Tag: provincial capitals

Renta & APG’s Socimi Buys 2 Residential Complexes For €25M

15 June 2017 – La Vanguardia

The Socimi created by Renta Corporación and the Dutch pension fund APG has closed its first operations in Spain with an investment of more than €25 million.

Specifically, the vehicle, which was launched at the end of April, has acquired two residential complexes in the Madrilenian towns of Navalcarnero and Rivas-Vaciamadrid, which together cover a surface area of 20,891 m2 and contain 335 rental homes.

In Rivas-Vaciamadrid, the Socimi, which is managed exclusively by Renta Corporación, has purchased a building located on Calle Jovellanos, with a surface area of 12,743 m2, which is divided into 200 homes, parking spaces and storerooms.

In Navalcarnero, the new company has completed the acquisition of a property located at number 5 on Calle Pino Negro, which has a surface area of 8,148 m2, spread over 135 homes with parking spaces and storerooms.

According to a statement issued yesterday by the Catalan real estate company, the homes in both buildings are leased almost in their entirety and the Socimi plans to continue this arrangement over the medium and long-term.

This operation represents the launch of the Socimi’s activity in the Spanish market, where it will focus its activity in Madrid, Barcelona and the main provincial capitals, with an investment capacity of €250 million to acquire residential rental assets.

The company, which is currently in the market analysis phase, is working to close new acquisitions over the coming months and to become “a major player in this segment”.

The Socimi’s aim is to debut on the stock exchange within the next two years and accumulate properties worth more than €1,000 million.

The Socimi allows Renta Corporación to expand its market and obtain higher recurring revenues, whilst for APG this move represents its entry into the Spanish market.

Original story: La Vanguardia

Translation: Carmel Drake

Buy-To-Let Properties Generate Returns Of 10%+ In Spain’s Large Cities

30 May 2017 – Expansión

Buy to let / The gross annual return from buying a home and putting it up for rent amounted to 4.3% in the first quarter of 2017, according to the Bank of Spain. If we add to that the fact that the price per square metre rose more sharply than during the previous quarter, then the total return exceeds 9%. And the equivalent figures are in the double digits in the largest provincial capitals.

After seven years of crisis and three years of recovery, investment in housing is now enjoying a new golden age. Without the excesses of yesteryear and with the lesson of the bubble very much learned, professionals and individuals alike have set their sights on the residential sector once again as the generator of profits. (…).

The major indicator in the sector nowadays is not so much house prices – which are still important – but rather returns. In the main Spanish provincial capitals, the average gross yield from rental homes is 5.93%, according to a study of the yield on rental homes in 2017, compiled by Invermax. (…).

That 5.93% is higher than the overall average for Spain, which amounted to 4.3% in the first quarter of the year, according to the Bank of Spain. If to this return, we add capital gains, the average gross rate of return per annum increases to more than 10% in Spain. To calculate the return from capital gains, the Bank of Spain uses house price data from INE, which will be published on 8 June. But, taking into account the registrars’ statistics, which revealed an increase of 7.7%, the analysts are convinced that the average return, including capital gains, now exceeds 9%. Moreover, in the large cities, these figures are comfortably in the double digits. For example, the annual return in Barcelona is 17.7% and in Madrid, it is 13.4%, if we combine Invermax’s yield data by city with the local prices published by Tinsa. (…).

The economic environment “is completely favouring the yields on these kinds of assets…” said Jesús Martí, author of the report compiled by Invermax, a company that belongs to the Enacom group. “The reasons driving the increase in the gross rental yield are….the fact that house prices in Spain’s major cities have bottomed out, demand is continuing to rise, especially for rental properties…”. Also, unemployment rates in the provincial capitals stand at around 10% and there is a persistent shortage of available homes for rent. (…).

According to Beatriz Toribio, Head of Research at Fotocasa, “The rental market still has a lot of potential in Spain. The country mainly comprises homeowners, but consumers are gradually opening up to the rental culture, as a result of the economic, socio-demographic and employment changes that are happening across Spanish society”, she said. (…).

