Spain’s Property Development Sector Will Continue its Expansive Cycle for the Next 3 Years

30 May 2018 – Eje Empresas

The CEO of Neinor Homes, Juan Velayos, has highlighted that the “healthy and strong bullish cycle” that the property development market is experiencing at the moment, will result in a “positive” performance over the next three years, before reaching “a situation of stability lasting many years”.

The main challenge (facing the market) is to “become more predictable”, in aspects such as the time it takes to obtain licences, a problem that may be resolved because “the market is going to continue helping”, according to Velayos.

The Director of Strategy and Investment at Aedas Homes, Sergio Gálvez, explained that the situation in the property development sector is “unique” given that it is recovering from “a very low level”.

The Executive President of Inmobiliaria del Sur, Ricardo Pumar, agrees that “the macroeconomic forecasts point to a very good situation for the next three years”.

Pumar stressed that the recovery is “widespread” but he has opted to facilitate access to housing for young people to “boost the whole sector”.

The President of Quabit Inmobiliaria, Félix Abánades, predicts that the expansion cycle “will last for six years” and he agreed that there will be “significant increases in prices” over the next three to four years.

The market for property developers is clearly expanding and growing with a very “solid” demand, he added.

Investors back the property development sector

The Partner at the consultancy firm Deloitte, Alberto Valls, highlighted that “investor appetite continues” but is still a long way off the levels seen before the economic crisis.

“There are barriers to entry, such as capital, the lack of available land to build on and the limited production capacity”, he said.

He said that half of the property development market is concentrated in Madrid, Barcelona, Alicante, Málaga and Valencia.

The Spanish sector is more fragmented than those of other European countries, given that the top five property developers account for just 6% of the market, whereas in the UK and France, they represent around 40%.

Nevertheless, Valls pointed out that “the trend is towards corporate concentration and the stock market debut of new players”.

Original story: Eje Empresas

Translation: Carmel Drake

House Prices Rise By 10%+ In Most Exclusive Neighbourhoods

5 April 2016 – Expansión

Changing trend / Madrid and Barcelona are leading the recovery in the residential market, with house price increases of 9.2% and 7.5%, respectively during Q1 2016. The appraisal value of homes is now on the rise in every district of both cities.

(…). According to statistics from the appraisal company Tinsa, the value of residential properties increased by 1.4% during the first three months of 2016, with Barcelona and Madrid leading the charge.

The average appraisal value of (unsubsidised) homes per m2 in Barcelona amounts to €2,551/m2, which is 19% more expensive than the average in Madrid (€2,142/m2). This gap between the two cities has a simple explanation: not only have house prices been rising significantly faster in Barcelona than in Madrid, but also the Catalan capital has a higher population density than Madrid, which affects supply and demand, resulting in a higher degree of concentration. Moreover, barely any new residential properties are being constructed in Barcelona. (…).

The evolution of house prices in Madrid and Barcelona varies by neighbourhood. House prices rose in all 10 districts of the Catalan capital during Q1 2016, without exception and, for the first time, they also increased in all 21 Madrilenian districts. That has not happened since the real estate bubble burst.

The ranking

The highest price increases were concentrated in Barcelona. The two districts where average prices rose by the most were Les Corts (13.5%) and Sants-Montjuïc (12.2%). They were followed by the district of Salamanca, Madrid’s main real estate district, with an increase of 11.8%.

With an average price of €3,597/m2 and despite the heterogeneity of the neighbourhoods that comprise it, Salamanca is the district with the second highest prices of all of those analysed by Tinsa, behind only Sarrà-Sant Gervasi, which has an average price of €3,671/m2 (5.8% higher than in 2014). (…)

According to calculations from the consultancy firm Knight Frank, prices are going to rise by between 5% and 10% in prime areas in 2016, especially in five areas of the Madrilenian capital, namely Salamanca, Jerónimos, Chamberí, Justicia and El Viso. (…).

