JLL: Hotel Inv’t Amounted To €1,030M In First 7M 2016

3 August 2016 – Expansión

(…). Hotel investment in Spain amounted to €1,030 million during the 7 months to July 2016, which represents a 41% decrease compared with the same period last year. Nevertheless, it also represents the second highest figure recorded since 2007, according to a report prepared by JLL.

Specifically, as at 31 July this year, 81 (hotel) assets had been sold, for a combined investment volume of €1,030 million through 68 operations, compared with 92 assets sold as at July last year, with a combined investment volume of €1,752 million through 55 operations.

The most noteworthy operations so far this year have featured: Hotel Villa Magna, which was acquired by the Turkish group Dogus for an estimated €180 million; and Hotel Pullman Barcelona Skipper, which was purchased by the Saudí Royal Family for €90 million.

Excluding those two operations, Spanish investors accounted for 80% of the total volume invested in Spain.

In this vein, the most active investors in the hotel market have been the investment fund HI Partners (a subsidiary of Sabadell) and Hispania, which have completed transactions amounting to €110 million and €71 million, respectively.

Meanwhile, on the sell side, hotel groups have accounted for 41% of all hotel assets sold, followed by real estate companies (26%) and private investors (13%).

For Manuel Climent, Vice-President of JLL Hotels & Hospitality Group, the decrease in investment this year reflects, in part, the lower number of hotel portfolio transactions sold this year, after they soared in Spain in 2015.

Specifically, last year, up to eleven portfolios were sold, containing 74 hotels in total, for a combined investment volume of €1,450 million. So far this year, seven portfolios have been sold, containing 21 hotels and a combined investment of €174 million.

Climent forecasts that activity will intensify in terms of hotel portfolio transactions during the second half of the year, with HI Partners and Hispania leading the way.

For Climent, the moratorium in Barcelona has caused lots of investors who had purchased assets with a view to converting them into hotels, to become more cautious again. By contrast, some owners have put their hotel assets up for sale as they think that now is a good time to sell, given the lack of supply, which is raising prices in a space that is still very attractive for tourism.

The Vice-President of JLL Hotels & Hospitality Group considers that, although some important transactions are expected to be closed before year end, total investment volumes will fall below last year’s record of €2,740 million.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Tinsa: Coastal House Prices Share In The RE Recovery

4 July 2016 – Expansión

Analysis by region / The price of tourist housing is thriving once again in many areas along the coast, including in the Balearic Islands, Canary Islands, Málaga, Cádiz, Alicante and Gerona. More than half of Spain’s beaches are experiencing clear recoveries in their property prices or are showing signs of recovery, with an increasingly active market, according to Tinsa; very few areas are still in decline.

The housing market has taken off with a bang, above all in the major cities. Nevertheless, certain other areas also stand out, in particular: the coasts, where 56% of the areas are now in recovery and where foreign demand and the limited stock in the prime areas has further encouraged increases in real estate prices. Specifically, and according to a recent report from the appraisal company Tinsa, 56.2% of the coast areas are now in a process of recovery, whilst prices have bottomed out in 28.1% of areas and only 15.8% are still experiencing price decreases.

In this way, the report highlights the Balearic and Canary Islands, which have several areas in “clear recovery”, followed by the Costa del Sol (Málaga) and the Costa de la Luz (Cádiz). In addition, there are significant improvements in Barcelona, Gerona and Alicante. In these areas, a good portion of the unsold housing stock has now been sold off, given that the number of transactions has shot up, and so too therefore has the granting of new permits, which have doubled. By contrast, prices in some parts of the Comunidad Valenciana, Murcia and Andalucía are still decreasing, as the markets there are saturated with unsold properties, which means it is still possible to find bargains relatively easily. The Cantabrian Coast has experienced a more moderate evolution. There are several keys that point to the prolongation of the rising trend. “We have been observing a moderate but stable increase in prices for several quarters now, foreign demand is rising sharply, above all along the coast, which means that the remaining unsold homes are now starting to run out in many areas”, said Beatriz Corredor, Director of Institutional Relations at the College of Property Registrars. (…).

