Tag: price

HomeAway: Holiday Home Revenues Grew By 4% In 2015

8 July 2016 – Expansión

Spanish residents spent just over €1,311 million renting out holiday homes in Spain in 2015, 4% more than in 2014, according to a study conducted by HomeAway and the University of Salamanca. If we add to this amount an estimate of the other costs incurred by holiday home occupants during their stays, then this expenditure figure increases to €6,159 million, which represents 0.57% of GDP in 2015.

Over the last two years, between April 2014 and April 2016, the total cumulative rental cost paid by travellers amounted to €2,622 million, and that figure increases to €12,318 million if we take into account all the other expenditure incurred by those users during their stays (in other words, the amounts that users spend in the areas surrounding the properties they rent).

Holiday homes are becoming increasingly popular amongst travellers resident in Spain, according to the data from the aforementioned study. In the last two years, 8 million Spaniards, aged between 18 and 65, have used this business model.

Holiday homes are increasing in popularity against other more traditional option and accounted for 36% of the total market in 2015.

Users

Families lead the ranking of holiday home users, accounting for 45% of total demand, followed by couples, who represent 32%, and groups of friends come in in third place (19%).

Price is the most important and valued factor influencing consumers’ final decisions, according to the study. Location and environment are the next most prized characteristics.

The favourite regions in terms of destinations for users of these holiday homes are: Andalucía (25%), Comunidad Valenciana (14%), Cataluña (12%) and the Canary Islands (11%). Nevertheless, 70% of rentals booked in Spain are made by overseas visitors, given that the country is the preferred holiday destination for Europeans.

Original story: Expansión (by María Sánchez)

Translation: Carmel Drake

Deutsche Buys €400M Developer Loan Portfolio From Bankia

4 July 2016 – Expansión

Deutsche Bank has reaffirmed its commitment to the Spanish real estate market despite instability in the markets caused by Brexit. Last week, funds from the German entity sealed the acquisition of almost €400 million in doubtful property developer loans from Bankia.

This is the second transaction of its kind that Deutsche Bank has signed with Bankia in just six months. At the end of 2015, it acquired just over €600 million in unpaid company loans, backed by real estate collateral. In this way, the German bank became the owner of at least one hundred loans linked to property that had originated on Bankia’s balance sheet.

Sources in the market estimate that Deutsche Bank could have paid just under €150 million for this latest operation, known as Project Ocean.

With these types of portfolios, funds are typically looking for loans that give them relatively easy access to real estate collateral, either through legal foreclosures or agreements with the borrowers.

These deals allow the vendor entities to reduce their default rates; lower their risk-weighted assets; generate gains, in some cases; and focus their resources on granting new, profitable, loans.

In fact, Bankia is close to completing another major divestment within the next few days, with the transfer of 2,500 flats to the fund Sankaty, the subsidiary of the US giant Bain Capital. These properties have been valued at between €300 million and €400 million.

A new star

This investor has become the largest purchaser of problem assets from the banks (in Spain) in 2016. In this way, in addition to Bankia’s portfolio, Sankaty signed another two acquisitions last week: Project Pirene, comprising €460 million in problem assets linked to property developers, from Sabadell; and Project Baracoa, containing 2,400 loans to bankrupt companies, worth €530 million, from Cajamar.

Sector sources say that these operations prove that investors are still interested in Spain, even through Brexit has made the financing of these purchases more difficult.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Sareb Puts 1,300 RE Assets In Madrid & Barcelona Up For Sale

21 June 2016 – Expansión

Sareb has launched a commercial campaign to sell a selection of more than 1,300 assets in the metropolitan areas of Madrid and Barcelona. The majority of the properties are new and second-hand homes and they are being marketed under an initiative that goes by the name “MAD-BCN/BCN-MAD”, which will run for three months.

Potential buyers can access the full list of properties through a dedicated website that allows users to search by location, as well as access detailed information and request more data by email or telephone. It is also possible to buy a property through the website, and to make direct contact with the marketing platform to execute an operation. The four platforms that support Sareb (Altamira Asset Management, Haya Real Estate, Servihabitat and Solvia) are responsible for marketing these properties.

The assets included in the campaign comprise a “very competitive” portfolio, thanks both to their prices and their location, according to the so-called bad bank

Original story: Expansión

Translation: Carmel Drake

The Puerto Banús Sale Runs Into Difficulties

4 May 2016 – El Confidencial

Puerto Banús (Marbella) has always been a clear object of desire. Its name is associated with glamour, parties and luxury. And it has been up for sale for several months now. The company behind this leisure and port complex in Marbella wants to generate cash. But the death of Alberto Vidiella, the Chairman of Puerto Banús, in February is making the sales process more complicated. The death of Vidiella and the harsh conditions imposed by the Andalucían Government are making the sale of the company to a Swiss/Chinese consortium, led by Credit Suisse, more difficult and theirs is the only firm offer that the company has received to date.