In Madrid, the most expensive districts after Salamanca are Chamberí (€3,444/m2 for subsidised homes, up by 5.4% compared with Q1 2015), Retiro (€3,270/m2, up by 4.3%), Chamartín (€3,312/m2, up by 1.7%) and the Centro, which has exceeded the €3,000/m2 threshold once again (€3,014/m2, up by 3.7%). All of the others sit below this psychological barrier, such as for example Moncloa-Aravaca (€2,793/m2 and 6.9%) and Arganzuela (€2,697/m2 and 8.5%).

The cheapest areas

The cheapest areas in Madrid are Villaverde (€1,232/m2), followed by Puente de Vallecas (€1,307/m2), Usera (€1,398/m2) and Carabanchel (€1,531/m2).

Average house prices will increase significantly in the Madrilenian capital during 2016, according to predictions by real estate analysts.

In Barcelona, Nou Barris is the district where house prices are lowest (€1,752/m2), followed by Horta Guinardó (€2,007/m2) and Sant Andreu (€2,105/m2). They are the only three places in Barcelona where prices are lower than the average price in Madrid (€2,142/m2), however, as is always the case in a market as fragmented as the housing sector, each area has its own micro-market. (…).

In any case, the forecasts are promising, in general terms. “In terms of both the number of transactions and prices, there has been a certain rebound effect following the collapse of the market that had not been seen for many decades. Now we need to wait for the stabilisation of the market, for similar data to that seen last year”, says Jorge Ripoll, Director of Research Services at Tinsa.

For the upwards trend to be maintained, the growth forecasts must be met and the labour market must improve. The other factors are already working on autopilot, at least in Madrid and Barcelona.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Tinsa: Most Homes Bought In 2015 Cost Between €50k & €100k

31 December 2015 – El País

(…) Most of the homes bought this year cost between €50,000 and €100,000. That has been the most popular price range in the provinces of Madrid, Valencia, Sevilla, Zaragoza, Málaga and the Canary Islands. Homes were more expensive in Barcelona and the Balearic Islands, where they typically cost between €100,000 and €150,000. Those are the findings of Tinsa’s IMIE Local Markets Index for Q4, published yesterday, which concludes that the average price of finished homes (new and second-hand properties) rose by 1% in Spain in 2015.

This data, which represents the first YoY increase since the beginning of 2008, reflects the changing trend in the evolution of prices. Just a year ago, in the last quarter of 2014, the same index reflected a YoY decrease of 4.5%. (…).

During 2015, average prices increased the most in YoY terms in the Catalan provinces of Girona (10.7%), Barcelona (5.8%) and Lleida (5.3%), as well as in Albacete (4.5%) and Madrid (3.3%). In terms of provincial capitals, Barcelona led the ranking with a YoY increase of 8.5%, followed by Badajoz (5.7%), Ávila (4.3%) and Madrid (3.8%). Prices are expected to increase at rates of less than 5% during 2016. Nevertheless, the evolution of the market will be determined by the political panorama in Spain, as well as by the high level of debt that the economy and families still hold, and the quality of new jobs. The creation or otherwise of new solvent demand will be the main driver, to the extent that the pent-up demand, which is currently boosting the market, loses power.

“We should not forget that the market is extremely heterogeneous and is moving at different speeds depending on the area. If we compare average prices in Q4 2015 with those from the same period last year, then average prices have increased in 21 provinces and 15 provincial capitals, but at the same time, they have decreased by more than 5% in nine provinces and ten provincial capitals”, say sources at Tinsa. (…).

How long does it take to sell a property on average? 

On average, it takes 10.2 months to sell a home in Spain, compared with 10.6 months as at June 2015. Cantabria is the province where sales take the longest: 18.6 months. Sales periods significantly above the national average are also reported in the provinces of Álava, Segovia, Ávila, A Coruña, Salamanca and Vizcaya, where it takes more than 14 months on average to sell a home. The provinces where buyers are found most quickly include: Ceuta (3.7 months), Melilla (5.3 months), Soria and Santa Cruz de Tenerife, both with an average of seven months.