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake

Tinsa: Holiday Home Prices Rises Spread Along The Coast

15 June 2016 – El Mundo

Holiday home price increases have spread to more than twice the number of municipalities that they were seen in last year, with the Costa del Sol, Alicante, Balearic and Canary Islands enjoying the most active markets. Meanwhile, Castellón, the Cantabrian coast, Menorca and La Palma are still seeing price decreases/stabilisation. Those are the findings of the Coastal Homes 2016 report prepared by Tinsa, which shows that prices increased in 71 of the 136 municipalities analysed along the coast during Q1 2016, compared with 35 in 2015 and 4 in 2014.

The appraisal company explained that although this trend, “which is more in line with a stabilisation phase than a clear recovery” is spreading “gradually”, the coastal market is still “very heterogeneous”, given that prices in certain locations are still decreasing at an annual rate of more than 5%. The company added that the most repeated pattern is the absence of construction as well as of transactions involving land. (…).

By municipality, the towns of Teguise and Tías, in Lanzarote, recorded the highest YoY price rises during the first quarter, with increases of 17.8% and 14%, respectively, according to provisional data from Tinsa’s appraisals. They were followed by Gavà (Barcelona) and Benicarló (Castellón), both of which saw an increase of 13.2%, and Blanes (Gerona), where prices rose by 12.8%, with respect to Q1 2015.

The largest decreases were recorded in Piélagos (Cantabria), where the average price fell by 16% over the last 12 months; Antigua (Fuerteventura), down by 12.6%; and Los Alcázares (Murcia), with a decrease of 10.6%.

Price decreases of more than 50%

Similarly, the report shows that the Spanish coast accounted for a large majority of the highest price decreases during the crisis. Of the municipalities analysed, the most intense reduction since 2007 was recorded in Mataró (Barcelona), where the average price has decreased by 59.8% since the height of the boom. (…).

Stable outlook

Tinsa’s forecast for the next few months is characterised by stabilisation. Tinsa expects prices to remain stable in just over half of the regions analysed in its report and for prices to rise in just over a third of the areas. This forecast for improving prices focuses primarily along the coast of Valencia Alicante, Málaga, Palma de Mallorca, Canary Islands and San Sebastián, as well as along some stretches of the coast in Gerona, Barcelona, Cádiz and Asturias.

In terms of the supply of holiday homes, the report notes that it mostly comprises second-hand properties. The stock generated in recent years as a result of the slowdown in financing and sales is gradually being absorbed.

Moreover, Tinsa’s technical network classifies the over-supply of holiday homes as “very abundant” in just 8 of the 55 regions. These include the northern coast of Castellón; the Manga del Mar Menor; the west of Almería; the south of Barcelona; the central stretch of the Tarragona coast; the western region of Cádiz and the eastern coast of Vizcaya.

To evaluate the degree of difficulty in terms of stock absorption, Tinsa concludes that the current stock is “manageable in the short term” in 56% of the regions. This group includes the coasts of the provinces of Girona, Valencia, Huelva, Granada and San Sebastián, as well as Ibiza, Fuerteventura and Lanzarote, and most of the provinces of Alicante, Murcia and Cádiz. (…).

Original story: El Mundo

Translation: Carmel Drake

Property Developers Search For Buildings To Refurbish

3 May 2016 – Cinco Días

For the third year in a row, 2015 closed with an increase in the number of building permits, although the level of housing construction is still a long way below that recorded at the height of the boom. So great is demand in places like Madrid that investors/property developers are now allocating almost one out of every five euros to the acquisition of buildings in the centre of the capital for renovation and whereby bringing more new homes onto the market in prime areas.

The slight slowdown in construction detected by the Bank of Spain during the first quarter of the year does not seem to be affect real estate activity that much, but does affect other sub-sectors. In fact, the main market indicators show how the pull of demand for housing is continuing to strengthen and how that has driven the launch of new developments. Above all in places where most of the stock has now been absorbed and there is none left, or the surplus that remains unsold does not match what buyers are looking for.

A recent study compiled by the consultancy firm Knight Frank also shows how the recovery in housing has reduced auto-promotion, or the construction of homes by cooperatives, in favour of traditional property developers by 8%, and the banks have played an important role in the phenomenon as they have started to finance the most solvent developers with the most robust projects once again.