According to data from Fotocasa, the most profitable autonomous regions for buying a home and subsequently renting it out are Cataluña, Madrid, the Canary Islands and the Balearic Islands, where yields amount to more than 6%. In some towns in Cataluña and Madrid, that percentage increases to 7% in certain areas and even to 8% in one district in the capital, specifically, Villaverde. (…).

And so we ask the million-dollar question once again: Is now a good time to buy a home and put it on the rental market to obtain returns? The general answer from the real estate experts is a resounding “Yes”, with increasingly less hesitation. However, the choice of investment (area, size, features and the level of demand for rental housing, amongst other factors) is fundamental.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Tinsa: House Prices Rose By 6.1% YoY In Large Cities In April

10 May 2017 – Expansión

House prices are continuing to rise sharply, boosted by an acceleration in the large cities and in the Balearic and Canary Islands, according to the latest estimates from the appraisal company Tinsa. Specifically, the price per square metre of properties rose by 2% in April with respect to the same month last year, according to figures published yesterday.

Although those figures are seven-tenths lower than those registered in March for the country as a whole, we cannot speak of a slowdown, given that the general trend over the last few years has been increasingly bullish. Moreover, the data also reveals a growing acceleration in several key markets, such as the large cities, where prices rose by 6.1%, and the Balearic and Canary Islands, where property prices rose by 4%.

In this way, the rise in house prices in Spain’s provincial capitals and large cities has accelerated by six-tenths with respect to the same month last year, to reach its highest rate since the outbreak of the crisis. This increase is being spearheaded by some of the prime areas of Madrid and Barcelona, where supply is constrained and demand is rocketing. Nevertheless, over the last few months, the price rises have been spreading to more and more neighbourhoods, given the strong buyer pressure in the most sought-after areas.

Meanwhile, property prices in the Balearic and Canary Islands are rising at a rate of 4%, driven by two main factors. On the one hand, the high level of demand from overseas buyers. On the other hand, the purchase of homes as investments, given that owners can rent them out easily for short-stays for most of the year, which raises their yields. Prices in these regions have fallen by 27.8% since 2007, i.e. by one-third less than the average.

On the other hand, this situation contrasts with the weakness in house prices along the Mediterranean Coast, in metropolitan areas and small towns, where there the stock of homes for sale is greater and demand is lower. (…).

Two speeds

(…). By way of illustration, house prices in the Mediterranean region are still 46% lower than their peak levels of 2007. (…).

In metropolitan areas, prices are still falling, with a decrease in property prices of 2.6%. That data also represents a slowdown of more than two points with respect to last month and is a kick in the teeth for a market that has seen its price plummet by 45.9% since the real estate bubble burst. The reason is precisely due to the fact that the crash in the market made house prices in the centre of large cities more affordable, which meant that most buyers did not have to move tens of kilometres away to buy a home.

Original story: Expansión (by P. Cerezal)

Translation: Carmel Drake

Will 2017 See The Consolidation Of The RE Sector?

30 April 2017 – Expansión

Outlook / The experts believe that house prices will rise by around 5% and sales by more than 10% this year.

The recovery in the housing market is unequivocal and so the question that the real estate consultants are now asking is: “Will 2017 be the year of consolidation?”. In other words, “Will the recovery extend across the whole country and will the sector reach cruising speed?”. That is the million-dollar question.

The consensus of the real estate experts consulted by Expansión reveals that house prices are expected to grow by between 4% and 6% in 2017. Similarly, the overall forecast is that the number of residential property sales could reach 500,000 this year, which is regarded as the “healthy” or “normal” level for a market such as Spain.