Barcelona stands out as the provincial capital that requires the greatest financial effort to buy a home, with 23% of gross annual household incomes being used to finance the first year of mortgages. Meanwhile, Madrid is the major provincial capital with the most liquidity when it comes to selling a home, since it takes less than six months (5.8 months) on average to sell a home, compared with 6.1 months in Barcelona and 13.5 months in Valencia.

Original story: El País (by Sandra López Léton)

Translation: Carmel Drake

ACI: RE Inv’t Will Exceed €13,000M In 2015

12 November 2015 – Expansión

The Association of Real Estate Consultants (‘Asociación de Consulturas Inmobiliarias’ or ACI) forecasts that total investment in 2015 will fall below the maximum levels achieved in 2007.

The real estate sector will close 2015 with investment amounting to almost €13,000 million, which represents an increase of around 6-7% with respect to 2014, but still falls short of the maximums recorded in 2007, according to forecasts from the Association of Real Estate Consultants.

In fact, ACI expects that real estate investment will increase again in 2016, as a result of the continuing capital flows. According to the President of ACI, Ricardo Martí-Fluxá, investment in the sector during the first nine months of the year amounted to €10,800 million, which exceeds the total amount spent in 2014 as a whole.

In this sense, ACI considers that the real estate sector is going through a period of boom and consolidation, supported by, amongst other factors: the increase in business confidence, the creation of jobs, financing, low rates of interest and liquidity in the market, mainly thanks to foreign investors.

House prices in Madrid will increase by 3%

In this context, the association forecasts that house prices in the municipality of Madrid will grow by almost 3% by the end of 2015, an estimate that Martí-Fluxá acknowledges “falls short”, given that prices are likely to rise again between 2015 and 2016.

ACI also predicts an increase in the number of transactions in 2016, given the scarce supply of quality properties and an improvement in project financing in the future.

Within the residential segment, 128 property developments (7,000 m2) have been sold in the city of Madrid and prices have varied the most in the districts of Retiro and Tetuán since 2014, with increases of more than 4%. At the opposite end of the spectrum, Moncloa and Chamartín have recorded decreases of 3% and 2%, respectively.

When asked about the situation in Cataluña, the association says that international investors are not really worried about the political uncertainty and although some hotel projects in Barcelona have been put on hold, the ACI members (which include Aguirre Newman, CBRE, JLL, Knight Frank, BNP Paribas Real Estate, Cushman & Wakefield and Savills) are not overly concerned.

Offices and shopping centres

By segment, ACI expects average office rental costs in prime locations to increase by 6.5% between 2015 and 2019. It also expects the shortage of prime products to continue next year and for demand to increase, driven by growth in PIB and employment. In fact, the quarterly volume of new office rentals has exceeded 111,500 m2 in Madrid for the first time since 2008 and 315,000 m2 in Barcelona.

In terms of shopping centres, supply remains very limited and ACI expects 630,000 m2 of new gross leasable space to come onto the market between 2015 and 2016. In 2016, investors’ interest in the shopping centre market will remain high and institutional investors will continue to participate. Socimis and new investment funds are expected to be very active, as are “family offices”, with the notable presence of Brazilian and Venezuelan families. (…).

Original story: Expansión

Translation: Carmel Drake

Servihabitat: House Prices To Rise By 6%+ In 12 CCAA In 2016

20 October 2015 – Expansión

One of the main signs of stabilisation in the real estate market is the fact that the recovery of the housing market is progressing in line with expectations. (…). Furthermore, all of the forecasts for the end of 2015 indicate that the residential sector has now emerged from the recession and put the days of negative numbers behind it. But, what about next year? What does 2016 hold?

The latest report from Servihabitat provides an answer to that most basic of questions: In 2016, “the upwards trend is expected to continue”, with an increase in sales (up by 14.5% compared with 2015), a reduction in stock (down by -24.5%), and above all, more expensive homes. Prices will increase by 6.3%, on average.

In fact, prices are expected to rise across the whole of Spain, but will increase by more than 6% in 12 autonomous regions: Galicia (8.6%), Madrid (7.2%), Murcia (7.2%), Extremadura (7%), Aragón (7%), Valencia (6.9%), País Vasco (6.8%), Asturias (6.7%), Islas Canarias (6.6%), Andalucía (6.4%), Cataluña (6.4%) and Navarra (6.4%).

Before that, house prices will close 2015 with an increase of 2.6%, driven above all by increases in Castilla y León (4.1%), Cantabria (4%) and Castilla-La Mancha (3.9%), according to the study, the first one to be conducted by the think-tank Servihabitat Trends, which forms part of La Caixa and which was “created with the aim of analysing the evolution and forecasts of the country’s financial and real estate sectors”.

House sales

Most of the estate agents surveyed for the report say that “the stabilisation of house prices during the first half of the year” will serve as a prelude to a notable increase next year. “The forecast upturn in house prices is a clear indicator of the signs of recovery in the sector”, says the report.

Most of the operations involving the purchase of primary residence homes “will range between €79,000 and €167,000, depending on the geographic location of the product”.

Be it due to the cautious opening of the mortgage tap or because the days of price decreases are now behind us – in aggregate terms – the fact is that house purchases will grow strongly in both 2015 and 2016. Specifically, by 26.6% this year, to reach 403,000 transactions and by 14.5% in 2016, to reach 461,000 sales. These forecasts sit at the top end of the range predicted by other experts. For example, the President of the Foundation for Real Estate Studies (‘la Fundación de Estudios Inmobiliarios’), Julio Gil, thinks that “last year, there were 365,594 transactions and this year we expect to see between 350,000 and 400,000”. But he adds, “We do not expect sales to increase significantly YoY during the second half of this year. That would leave the final figure in a range between 370,000 and 380,000 house sales”. It is worth remembering that 190,135 homes were sold during the first half of the year, according to the Ministry of Development.

Servihabitat also predicts a sharp decline in the number of homes for sale without a buyer. The stock, which amounted to more than 675,000 units at the end of 2014, will decrease by 31.5% in 2015 to 462,000 homes. In 2016, a further 24.5% will be absorbed, taking the total to 349,000.

The study concludes that “a process of gradual normalisation is taking place in the residential market in Spain with an increase in house sales and a gradual appreciation in house prices”. And that normality is certainly welcome news.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Solvia: Madrid Sets The Pace Of Spain’s RE Recovery

24 September 2015 – El Mundo

The (average) recovery currently happening in the Spanish housing sector is characterised by its uneven nature. It really depends on the area of the map you look at. You could almost say it varies by neighbourhood. That is one of the main findings from the first “Solvia Market View” report about the trends in the real estate market, prepared by Solvia and presented in Madrid by Javier García del Río, the Director General of the servicer. As the study points out, the engine of the recovery is clear: it’s Madrid.

“Madrid is setting the pace of recovery in the sector. It is ranked as the hottest market, with a significant volume of development activity, especially in the North and North-East of the city; and prices there are rising” according to the report. Besides Madrid, it is mainly Barcelona and the Costa del Sol that are showing the best signs of recovery from a real estate perspective, in the form of increases in prices, transactions and residential construction activity.

In other words: “The clean up of prices has now concluded in Madrid and Barcelona”, according to García del Río, who highlights the “demand for prime (RE)” factor when he talks about the Costa del Sol. “In other areas”, he adds “the emerging recovery in the property sector still needs to be consolidated”. And he offers advice for this to happen: “Make the product attractive to buyers” (both in terms of the price and quality of properties).