Nevertheless, although it might seem like the real estate business has returned to the high road once again, the fact is that the recovery has only fully arrived in certain, very specific enclaves and one of them is Madrid, and it has done so in a nuanced way and at different speeds.

“Madrid is the most sought-after area for investors in search of residential products, specifically, it receives 19% of all real estate investment. Andalucía, Valencia and Cataluña are the following most popular autonomous regions, accounting for 16%, 15% and 14% of total investment, respectively” says the report. (…).

And, in the meantime, the appetite to buy homes in the prime areas of the major cities is such that investors and property developers are starting to opt mainly to buy buildings that need refurbishing in the centre of cities, to then bring new homes onto the market that better suit the demands of buyers. In 2015, investment in entire buildings accounted for 19% of the total, whilst land purchases represented 81%.

Type of home

(…). In general, the typical buyer profile nowadays is a family with medium to medium-high purchasing power, looking for a home to reposition or improve the one they currently own “in locations with services, transport, urbanisations with common areas and quality in the design of the materials and finishes”. Thus, the most sought-after product is now a three-bedroom house, with an average price of between €230,000 and €450,000.

Does the market in Madrid offer that product in sufficient quantity so as to not generate perverse tensions in terms of prices? The conclusion of the study by the aforementioned consultancy firm is….that the supply is still insufficient. The municipality of Madrid has around 3,000 new homes registered as available. Only 30% of those are located inside the M-30, where the scarcity of land is most acute and prices are highest. 20% are located in the area between the two main ring roads (the M-30 and the M-40) and the remaining 50% are in the PAUs and new developments, some of which are located beyond the M-40. Demand for housing is distributed in a relatively similar way, which according to Knight Frank avoids major imbalances between supply and demand (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Solvia: Land Sales Rose By 37% & Prices By 11% In 2015

20 April 2016 – El Confidencial

Land is no longer the ugly duckling of the sector. Regarded as the most toxic real estate asset until just a few years ago, it has now become one of the most desired and sought-after products for investors, and that has started to lead to overheating in terms of prices in specific areas, in particular, in Madrid.

This renewed appetite is now reflected in the official statistics and in the reports prepared by some of the most active players in the sector. Such is the case of Solvia, the real estate servicer arm of Banco Sabadell, which has found that land sales increased by 37% and land prices rose by 11% in 2015, excluding the effect of transactions carried out by financial institutions and including official data, such as that published by the Ministry of Development.

According to Solvia Market View, there were 15,718 transactions involving land in 2015, compared with 14,067 in 2014, which represents an increase of 37%, and not a decrease of 1.1% as reflected in the statistics published by the Ministry of Development, which do include transactions carried out by financial institutions. Those operations were worth €1,789 million – compared with €2,585 million according to the Ministry of Development – which represents a rise of 61% – compared with 4% according to the MoD -. In terms of prices, Solvia’s data indicates an increase of 11% over the last year, taking the average price to €166/m2, still below its peak of €285/m2 in 2007.

The appetite to buy land has resulted in intense competition between the main players in the sector – property developers, cooperatives, investment funds and servicers -. Against the race to acquire land in prime locations in Madrid and Barcelona, many players – especially investment funds, have started to look further afield, where they can often generate higher returns on their investments, such as in certain provincial capitals, including Sevilla, Alicante, Málaga and the Balearic Islands. (…).

The study also reveals the prices that the different players in the sector are willing to pay for this asset. Thus, for example, property developers move in the range of €700/m2 to €1,000/m2 in Madrid and Barcelona…Meanwhile, cooperatives move in the range of €900/m2 to €1,000/m2…and investment funds, with their high yield targets, are not willing to pay more than €800/m2.

According to Solvia’s data, the most active markets, in descending order, are: Madrid and Barcelona and their immediate metropolitan areas. Then Alicante and the Costa del Sol, primarily for the development of properties for non-residents. And finally, other major cities where demand for new builds is high, such as Sevilla, Córdoba, Zaragoza and País Vasco. (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

What Can We Expect From The Housing Sector?

