 56,000 new homes were sold in Spain, up by 5.8% compared to the same period last year, according to the latest report from the Spanish Confederation of the Associations of Construction Product Manufacturers (Cepco).

That represents quite an accelerated rate, with which permits for new homes are trying to keep up. During the first seven months of this year, 49,200 new permits were granted, up by 9,700 compared to the same period last year, which represents an increase of no less than 24.4% in relative terms.

That is what is causing the experts to predict that if these trends continue, then work could begin on the construction of around 80,000 new homes by the end of this year. If that volume of construction ends up being confirmed, the level of activity recorded in 2016, when 64,038 homes were started, will have risen by 25%. Nevertheless, these figures are still well below the more than 865,000 new home permits that were granted in 2006. And a considerable distance from the 200,000 or 250,000 that the consensus of experts in the sector believes will represent the real estate market’s cruising speed over the medium term.

Meanwhile, the number of finished homes also grew significantly during 2017, by 40%, although in absolute terms the figures are still minimal (33,085), as Cepco’s research acknowledges (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Spain’s Residential Sector: A Fleeting Boom Or A Genuine Bubble?

3 October 2017 – El Confidencial

A fleeting real estate boom or another bubble in the making? Although many in the real estate sector – property developers, banks, experts… –, deny that Spain is committing the errors of the past and are instead convinced that we are witnessing the creation of a new real estate boom, the truth is that some indicators have started to trigger the first alarm bells, in particular, those relating to the evolution of house prices. The increases in house prices are not only generalised, in certain markets, they are very striking.

Such is the case of large cities, like Madrid and Barcelona, where the increases – in new build and second-hand prices – are now well into the double digits. According to data from the appraisal company Tinsa, in just twelve months, house prices have risen by 20.6% in Barcelona and by 15.5% in Madrid. This means that during the summer months, there has been a real boom in prices since, during the second quarter of the year, the YoY rise amounted to just 1.8% and 2.7%, respectively.

“A sustainable increase in prices would range between 4% and 5%. The double-digit figures in certain areas, where there is limited supply or a tourist boom, such as Las Palmas and Ibiza, are sustainable over the long term”, explained Jesús Amador, Real Estate Analyst at Bankinter, speaking recently to El Confidencial.

Both cities are still well below their maximums of 2007 (Barcelona is 28.3% below and Madrid is 37.4%), nevertheless, since their minimums, prices have now appreciated by 44.4% and 24.9%, respectively (…).

Prices in Palma de Mallorca have returned to the peaks of 2007

The most notable finding in the second-hand market is the rise in house prices in Palma de Mallorca, which increased by 7.3% over the summer, making it the country’s first capital city to exceed the price levels of 2007, followed by Lleida (5.3%), according to data from Idealista. Increases in Málaga (5.2%), Girona (4.9%) and Pamplona (3.9%) are also noteworthy (…).

Five indicators of the health of the Spanish real estate market 

1.- Average sales period (liquidity)

In Spain, it takes 9.1 months on average to sell a home. The cities of Madrid and Barcelona are the most liquid markets, with average sales periods of 3.2 and 3.4 months, respectively. Of the five largest capital cities, Valencia and Sevilla have the longest periods, where it takes 8.7 and 6.4 months, respectively, to sell a home.

2.- Financial effort

On average, Spaniards spend 16.6% of their gross household income to pay the first year of a mortgage. The autonomous regions where below-average financial effort is required are La Rioja (13.2%), Murcia (13.3%) and Castilla y León (14.2%).

At the opposite end of the spectrum (…), a much higher percentage of the household income is required to buy a home with financing in the Balearic Islands (21.2), Andalucía (17.6%) and Cataluña (16.7%) (…).

3.- Average mortgage and monthly repayment

The average mortgage in Spain amounted to €113,130 during the second quarter of the year (the most recent data available), compared to €148,037 in 2007, according to data from Spain’s National Institute of Statistics (INE). The average monthly mortgage repayment amounted to €528 in Q2, almost 40% lower than ten years ago (…).

4.- Sales and purchases

The provinces of Málaga, Alicante and the Balearic Islands, which all have a clear tourist component, are those with the highest number of house sales in the last four quarters with respect to the size of their respective housing stocks: 33.3 homes for every 1,000 properties in the province of Málaga; 29.4 in Alicante and 28.8 in the Balearic Islands.

By contrast, the least active markets include Ourense, with barely 6.6 house sales for every 1,000 properties; and the provinces of Zamora and Teruel, with 9.4 and 9.5 homes sold, respectively, for every 1,000 properties.

5.- Permits for new builds

In terms of property developer activity, the provinces of Madrid, Navarra and Vizcaya are still the ones where the highest number of new build permits were registered over the last four quarters, in proportion to the size of the housing stock.

In the Community of Madrid, 5.4 permits were granted in the last year for every 1,000 homes already in existence, whereby exceeding the number granted in Navarra (4.4 permits) and Vizcaya (4.3 permits). The least active areas in this regard include the provinces of Tarragona and Lugo (0.7 permits for every thousand homes in both cases), followed by Valencia, Pontevedra and Zamora, where 1 permit was issued for every 1,000 homes.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

BBVA Research: House Prices Will Rise By 3% In 2017

20 July 2017 – Eje Prime

The residential sector is going full steam ahead. House sales are expected to exceed 500,000 in 2017, an increase of 10% with respect to 2016, and house prices are forecast to rise by three percentage points with respect to last quarter, according to the figures published by BBVA Research in the magazine Real Estate Situation in Spain. In economic terms, the investment in housing will represent 9.4% of the growth in GDP in 2017.

Between January and May, 212,073 homes were sold, up by 14.5% YoY. The cumulative figure over the 12 months to May  2017 saw the number of house sales rise to 488,000 homes. The study reveals that, in a scenario in which there continues to be a limited supply of finished new homes, prices will rise by around 3% per annum on average, closing the year at €1,570/m2, similar to the values last seen in 2004, based on statistics from the Ministry of Development.

In this sense, the report states that property developers will continue to respond to the increase in demand and it is expected that they will request permits to build around 80,000 new homes this year, up by 20% to satisfy demand.

The market is growing across all of its component segments, primarily due to the sale of primary residences, ahead of demand from foreigners, which accounts for 17% of the total market, and second homes (9%).

Meanwhile, financing costs, with mortgage rates at around 2.2%, the expectation of attractive capital gains and strong demand from foreigners are all having a positive effect on demand.

Original story: Eje Prime

Translation: Carmel Drake

Ministry Of Development: Finished Homes Fell By 4.9% In Jan

30 April 2017 – El Mundo

In January 2017, construction of 2,973 homes was completed in Spain, which represented a decrease of 4.9% compared to the same month in 2016, according to data from the Ministry of Development.

In this way, the number of finished homes in Spain began 2017 on a negative note, after recording nine consecutive years of decreases in 2016. Since the peak of 2007 (641,419 homes), the figure decreased by 94% with respect to the end of 2016.

Of all of the homes completed in January 2017, 99% (2,945) corresponded to private developments and 1% (28) to Public Administrations.

In comparison with the figures recorded in the same month in 2016, the construction of homes by private developers decreased by 5.3%, whilst the number increased in the case of Administrations from 16 to 28 constructed homes.

In the private segment, 1,918 homes were constructed by companies, representing a YoY increase of 5.3%; 956 were built by individuals and communities of owners (-21.2%) and 26 by cooperatives (-59.4%). In addition, there were 45 construction completion visas relating to another type of private developer.

Meanwhile, the liquidation value of the material execution of the construction work rose by 27.86% in January, to €444.7 million.

Renovations rose by 4.7%.

Permits to renovate or restore homes in Spain amounted to 1,785 units in Spain in January 2017, which represented an increase of 4.7% with respect to the same month in 2016 (1,705 permits).

In this way, permits to renovate homes began 2017 on a positive note, after recording two consecutive years of increases, although the rise in 2016 (2.7%) was more moderate than in 2015 (13.4%).

In 2014, permits to renovate homes recorded four consecutive years of decreases and dipped to a minimum in the historical series prepared by the Ministry of Development, but that trend was broken in 2015, and the new trend was consolidated in 2016 and maintained at the beginning of 2017.

Meanwhile, permits to expand properties doubled in January, from 89 during the first month of 2016 to 197 in 2017.

Original story: El Mundo

Translation: Carmel Drake