There is also consensus that the number of operations involving new and second-hand homes will rise by around 10%, at least. Spain’s National Institute of Statistics (INE) certified that 403,866 homes were sold last year, up by 13.6% compared to 2015. It was the first time since 2010 that the figure had exceeded the 400,000 threshold, and this year will be even better, in the opinion of the analysts. House sales will grow in every single autonomous region in 2017, above all in Cataluña, the Balearic Islands, the Canary Islands and Madrid, which are the four regions that are setting the trend for the sector as a whole.

Something similar is happening with average house prices. The boost from the large cities is now having an effect on medium-sized (provincial) capitals, the majority of which are clearly recovering in 2017. Not in vain, Tinsa reported a few weeks ago that the appraisal value of residential properties experienced a YoY increase of 2.7% in March, but rose more than twice as much, by 5.5%, in the provincial capitals and major cities.

Almost all of the forecasts from the major real estate analysts place the rise in prices at around 5%, and underline the disparity in the various real estate markets in the country. Servihabitat thinks that residential property prices will rise by 4.3%. The consultancy firm Aguirre Newman estimates “growth of around 6%”. JLL predicts that prices in city centres and in exclusive locations along the coast will see “increases of more than 6%”. CBRE forecasts that house prices will rise by between 4% and 5% in 2017 and by more than 6% in Madrid and Barcelona”.

The creation of new households and, above all, the significant increase in purchases by investors is spurring on demand. These two variables, combined with the significant rise in the rental market, mean that Madrid and Barcelona are still the major drivers of the market. During the first quarter of 2017, prices rose by 12.1% in the Catalan capital and by 7.7% in the Spanish capital.

The data from the other three large cities is much less extreme. The price of homes rose by just 1.1% in Valencia, fell by 1.1% in Sevilla and increased by 2.5% in Zaragoza. Other capitals saw higher increases in house prices, including Alicante (+11.7%), Vitoria (+9.3%) and Las Palmas de Gran Canaria (+7.8%). (…).

Original story: Expansión (by J. M. Lamet)

Translation: Carmel Drake

Tinsa: House Prices Rose By 5.5% In Large Cities In March

19 April 2017 – Expansión

The latest statistics confirm the continuation of the good vibe in the housing market, which is advancing at cruising speed thanks to the boost from large cities. Last week, the appraisal company Tinsa reported that the average appraisal value of residential properties experienced a YoY increase of 2.7% in March.

The YoY price rise amounted to 5.5% in large cities, which account for 40.8% of the market, according to the weighting that Tinsa applies to calculate the statistics. Major cities saw their positive evolutions accelerate in March. Although the average price in January was 1.5% higher than at the end of 2016, the increase during the first three months of the year amounted to 3.5%, thanks to the fact that the rise in March was 2.2 points higher than in February.

Once again, the most marked price increases were recorded in the Balearic and Canary Islands: up by 7% on average. In both cases, the increase in demand for holiday homes and in purchases made by overseas investors, are spurring on the recovery in the real estate sector.

Something similar is happening on the Mediterranean Coast, which saw prices rise by 1.9% YoY, despite the huge surplus of new unsold properties in certain provinces in the region, above all in Castellón.

The cities and the coast are the two segments where the housing market has performed the best traditionally, due to the high level of demand. In the case of provincial capitals, due to the creation of new households and, above all, the marked increase in purchases made by investors. Those two variables, combined with the strong rise in the rental market, mean that Madrid and Barcelona are continuing in their role as the real engines of the housing market.

In aggregate terms, the residential market is following the positive trend with which it started the year. The growth of 2.7% is almost one point above the figure recorded in February (1.8%). These increases are in line with Tinsa’s forecasts for 2017. The Head of Research at the appraisal company, Jorge Ripoll, revealed his predictions: growth will be almost flat this year, “ranging between 0.1% and 2%”. This is a moderate estimate, compared to those published by other analysts. Overall, the consensus amounts to around 5%.

The other two real estate sub-markets analysed by Tinsa experienced a YoY decrease in prices in March. The metropolitan areas and “other municipalities” saw reductions of -0.5% and -0.6%, respectively, over the last 12 months.