30 November 2015 – Cinco Días

It goes without saying that the real estate sector was the most vilified during the crisis. Blamed for almost all of the problems that ended the greatest economic boom in recent history, the sector has been striving to rise from the ashes since the end of 2013. International investors returned to Spain first, attracted by the low prices – according to statistics, property prices have now decreased by between 30% and 40% since their peaks.

Next, came a rise in the number of transactions, driven by improvements in the labour market and expectations of an economic recovery. Following this increase in sales, came a moderation in the price decreases and, finally, the cranes returned to the urban landscape of the large cities, albeit in a very piecemeal way. The housing stock, i.e. the huge surplus of new homes (389,00 units in total, according to a recent study from Tinsa), has stopped representing such a problem in certain cities and therefore, the moment to return to property development has arrived.

The problem is that the crisis has practically destroyed the real estate sector along the way. Today, sales represent just one third of their levels in 2006, firms are constructing only 4% of their historical peak volumes and instead of property developers and construction companies, the business has now diversified and is in the hands of the banks, Sareb and new servicers.

Macro-economic figures

The truth is that the key macroeconomic figures are starting to show real signs of the real estate recovery. Employment is growing by more than 3% and the flow of financing is increasing. Mortgage lending continued to increase at rates exceeding 20% in September, which means that it has now been recording double digit increases for 16 consecutive months.

Nevertheless, the experts warns that the “exit from the crisis is not going to be the same for everyone”, says Luis Corral, CEO of Foro Consultores. “There is a dual market. The euphoria being seen in Madrid, and to a lesser extent in Barcelona, contrasts starkly with those places where the surplus has not yet been digested and, therefore, nobody wants to build there”, he says.

The evolution of these two variables, employment and credit, will determine whether the recovery strengthens or stagnates at its current modest figures. Demographics are working against it, since the rate of household creation that was seen at the end of the 1990s, which really spurred on real estate demand, is not expected to be repeated, according to the population projections made by Spain’s National Institute of Statistics. That is why nowadays, almost no-one, except from the sector association Asprima and the appraisal company Tinsa, dares to venture a projection about what demand for homes will be like in the future. Both entities forecast that between 200,000 and 250,000 homes will be constructed over the next few years.

New Projects

Prudence is one of the key words that everyone is talking about in the market at the moment. Prudence in terms of projections, lending, construction etc.

Refurbishments

Moreover, the logical evolution for Spain’s stock of more than 25.5 million homes involves renovations and refurbishments. The vast majority, almost 95% of homes, do not comply with basic energy efficiency criteria and many established neighbourhoods in large cities could be rejuvenated with good urban renovation and renewal projects, with the corresponding boost to activity and employment that such projects would involve.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Tinsa: 24.9% Of Homes Completed Since 2008 Remain Empty

26 November 2015 – El Economista

24.9% of the homes completed since 2008 remain unoccupied, according to a report entitled “In-depth analysis of the housing stock 2015”, compiled by the real estate valuations, analysis and advisory company, Tinsa.

1.56 million new homes have been constructed in Spain since 2008, a figure equivalent to 6.4% of the total real estate stock, of which 389,000 remain empty. It estimates that it will take an average of 2.5 years to find owners for thema all, according to the study. (…).

Therefore, Tinsa considers that, in general, this stock of new homes will not be fully occupied until the first half of 2018.

In turn, this scenario implicitly assumes demand equivalent to 150,000 new homes per year will be sold, self-promoted or rented, over the coming years.

Nevertheless, in areas where the surplus falls below 10% of the constructed stock, it estimates that it will take only 1.2 years for them to be occupied and in areas where the surplus exceeds 50%, itestimates that this time period will increase to four years.

In this sense, funding difficulties, the increase in unemployment and the outlook of falling prices have been the factors that have slowed the number of sales.

Prices have not still adjusted to the market

Tinsa believes that prices have still not adjusted to the market and that they still need to fall for almost one third of the stock located in the areas that have seen the most construction activity in recent years.

The company also considers that prices will remain stable for 41.3% of homes, will decrease by between 0.1% and 6% for 29.5% of homes and will rise by between 0.1% and 6% for 29.1% of homes. (…).