Several auditors analysed the balance sheet of Puerto Banús at the end of 2015. No price has been set yet, but experts in the sector calculate that the cost of the company will not exceed €100 million. (…). Is the Wanda Group behind the Swiss/Chinese consortium? The owners deny any conversations with the Asian corporate giant. (…). But according to real estate sources in Madrid, Wanda would be willing to pay up to €250 million for the company. (…).

Meanwhile, Wanda could be behind the purchase of the iconic Marbella Club Hotel, according to the ABC newspaper in Sevilla. However, an official spokesman for the luxury tourist complex denied that claim to this newspaper. “There is nothing in it. We have invested a lot of money in the hotel in recent years and there are always rumours. But we are not for sale”, said Rudolf Graf von Schönburg, advisor to the complex. (…).

The Andalucían Government is aware of the offer from the Swiss group. The Public Agency for Ports in Andalucía, led by Alfonso Rodrígeuz Gómez de Celis, confirmed to this newspaper that it received a letter on 29 January, from an international consortium interested in finding out more about the conditions for a possible expansion (of the marina) into the open sea and extensions of the concession term. The regional government is not responsible for either matter; the State is. (…).

For the time being, no other offers have been received for Puerto Banús, although conversations and interest from other overseas investors, above all high profile British and German funds, are continuing in a steady trickle (…).

One of the main problems facing all of the parties interested in buying Puerto Banús are the intentions of the Regional Government to not allow the construction of any hotels or shopping centres on the site in the future. The plans only include an increase in the number of berths, by 450, worth at least €75 million. (…).

Original story: El Confidencial (by Agustín Rivera)

Translation: Carmel Drake

Speculation Returns To The Market For Land In Madrid & Along The Coast

11 April 2016 – ABC

During the years of the crisis, investors regarded land as one of the least attractive assets. In fact, in the face of scarce demand and the paralysis in the construction sector, land values fell to historic lows. (…).

Sales of urban land, the substratum of real estate developments, are growing again after nine years of consecutive decreases. And they are doing so at a healthy – and on occasion, vertiginous – rate in certain areas of the country where the housing market has already started its recovery, such as the more illustrious areas of major cities, including the north of Madrid and established areas along the coast (Málaga, Palma de Mallorca and the Canary Islands). So much so that a warning is now spreading amongst analysts and agents in the sector: the scarcity of developable land – which does not require land planning approval – in certain areas, and renewed interest from investors is generating a new “overheating” in the price of transactions, something not seen since the burst of the real estate bubble.

The latest “Market Trends” report prepared by Solvia, the real estate arm of Banco Sabadell, warns that the expectation of a strong recovery in value is incubating operations of a speculative nature. “The fact that the supply of well-located land is scarce in areas with demand, that there is widespread liquidity in the market and that there is fierce competition to acquire assets, means that land purchases are being made for speculative purposes, in certain specific cases, for subsequent resale at significantly higher prices”.

In this sense, the study, which does not cite who is behind such transactions, highlights the cases of the Madrilenian neighbourhoods of Valdebebas and Montecarmelo. In the case of the latter, the price of land has risen by between 40% and 60% to €2,400/m2.

Montecarmelo and Valdebebas

Fernando Rodríguez de Acuña, Director General of Operations at the consultancy firm RR de Acuña y Asociados distinguishes between three players in the race for land: the financial entities and large investors, who have put their assets up for sale “in stages” and the small and medium-sized funds, which are more prone to speculative operations given that they seek high short-term yields. The confluence of these players has given rise to a situation in which both the activity and value of these real estate assets have increased significantly, if we exclude the statistical effect of operations carried out by financial entities foreclosing unpaid debt. Thus, the number of transactions carried out by operators in the sector (developers, funds and cooperatives) increased by 37% in 2015 compared with the year before and by 60% in terms of transaction volume. (…).

According to the experts, two operations in particular have caused prices in the land market in the Spanish capital to sky-rocket: firstly, the sale of 14 plots containing more than 93,000 m2 of buildable space, by the Valdebebas Compensation Board to the property developer Pryconsa for more than €55 million and secondly, the acquisition of a plot of land in Montecarmelo by Cogesa, which belongs to the Dragados group, for more than €20 million. (…).

Original story: ABC (by Luis M. Ontoso)

Translation: Carmel Drake

Significantly Fewer Homes For A Much Smaller Population

7 March 2016 – Cinco Días

The real estate sector is preparing to undergo a comeback this year after the burst of the real estate bubble caused house prices to depreciate by 35% since 2008 and more than half of its productive fabric was destroyed. The cranes have returned, albeit, in moderation, for the time being. And the demographic projections support this caution, given that between now and 2029, Spain is expected to lose one million inhabitants.

In the face of some apparently overly optimistic estimations from certain players in the real estate sector about the evolution of the market this year, experts and other operators, such as the national trade association of property developers APCE emphasise the need for prudence and restraint when taking on new projects.

The truth is there are many reasons to be optimistic. House prices seem to have bottomed out across most of the country, sales are continuing to maintain the good tone with which they closed last year and the return of financing has resulted in a higher volume of solvent demand. If the improvement in the labour employment continues in the short and medium term, then property developers will be in no doubt that 2016 will be the year of the return of construction with figures showing the market taking off, after it lived the worst crisis of its recent history.

But, as always, there are risks and threats that cannot be ignored. The most short-term factors will be those relating to the good performance of the economy: employment, credit and interest rates are three key variables. Plus, the political climate. (…).

However, one of the variables that was critical during the previous real estate boom and which all Governments and economic agents must bear in mind is that of demographics.

At the end of this year, the National Institute of Statistics (INE) will update its long-term population projections, which it does every two years. The last update, at the end of 2014, drew devastating conclusions that the real estate market cannot ignore if it wants so avoid another phase of runaway growth, with the undesirable effects on price, supply, indebtedness, activity and employment. Thus, in 2015, INE’s first prediction was fulfilled. It was the first year during which the number of deaths exceeded the number of births, and so began the population decline that INE has forecast will happen over the next 15 years, which will amount to 1.02 million inhabitants (2.2%) in total and will amount to 5.6 million inhabitants over 50 years. In this way, there will be 45.8 million residents in Spain in 2024 and just 40.9 million in 2064.

The reduction in the population will happen as a result of this gradual increase in deaths over births, a trend which, if nobody remedies it, will become even more accentuated, above all from 2040 onwards, and which will not be mitigated even by the flow of migration. Not even considering that over the same period there will be a net positive migration balance of 2.5 million people  (the difference between immigrants who arrive in Spain and Spaniards who move overseas). The truth is that the baby boom generation, the largest in Spain’s recent history, explains to a large extent how the most prolonged period of rising prices and house sales last century was created from the end of the 1990s. (…).

Gómez-Pintado has already launched a study at APCE to calculate, in the most comprehensive way possible, what the demand for homes will be by autonomous region between now and 2017. “The purpose of the study is to establish ranges of need for housing and to avoid constructing in places where there is no demand”. (…).

Although the study has not been completed yet, Gómez-Pintado revealed that his projections will fall in the intermediate range, between the most pessimistic, i.e. those who calculate demand of just over 60,000 homes per year, and those who are convinced that almost 250,000 new homes may be built.

According to Josep Oliver, Professional of Applied Economy at the Universidad Autónoma de Barcelona, not even the pull on demand for housing from foreigners can justify the construction of 250,000 homes per year. (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

The Price Of Existing Homes In 2015 Recorded The Highest Increase Since 2006

4 February 2016 – El Mundo

The price of existing homes in Spain recorded, in the second half of 2015, an increase of 5.76%, representing the highest growth rate since 2006, according to XXII Market Report from Tecnocasa Group and the Pompeu Fabra University (UPF) in Barcelona. With this slight increase, the price per square meter has averaged in Spain the 1,560 euros.

As explained by the Head of Department of Reports Analysis  (DAII) of Tecnocasa Group, Lázaro Cubero, after a cumulative decline of 55.29% from the peak of the historical series (late 2006 – early 2007), the data the second half of 2015 shows that the market “is in a phase of slight growth.”

Seville is the only city that has not experienced a rise in the price (stays stable), while the highest increase was registered in Barcelona, ​​where house prices rose by 8.2% and now stands at 2,217 euros per square meter. It is closely followed by Madrid with an increase of 6.13% and 1,697 euros per square meter, and Zaragoza, where the price has risen by 4.29% and stands at 1,046 euros per square meter.

The average mortgage amount also grows

The average mortgage amount has also recorded a slight growth of 3.1%, following the change in trend that began in the first half of 2015 and now stands at 91,992 euros. Despite this increase, the monthly mortgage payment remains stable at 358 euros per month, due to the fall in the mortgages cost.

CEO of Tecnocasa Group, Paolo Boarini, has stated that credit entities begin to show more confidence and a trend towards more normal parameters as to granting mortgages, as drawn from the risk indicator analysis. For instance, from 2009 a tendency to grant shorter mortgages was observed, but in the second half of 2015 there has been a slight increase in the longest mortgages (mortgages to 35 years have gone from 2.3% to nearly 4% and 40-year mortgages from 1.4% to almost 3%).

Investment Buying remains steady

According to the DAI a 75.35% of buyers purchase housing to live in it, compared to 24.65% who buy it as an investment, a proportion that has remained stable for the past three years. The possibility of investing in housing “is still interesting due to the profitability offered by the market,” said Cubero, who added that the rent price “is rising in the big cities.”

José García-Montalvo, Professor of Economics at UPF and coordinator of the report, pointed out that the first-home buyer “has gained weight in the market thanks to the opening in the funding,” whereas investors in the current economic situation, have been found in housing “the only asset that provides positive returns.”

As for the first-time buyer, the majority (58.39%) uses a mortgage to pay off the property. The average profile of first-time buyer with a mortgage is that of a man (in 51.46% of cases) between 25 and 44 years (76.86%), Spanish nationality (76.42%) and with an undefined contract (78.20%).

Methodology

The report has been performed with the data of intermediated operations by Tecnocasa Group, in particular with the purchases transacted through Tecnocasa and intermediated loans by Kiron, the intermediation financial network of Tecnocasa Group.

Original story: El Mundo

Translation: Aura Ree

Deloitte: Inv’t In Shopping Centres Exceeded €1,500M In 2015

26 January 2016 – Expansión

Shopping centres are once again the most desirable assets for real estate investors, together with offices. The decrease in the price of all assets in general and the outlook for the recovery in consumption have placed shopping centres at the top of the list for funds and Socimis once again.

Although the final operations from last year have not been formalised yet, Deloitte calculates that investment in shopping centres amounted to €1,500 million in 2015, a figure than may increase by a further €100 million as a result of the transactions currently being closed, according to a study by its Financial Advisory team.

“29 operations were closed in 2015 and two or three more deals may be added to the list, once the final numbers have been formalised, which would increase total investment by around €130 million”, says Javier García-Mateo, Partner in the Financial Advisory team at Deloitte.

During the 10 months to October, investment in shopping centres in Spain amounted to €1,196 million, which fell below the figure recorded during the same period in 2014 (€2,247 million), but was higher than the amount spent in 2013 (in €867 million). Over the last three years, purchases of shopping centres accounted for around 25% of total investment volumes.

Highlights in this segment in 2015 include: the acquisition of the Plenilunio shopping centre in Madrid, for which the French group Klépierre paid the fund Orion €375 million. Lar España’s purchase of the Megapark in Bilbao, which also came in above the €100 million mark – the Socimi paid €170 million for that shopping centre. “The types of investor are very varied. Socimis and private equity funds are dominating the stage, but private investors are also making sizeable acquisitions in light of the ever lower yields being offered in the market for high street premises”, says García-Mateo.

Revaluations

The progressive increase in the interest for shopping centres has resulted in a decrease in the yield on these operations, which has fallen by 100 points in the last year, to reach 4.75%. As such it is now in line with the yields seen in other large European real estate markets such as Belgium (4.75%) and the UK (4.5%).

Another consequence has been the revaluation of this type of property. In less than two years, some shopping centres have experienced revaluations of more than 20%, says Deloitte.

Another key is the return of bank financing for the purchase of these assets. “The Spanish banks are positioning themselves strongly as financing sources against the funds of debt that have been financing shopping centre purchases until now”, added García-Mateo.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

MoD Sells A Plot Of Land In Mallorca For €5.5M

27 May 2015 – Expansión

The Ministry of Defence is continuing its real estate divestment plan to generate revenue. To this end, the body chaired by Pedro Morenés has closed the sale of a plot of land measuring 14,429 square metres, with more than 25,000 square metres of buildable area, in Cas Capiscol (Mallorca).

Given that the building is owned by the Administration, the Ministry of Defence organised a public auction, through the real estate portal addmeet. The plot of land that is up for sale houses former (army) barracks, spread over several buildings, which have been in disuse since the 1990s.

The Ministry of Defence put this land on the market for €5.318 million. In the end, it has been sold for a slightly higher price: €5.55 million. The winning bid was submitted by a subsidiary of the Catalan real estate company La Llave de Oro. The buildable plot measuring 25,131 square metres may be used for tertiary purposes, i.e. to build offices, hotels and retail buildings. Nevertheless, the general urban development plan where this land is located is currently in the process of being modified.

The Ministry of Defence also own other plots of land in Mallorca, including in Son Busquets, where it has a plot measuring more than 110,000 square metres.

Original story: Expansión (by R. Ruiz)