“During the first quarter alone (January, February and March), average prices in Spain rose by 3.2%”, according to Tinsa’s report. “The cumulative decrease since the peaks of 2007 now stands at 39.4%”. In other words, it has fallen below 40% for the first time since June 2014.

The largest decrease in prices since the peaks of 2007 was recorded on the Mediterranean Coast (down by 45.5%), followed by metropolitan areas (-44%) and then the provincial capitals and large cities (-42.1%). In the Balearic and Canary Islands, where historically, prices have decreased by the least, the cumulative reduction amounts to 24.2%.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Vbare Debuts On The MAB With Almost 200 Rental Homes

27 December 2016 – Idealista

With just a few days left until the end of the year, the stock market is still receiving new Socimis. The trickle of debuts is incessant and on this occasion, the star of the show is Vbare Iberian Properties, a vehicle that owns a portfolio of residential rental assets.

The company has debuted on the stock market at a price of €12.90 per share, which represents a market capitalisation of €20.6 million, according to the consultancy firm Grant Thornton, and as such has become the twenty-eighth Socimi to trade on the MAB.

According to idealista.com, the company is backed by foreign capital (one of its main shareholders is the Israeli investment firm Value Base) and it has 183 real estate assets in its portfolio. Almost all of them are homes, but the Socimi also owns some garage spaces and some storerooms.

All of the properties are rented out and are located in the Community of Madrid. They are worth €20.84 million in total, according to Aguirre Newman. Half of the homes are located in Madrid capital, although the company also owns other homes in the municipalities of Aranjuez, Móstoles, Parla and Torrejón de Ardoz. In total, they have a useful surface area of more than 2,000 m2, comprise between one and four bedrooms and have an average occupancy rate of 72%.

One of the objectives that Vbare has set itself for the future is to raise more funds to allow it to expand its asset portfolio and to make the jump onto the main stock market, where some of the largest Socimis are already listed (Lar, Hispania and Axiare; meanwhile, Merlin Properties is listed on the Ibex).

In its market debut prospectus, the Socimi explained that it wants to centre its portfolio on residential real estate assets, aimed at middle-class tenants and located in the metropolitan areas of Spain’s major cities. In other words, areas with significant demand and with future development prospects in the short and medium term.

“Our properties are currently located in the metropolitan area of Madrid, this represents our first phase of investment. Progressively, the Socimi plans to diversify its asset portfolio by acquiring properties in the metropolitan areas of the main provincial capitals in Barcelona, Málaga, Valencia, Alicante, Bilbao, Sevilla, Zaragoza, Palma de Mallorca and La Coruña, which represent the company’s core business”.

Original story: Idealista

Translation: Carmel Drake

New Tax Rules Increase IBI Charge In 11 Provincial Capitals From 2017

5 December 2016 – Expansión

Property owners in some of Spain’s largest cities will start the new year with a tax blow. The Royal Decree that was approved by the Council of Ministers on Friday and published in the BOE on Saturday contains…a measure that will significantly increase the Tax on Real Estate Assets (IBI) in hundreds of towns, including in eleven provincial capitals, specifically: Valencia, Alicante, Badajoz, Cádiz, Córdoba, Teruel, Granada, Jaén, Huelva, Tarragona and Huesca.

This tax will accrue from 1 January 2017 and will depend on the cadastral values, given that they form the taxable base for the IBI calculation. The Tax Authorities have approved updates to these values in 2,452 towns, i.e. in almost one third of the towns in Spain.

The Town Halls set the cadastral values on the basis of value proposals performed by the Catastro. However, all of the property values (homes, garages, premises, offices, hotels, etc) affected by proposals made prior to 2004 will be revised upwards, with coefficients ranging from 1.03 to 1.08, according to the Royal Decree from the Tax Authorities.

For example, in Córdoba, whose valuations were last reviewed in 1995, the update will be 1.06. Thus, if a home had a cadastral value of €100,000 in 2016, it will have a cadastral value of €106,000 in 2017. The IBI payments will increase without the need to raise the tax rate. In Valencia, whose valuations were last reviewed in 1998, the coefficient will be 1.04.

Most of the towns that requested the review, which seeks to reflect property values to 50% of their market price, did so to increase their coefficients and, ultimately, to increase the IBI raised without changing the tax rate . Many of the affected towns have not reviewed their values since the real estate boom, or even earlier. In fact, numerous town halls have not updated their valuations since the 1980s.

The valuations last performed between 2005 and 2011 will be updated with a coefficient of less than one, of between 0.87 and 0.92. They include four provincial capitals: Almería, Santander, Lleida and Ávila.

The reason for the measure

(…) For the avoidance of doubt, the Royal Decree explains that the measure “is necessary given that it contributes to strengthening municipal financing, tax consolidation and budgetary stability for local entities”. In other words, it is a necessary measure to balance the deficit. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Savills Advises Sale Of Retail Outlet Portfolio In Puerto Banús

13 July 2016 – Mis Locales

Savills has advised the sale of a portfolio of five retail outlets in Puerto Banús.

The purchaser is a vehicle owned by domestic private investors, managed by N+1 Real Estate, and the consideration paid has not been disclosed.

Located on the waters edge in the marina, the five retail outlets have a combined gross leasable area of 578 sqm in an area that has the highest concentration of luxury brands per square metre in Spain and one of the highest footfalls of high end consumers in the country, with more than 5 million visitors per year. The five retail outlets are currently leased to fashion companies, including brands such as Guess and La Martina, restaurants and other services.

Alejandro Sánchez-Marco, Director of Private Wealth at Savills, explained that “Puerto Banús is a market that is very much in demand by the main operators in the luxury segment in the country. The high number of people that visit the marina in Puerto Banús each year and in particular the average expenditure profile in this area, mean that it has an occupancy rate of almost 100% and a confluence of the main operators in this segment, which attracts investor interest from the main domestic and international groups”.

The yield on commercial premises in luxury High Street areas with high footfalls in Spain, amounts to around 3.75% on average in Madrid and Barcelona, however, those yields can contract even more in the best locations. The main provincial capitals represent a good alternative for those investors seeking a product profile of this kind with a more attractive yield.

Original story: Mis Locales

Translation: Carmel Drake

Solvia: The 2 “Castillas” Are The Black Sheep Of The RE Recovery

24 September 2015 – El Confidencial

Spain’s real estate market is very heterogeneous. There is nothing new about that. Madrid, Barcelona, the Costa del Sol and the (Balearic and Canary) Islands have all been showing signs of recovery for several months now, in terms of prices and the launch of new property developments.

Nevertheless, there are other areas where the desired recovery is not happening yet and other still where it is not even expected to happen, at least in the short term. The two Castillas (Castilla-La Mancha and Castilla y León) are two of these regions. The key drivers of the recovery have not been seen there yet and prices continue to be subject to downwards pressure. Or at least, those are the findings of ‘Solvia Market View‘, the first report about the real estate market prepared by Banco Sabadell’s servicer.

“Castilla-La Mancha is a market that is not showing any signs of recovery yet, since it has a large stock and a significant number of assets for sale, which are continuing to drive prices down. A slight increase in prices is only being observed in the historical centres of certain provincial capitals, such as Toledo and Cuenca, mainly due to the shortage of supply in these locations..but that is it”, explains Javier García del Río, CEO of Solvia.

Castilla y León finds itself in a very similar situation. The first timid signs of recovery are only being seen in a handful of towns and cities, where there is a shortage of supply and demand has been withheld – buyers have been waiting for prices to bottom out or have not been able to obtain financing until now. (…). According to García del Río, the drivers of the recovery are weak in these areas (Valladolid and Salamanca) and the demographic make-up does not help the recovery in demand, therefore the volume of activity is still very limited. (…).

High expectations in the País Vasco

Despite the sluggish behaviour in the two Castillas, Solvia has identified a certain degree of expectation in other parts of the peninsula, such as in the País Vasco. In Guipúzcao, for example, constructors are starting to build small developments, although the market is still quite slow there. Meanwhile, in Vizcaya, prices are stabilising for both new and second hand homes, and sales volumes are flat, according to Solvia. However, it points out that no new developments are being started there yet, unlike in Madrid for example. (…).

The stock of homes to be absorbed in Álava is still plentiful. “The financial entities (Kutxa, Caja Laboral) are starting some new property developments, which will be sold at a reasonable rate if they are marketed at competitive prices and are supported by financing”, says Javier García del Río. Meanwhile, in La Rioja, the market is normalising, especially in the north of the region, since as well as primary residences, it also supplies second homes for people from the País Vasco.

Sales have increased in Logroño, with competitive prices and a normalisation in terms of financing, although there is still a sizeable stock of new homes there. Finally, Navarra is a market that is still relatively inactive, with few operations overall; meanwhile, there has been a significant reduction in stock in Aragón and several property developments are being started at competitive prices. (…).

Finally, in Galicia and the northwest of Spain, particularly in A Coruña, there is a limited supply and reasonable demand for homes at affordable prices. In Vigo, there has not been a real estate boom, due to the suspension of the general (housing) plan during the crisis, but there is demand for finished products, whilst in Gijón, there is demand for homes in central, well-located areas.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Bankinter: House Prices To Grow By 1.5% In 2015 And By 5% In 2016

18 February 2015 – El Mundo

Bankinter expects the volume of house sales to reach 450,000 by 2016.

The large ‘stock’ (in poor locations) will not prevent the recovery in construction.

GDP is forecast to grow by 2.2% in 2015, which will significantly boost the real estate market.

Demand for housing in Spain will increase again in 2015, with a 15% increase in the volume of transactions, which will drive up property prices by 1.5% on average and by a further 5% in 2016, according to the half-yearly report about the real estate market in Spain, prepared by Bankinter.

The financial institution states that, given the heterogeneity of the Spanish real estate market, prices in most provincial capitals and in the towns furthest from the large cities will remain stable and may even decrease slightly over the next few months. Meanwhile, in the most sought after areas (prime) of the main cities and in the best locations of tourist centres, prices will increase and may even grow by more than 3% in 2015 and by 5% in 2016.

Bankinter explained that this improvement in the outlook for the real estate sector is due to the economic recovery – GDP is forecast to grow by 2.2% this year – which will lead to a better climate for employment, increased confidence and greater access to finance. However, the financial institution warns that it does not expect the recovery of the sector to be fast or sufficiently profound to generate a return to the pre-crisis position, either in terms of transaction volumes or price increases.

The report states that unemployment will remain above 20% over the next two years; the financial effort required to make a purchase will continue to be high due to the decrease in disposable household wealth; the size of the Spanish population will decline (with the consequent negative knock-on effect on demand); and homes foreclosed by banks will continue to come onto the market with big discounts.

Recovery in new build sales

In terms of demand, the report expects an increase to 400,000 homes in 2015 and to 450,000 homes in 2016. A significant part of this growth will be driven by a recovery in the sale of new homes and by the maintenance of demand from foreigners. This increase will cause (new) house sales to break through the psychological barrier of 100,000 transactions in 2016.

In the case of supply, Bankinter points out that Spain still has a stock of between 650,000 and 700,000 empty homes, based on data published by the Ministry of Development and Sareb. Nevertheless, it considers that “this will not prevent the reactivation of the construction sector, given the mismatch between the location of the surplus (stock and demand)”.

In this sense, it warns that around 100,000 homes may never be sold unless huge discounts are applied to compensate for their challenging locations. Whereas, in the prime areas, there is a shortage of supply, according to the entity, which will be covered through renovations and new developments over the next few quarters.

Original story: El Mundo

Translation: Carmel Drake