13.9% of homes are still owned by property developers

13.9% of the empty new homes are still owned by property developers, whilst the remaining 86.1% are owned by other organisations, mainly banks.

In this context, it is hard to estimate what percentage of empty new homes are not being marketed, since it depends on the operators.

Amongst the reasons for the existence of this stock are that home owners would rather wait for prices to rise to obtain higher returns and also that no effective demand exists.

Meanwhile, the company highlights the reasons why homes on the market are not being sold or rented, including insolvent demand, poor location in some cases, high prices and the lack of established environments (local amenities etc).

Percentage by province

By province, Almería has the highest proportion of empty properties, with 38.9%, followed by Cuenca and Castellón, with 37.1% and 36.1%, respectively.

By contrast, Álava is the province with the lowest proportion of empty homes, with 10.3%, followed by Guipúzcoa with 15.2% and Navarra with 17.6%.

Nevertheless, in Madrid and Barcelona, construction needs to begin to avoid shortages within the next two years. This is also the case in the cities of Málaga, Granada, Girona, Oviedo, Santander, Vigo, Pontevedra, San Sebastián, Gijón and Avilés.

The same situation has also been identified in certain municipalities on the Costa del Sol, on the north-east coast in Girona and in Cádiz, as well as in some of the island regions, such as on the Balearic Islands and Tenerife.

Original story: El Economista

Translation: Carmel Drake

Notaries: Sales Of Second-Hand Homes Reactivate RE Market

18 August 2015 – Cinco Días

The General Council of Notaries has published its report for the real estate market in Q2 2015 – it shows an improvement in sales and a recovery in prices. Specifically, the notaries’ information, which is based on deeds included in the registries, shows that 37,641 homes were sold in Spain in June 2015, an increase of 19.4% YoY (14.4% if we correct for the effects of seasonality), of which 30,008 were flats and 7,633 were houses, with those segments experiencing YoY rises of 15.7% and 14.5%, respectively.

The most striking data to emerge from the statistics prepared by the notaries is the significant volume of second-hand home sales, compared with the lack of new home sales. 83% of the properties sold during the quarter were used homes. The strong demand (in the second-hand segment) meant that prices stopped falling at the end of Q1 2015 and actually rose for three consecutive months (by 1.9%, 1.2% and 0.4%, respectively), but by significantly less than the figures reported by INE for the period from January to March.

Exactly the opposite happened in the case of new builds. Sales in June amounted to just 3,558 (9.4% of the total), which undoubtedly compromises the Government’s plans to reduce the huge stock of unsold new homes (which stands at 535,734 properties, according to the most recent data from the Ministry of Development) and may force it to use some of those homes for other purposes, such as for social housing, in line with the demands being made by certain social organisations. (…).

The weak demand for new homes has had an inevitable impact on prices, which have continued to fall. In June, they dropped by 1.8% YoY and with the exception of April 2015 (when they rose by 5.3%), they continued to decrease throughout the quarter. The decrease in the price of new homes and the incipient rise in second-hand prices has meant that the general index, which measures the evolution in the prices of all types of homes, recorded a 0.3% decrease in June. That figure contrasts with the information provided by INE in its House Price Index for Q1 2015 (which reported an average increase of 1.5% during the first quarter) and then only a partial improvement.

In this context, the General Council of Notaries states that these figures “continue to show that the Spanish real estate market is stabilising and sales are recovering”. The recovery of the mortgage sector, which began in the first half of 2015, is going to play a key role in the consolidation of this trend. Mortgages granted for the purchase of properties increased by 32.4% YoY in June (to 17,508 loans), due to both an increase in the volume of mortgages granted to purchase homes (+32.4%), as well as a rise in the number of mortgages granted for the acquisition of other properties (+39.7%).

Meanwhile, the average amount loaned for property purchases was €130,343 (+5.2%). The average amount loaned to acquire a home was €121,445 (+4.6%), whilst the average mortgage for the purchase of other types of properties was €221,620 (+5.1%).

