Tag: pre-crisis levels

Renta Corporación Considers Paying Dividend of 30% to Shareholders in 2018

26 April 2018 – Eje Prime

Renta Corporación is returning to the boom times. According to Luis Hernández de Cabanyes, President of Renta Corporación, the real estate group is evaluating the possibility of distributing a 30% dividend to its shareholders. If that decision is approved in the end, the group’s shareholders would receive almost €5 million, given that the group’s objective for this year is to achieve a net result of €16 million.

That would be the first time in ten years that Renta Corporación has distributed any of its profits. “We have the intention of distributing a dividend, however, it will all depend on the financing needs of the company”, added the President of the group. Although the dividend for 2018 is still under consideration, the company has hinted that it will almost be a commitment to its shareholders starting from next year.

This reward for Renta’s shareholders comes after the company managed to pull itself out of the economic crisis. “We find ourselves facing a favourable market for the next four years and our objective is to return to our pre-crisis levels, when the group’s net profit amounted to between €30 million and €50 million, by 2022”, says Hernández.

“A stable business model, a renewed brand (the group is going to unveil a redesign of its entire corporate image next week), solvency, a portfolio of buildings under construction, a database and external collaborators are the ingredients to achieve the results that we have set ourselves”, concluded the President of the group.

According to the group, its strategic plan for the next three years involves maintaining a portfolio mix similar to the one it has had until this year “with the aim of diversifying its exposure to the risk presented by the different segments of the real estate market”.

“Renta will continue to concentrate its portfolio in the residential sector, one of the markets that is experiencing the highest growth and where positive trends are forecast, both in terms of prices and the volume of operations” – say sources at the group – “The operations forecast in the strategic plan will continue to concentrate on the cities of Madrid and Barcelona, since they are the most dynamic of all the markets”.

In 2018, Renta expects to close numerous operations involving the acquisition of new assets and the sale of properties, whilst in 2019, the number of transactions carried out by the group will rise to 31. In 2020, Renta plans to sign 34 operations. The operating margin is expected to amount to €26.5 million in 2018; €33.9 million in 2019; and €35.6 million in 2020.

Although Renta is focusing on Spain, specifically Madrid and Barcelona, the company does not rule out returning to some of its old haunts such as Paris (…).

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Moody’s: House Prices Will Rise By 4.7% p.a. Between 2017 & 2019

30 May 2017 – El País

The risk rating agency Moody’s expects house prices to rise in Spain by 4.7% per annum between 2017 and 2019, in line with their evolution in 2016. This will have a positive effect on the balance sheets of the banks and on the behaviour of mortgage securitisations.

Those are the conclusions of a report on the real estate sector in Spain, prepared by analyst Antonio Tena, which nuances these promising forecasts by reminding readers that the number of units sold is just as important as the price at which those units are sold for.

Even if GDP grows at a lower rate than currently predicted, the US agency believes that the rate at which it will likely close the year (2.3%) will undoubtedly sustain this recovery in house prices.

But it is important to “decouple” house prices from the number of operations, given that although the volume of properties is decreasing, it is true that some of the new homes (…) date back to 2006 and 2007 and still have not been sold”. However, those now account for just 10% of operations, well below the pre-crisis levels, when new and second-hand homes accounted for half the market each, reported Efe.

The agency also commented that there is no risk of “overheating” in the mortgage market, said Tena, or of a mortgage bubble happening, given that nowadays just one euro is being loaned for every four euros that were being loaned back in 2007.

Last week, the President of the European Central Bank (ECB), Mario Draghi, spoke along the same lines. He ruled out the danger of a new real estate or credit bubble in the euro zone.

The banks are now a lot more restrictive when it comes to granting a mortgage, said the Moody’s analyst, Antonio Tena. He added that it is important to distinguish between the granting of mortgages and the sale of homes; in 2007, more mortgages were granted than homes were sold, whereas, in 2016, the volume of house sales was much higher than the volume of mortgages signed.

The sale of homes is growing in a sustained way, at around 14% p.a., but that still represents half of the volumes sold in 2007; the data from Moody’s shows that house sales are not decreasing in any city where there are more than 200,000 inhabitants; and that Madrid and Barcelona – and their peripheral regions – as well as the Mediterranean arc, are accounting for most operations.

Borrowers are increasingly older

Another positive indicator, according to Tena, is that the average age of mortgage applicants has increased from 34 years in 2007 to 38 years in 2017. Borrowers now have a greater capacity for saving and financing. (…).

Along with the report about the mortgage market, Moody’s has published another study about covered bonds, which are known here as “mortgaged bonds”. The product plays an important role in Spain, given that for every euro of that type issued, there are €2.50 of mortgage loans, whereas, that ratio barely amounts to 1.10 in other countries. (…).

Original story: El País

Translation: Carmel Drake

BBVA Finalises Sale Of Torre Puig To Grupo Puig

22 May 2017 – BBVA

BBVA has finalised the sale of Torre Puig to Grupo Puig, one of the largest real estate operations in Barcelona. The sales prices is reportedly in line with pre-crisis levels.

The property is a tower located in Hospitalet de Llobregat, one of the largest real estate expansion areas. The building has 21 floors and covers a surface area of 14,300 m2. The Grupo Puig has occupied the property to date.

The building was constructed by the former Catalunya Caixa (CX) for the perfume group Puig. The building was designed by architect Rafael Monea and GCA Arquitectos. The headquarters was completed three years ago, coinciding with BBVA’s purchase of CX.

BBVA’s real estate strategy

The sale of these types of portfolios is one of the channels established by the bank to reduce its real estate exposure, a strategic objective for BBVA’s Strategy and M&A area. In line with this strategy, in March, BBVA completed its second sale of a wholesale portfolio in 2017 (Project Boston), following the divestment of 3,400 properties (Project Buffalo) in February.

Original story: BBVA

Translation: Carmel Drake

Bankinter: House Prices Will Rise By 3%-4% In 2017 & 2018

20 February 2017 – Idealista

The rise in house prices is starting to run out of steam and will become more moderate over the next two years. That is according to forecasts from Bankinter, which explains, in a report about the real estate sector, that the limitation on the upwards potential is the consequence of several factors.

On the one hand, prices are now reaching their pre-crisis levels in many areas, primarily in prime locations and, on the other hand, the financial effort that families are having to make to acquire a home is starting to increase once more.

As a result, the capacity of families to access the residential market will be limited if prices rise at disproportionate rate. In this way, Bankinter estimates that house prices will grow by between 3% and 4% in 2017 and 2018. Moreover, the entity insists that, despite the moderation in price increases, the residential market will continue to rise.

One of the reasons is the shortage of supply, given that the number of finished homes is still at historical lows (40,000 homes were completed in 2016) and the fact that that figure cannot cover the normalised demand of around 200,000 new homes per year. “The combination of the scarcity of supply and the increase in house sales (which exceeded 400,000 operations in 2016) will continue to put upwards pressure on prices”, said the bank, which insists that, in this context, prices will continue to rise.

On the other hand, the report highlights the appeal of large cities, primarily Madrid and Barcelona, which are registering YoY price increases of between 4% and 7% and which have now recorded increases for eight quarters in a row. By contrast, average prices are still adjusting downwards slightly in YoY terms in other cities such as Bilbao and Sevilla.

Another factor that is also affecting prices is the increase in rental prices, which are also being driven upwards by the evolution of leases in the large cities, where, like in the case of the purchase market, there is a shortage of supply and high demand.

Demand for 500,000 homes.

The financial institution predicts that residential demand will continue to rise. “The upwards trend will continue for the next few years. We expect growth of almost 10% in 2017 and for demand to reach 500,000 homes by 2018”, explains the report.

But what is behind this increase? As sources in the sector have been commenting for several months, the drivers of demand are economic growth and the creation of employment, as well as the fact that housing is becoming more attractive as an investment opportunity and that financing conditions are still accessible.

Nevertheless, and this is where the experts are focusing, none of these drivers are reducing the effort that families are having to make to buy a home.

“The effort (that families are having to make) has risen again to 6.6 years of annual household income (compared to 6.2 years at the end of 2014) and there is no scope for improvement in terms of financing conditions. Finally, Sareb’s marketing of discounted homes located in areas characterised by oversupply will continue to limit the increase in average prices”, said Bankinter. (…).

Original story: Idealista

Translation: Carmel Drake

RE Investment Returns To Pre-Crisis Levels: €10,200m In 2014

20 February 2015 – El Economista

Spain became the second largest real estate market in terms of investment in 2014, behind Sweden. Specifically, investment in real estate in Spain amounted to €10,200 million during the year, a record surpassed only in 2007, just before the start of the crsis.

CBRE explains that the transactions closed during the last quarter of the year boosted this strong result. Between September and December 2014 alone, real estate investment in Spain amounted to €3,396 million, i.e. 50% more than in the same period in 2013.

These figures are in line with the trend across Europe, where investment in real estate assets increased by 32% in 2014, to €218,000 million. In the last quarter alone, investment reached €78,000 million, the highest quarterly investment recorded since 2006.

Spain was ranked as the sixth country in terms of inwards investment during the last quarter, above countries such as Norway, Denmark and Italy.

What about in terms of debt?

In terms of real estate debt, the total stock across the European continent increased by almost €23,000 million in 2014, to €978,000 million, primary due to the entry of new credit. According to CBRE, the amount of new debt issued rose by 47% in 2014 with respect to 2013, although in absolute terms this figure was less than half of the volume of debt issued in 2007.

The consultancy explains that this increase in new debt was due to the growth in the size of the real estate investment market. And the total value of investment transactions in Europe increased by 32% last year, to reach €218,000 million.

Moreover, the number of investors with an appetite for risk increased, especially in Spain; these investors tend to make more use of leverage, both to increase their purchasing power and improve their returns.

Real estate loan portfolios

In terms of the sale of non-performing real estate loan portfolios, CBRE says that the transaction volume amounted to €49,200 million in Europe in 2014, more than twice the figure recorded in the previous year.

This growth was particularly significant in Spain, where a rise of 103% was recorded, up from €3,200 million in 2013 to €6,500 million in 2014.

Looking ahead to 2015, CBRE expects the sale of real estate loan portfolios to continue and to expand into new markets, although it does also expect the pace of sale of these portfolios to decline.

“This is because of the time that the market needs to overcome a number of structural obstacles that currently stand in the way of a liquid market for loan sales in Europe”, it adds.

Original story: El Economista

Translation: Carmel Drake