In his opinion, the real estate sector ought to know how to benefit from the “favourable wind that is blowing” at the macroeconomic level at the moment (in terms of the economy, employment, financing, etc) and “move towards a higher degree of sophistication”, with micro analysis by neighbourhood. “Before, the market was driven by supply, now it is driven by demand”, he says. In this way, García del Río talks about a positive “gentle recovery” in terms of overall prices. And he dismisses the desire for any sharp increases: “A rebound like the one we saw in 1993 would not be a good thing right now”.

These general trends set out by García del Río are already bearing fruit for Solvia. Across the country, this servicer – “which was born out of necessity” (to sell Banco Sabadell’s assets)- has seen how the sales prices of its homes increased by 3.9% between January and May 2015, with respect to the same period in 2014. Similarly, Solvia has increased its rate of sales by 1.5% and has tripled its sales of land. “We are aiming to become one of the largest real estate companies in the country, but we also want to improve awareness about the sector”, he says.

Finally, García del Río, does not hesitate in stating that “the rental market needs to grow because socially Spain needs it, above all, to drive mobility, albeit through good operators”, he specifies. At the end of 2014, Solvia estimated that the percentage of rental homes over the total residential stock amounted to 17.6% – with levels exceeding 25% in cities such as Madrid and Barcelona -. Between 2015 and 2017, rental homes are expected to account for between 20% and 30% of Spanish homes at the national level.

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

AEV: Activity Is Returning To The Home Appraisal Sector

17 March 2015 – El Economista

Activity is returning in the home appraisal sector, with increasingly higher growth each quarter; meanwhile the real estate market is stabilising, according to data from the Spanish Association of Value Analysis (AEV).

Thus, the number of building projects valued, which amounted to 179 in the first quarter of 2014, increased to 224 in the second quarter and to 367 in the third quarter.

Similarly, new appraisals of individual homes, which experienced year-on-year growth of 7% during the first half of the year, accelerated to 10% in the third quarter.

Prices are not rising in the same way

However, the recovery in the sector is not being accompanied by an increase in prices, according to the AEV. The average appraisal values for housing blocks continued to decrease to September 2014, from an average value of €1,342/m2 in the first quarter down to €1,262/m2 in the third quarter, i.e. a decrease of 5.9%.

Meanwhile, data regarding detached homes (viviendas unifamiliar) showed stability during the course of the first nine months (of 2014).

For the secretary of AEV, José Manuel Gómez de Miguel, this data “provides statistical confirmation of the recovery in the residential sector and of the solvent demand for credit that had already begun to be felt in 2014”.

Original story: El Economista

Translation: Carmel Drake

Fotocasa: How Long Does It Take To Rent Out Or Sell A Home?

3 March 2015 – El Economista

On average it takes 4.5 months to rent a house and 11 months to sell one.

On average it takes four and a half months to rent a home, whereas it takes around eleven months to sell a property, according to a survey conducted by based on 2014 data.

Specifically, 90% of owners who rented out their homes in 2014 did so in less than six months; 7% did so in seven to twelve months; 2% did so in thirteen to twenty-four months; and just 1% took more than two years to rent out their homes.

Why it is quicker to rent out a property?

In terms of the factors that allow property owners to speed up the rental process, the real estate website indicates that 49% of owners that leased properties in 2014 had to reduce the initial asking price and did so by around 10%, on average, equivalent to €81, the lowest reduction in the last four years.

Nevertheless, of the 28% of users that did not manage to let their properties in 2014, 48% reduced the price by 12%, equivalent to €92. Moreover, 56% of those that did not rent out their properties, lowered the price between and first and the fifth month, 35% reduced it between the sixth and eleventh month, and 8% reduced it after a year.

Experts at state that “the price of rental housing will continue to decrease throughout 2015 because supply is ample and varied, although the decreases will be small, just a few decimal points, and they will be experienced alongside increases in some parts of Spain.

Other findings from the study show that 42% of the users surveyed state that the properties they put up for rent in 2014 were their own primary residences, followed by 28% who rented out a second home and 8% who let out homes that they had inherited.

Original story: El Economista

Translation: Carmel Drake