Finally, house sales increased in every autonomous region during Q2 2015, with Madrid and Cataluña leading the rise. (…).

Original story: Cinco Días (by Carlos Molina)

Translation: Carmel Drake

Sareb Sold 5,000 Assets In H1 2015, A Decrease Of 38%

3 July 2015 – El Economista

Sareb’s Chairman, Jaime Echegoyen (pictured above) has revealed that the entity sold 5,000 properties during the first half of 2015, which represents a sales rate of 28 units per day, with the majority of its activity concentrated in the retail market.

These figures show that the so-called ‘bad bank’ reduced its sales rate by 38.27%, with respect to the same period last year, when it sold 8,100 properties during the 6 months to June, i.e. 45 properties per day. Sareb has set a sales target of 15,000 properties for 2015.

According to Echegoyen…60% of the 5,000 properties sold during the first half of the year came from the balance sheet of property developers, as a result of agreements to facilitate the sale of homes that had been held as collateral for loans. (…).

The head of the ‘bad bank’ highlighted that the majority of the company’s debtors are small and medium-sized companies “which, in many cases, need support to settle the debtor position that they hold”. In this sense, he reiterated that Sareb “is not a bank” and therefore it cannot offer new financing, but it can collaborate by affording borrowers time and flexibility. Thus, during the first few months of the year, the company has evaluated more than 2,500 proposals from debtor companies to arrive at sale, restructuring and refinancing agreements.

Sale of land

Although the volume of property sales decreased during the first six months of the year, the volume of land sales increased, by 43% with respect to the same period last year, to reach 23, whilst the income from these transactions grew four-fold.

Moreover, Sareb closed 14 transactions in the tertiary sector, i.e. double the number recorded during the same period last year, with growth in income of almost 50%.

Echegoyen acknowledged that Sareb’s activity in the institutional market during the first half of the year “has been moderate” and he announced that the company intends to continue its divestment initiative during the second half of the year, with the launch of several loan portfolios, linked to different kinds of collateral, such as land, work in progress properties and logistical assets.

The Chairman of the ‘bad bank’ indicated that the current environment in the real estate sector “is very different” from that seen in 2012 and 2013, since the volume of transactions is beginning to grow, and prices are stabilising and have even started to recover in certain parts of the country, both for new and second-hand homes.

Social purposes

“Moreover, the recovery is not limited to the market for homes, but rather it is affecting other segments as well, such as land and tertiary assets, which is positive for us given the large range of real estate assets in our portfolio”, he added. In this sense, Echegoyen revealed that the bank plans to exploit this ‘stock’ of assets to deepen its commitment to society and he indicated that they are working to expand their social initiatives through other types of assets, beyond housing. (…)

Original story: El Economista

Translation: Carmel Drake

Investment In Property Returns To Pre-Crisis Levels

11 January 2015 – Expansión

According to the consultancy BNP Paribas Real Estate, investment in real estate assets amounted to €6,950 million in 2014, the second highest annual figure ever in Spain’s history.

The purchase of offices, hotels, commercial assets, warehouses and homes increased by 85% last year, building on the rise of 110% recorded in 2013. The figure recorded in 2014 has only been surpassed once, in 2007, when €9,000 million was invested.

By asset type, shops and above all, shopping centres, led the purchases closed in 2014 with transactions amounting to €2,367 million, i.e. 46% more than in 2013. Investment in offices exceeded €2,230 million and increased by 247%, compared with an increase of 89% in hotel acquisitions.

The types of property that best represent the reactivation of the Spanish market are warehouses and logistics platforms; investment in those assets grew by more than 406% during the year, according to BNP Paribas.

According to the consultancy, these very positive figures are set to continue in 2015. “This year will witness the closing of new transactions in the office and logistics segments. Transactions involving shopping centres will be more scarce than in 2014”, explains the consultancy.

By buyer type, the experts at BNP Paribas believe that, now that the Socimis have invested around €2,000 million in the real estate sector, this year acquisitions will be made by investors looking for “more consolidated assets, at higher prices, with a view to holding the properties for five years or more, that have no intention of selling them in the short term”, explains Francisco Machón, Investment Director at BNP Paribas Real Estate.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake