Tag: Public Administrations

Locare RE & Tectum Join Forces to Promote 1,000 Rental Homes

23 October 2018 – El Confidencial

The real estate manager Locare RE and the company Tectum Real Estate Investments are going to promote more than 1,000 long-term rental homes in the Community of Madrid and the main provincial capitals, which will require an investment of more than €120 million over the next two years.

Currently, they have three developments underway in the Madrilenian towns of Móstoles, Collado-Villalba and Torrelodones, which comprise 405 homes in total and whose entry into operation is scheduled between 2019 and 2020, as indicated in a statement.

In this sense, both have underlined that, given the scarcity of residential land, they are exploring and developing opportunities for differentiation in the sector by promoting contractual schemes involving public-private collaboration.

The aim is for these alliances to reinforce their vocation of long-term permanence, on the one hand, and to provide appropriate instruments to collaborate with the Public Administrations, especially with the Town Halls, on the other hand, in order to increase the stock of rental housing without those bodies having to commit to public investment.

This initiative is being launched in a favourable market context given the growing demand for rental housing and the shortcomings of the current residential rental stock in Spain’s main cities (…).

Original story: El Confidencial 

Translation: Carmel Drake

Carmena to Outlaw 95% of Madrid’s Tourist Apartments

27 July 2018 – Expansión

The days are numbered for tourist apartments in the centre of Madrid. Yesterday, the Town Hall of Madrid gave the green light to legislation that will put a limit on holiday rentals: 90 days or three months, is the maximum term that a person may rent their home for those purposes. From day 91 onwards, owners will need to have a commercial lodging licence, just like hotels.

Yesterday, the Spanish capital’s Governing Body approved the Special Plan for the Regulation of the Use of Lodgings, which will apply to the city’s most central neighbourhoods. The plan is expected to enter into force at the beginning of 2019, after being approved by the plenary session in October.

The Town Hall led by the mayor Manuela Carmena is also going to prohibit the operation of all homes destined to tourist rental that do not have an independent entrance, like in the case of hotels. According to the Town Hall, with that requirement, “95% of homes that operate as tourist apartments will no longer be able to do so”.

“Specifically, the affected radius will span 52.7 km, distributed in three concentric rings, depending on the massification of the ads. According to the Town Hall, in the rest of the municipality, “the existing legislation will be maintained”. Madrid is, in fact, the European capital where the number of adverts on these platforms has grown by the most, up by 67% in 2017 with respect to 2016, according to a report from Colliers International.

With this legislation, Madrid’s Town Hall is opening a new chapter in the fight between public administrations and tourist apartments. Its intention is to outlaw almost all of the tourist apartments that are advertised on platforms such as Airbnb in the centre of the city.

The prohibition is tacit. The trick is that 95% of the homes advertised on these platforms in the capital do not have an independent entrance. That limitation will only exist in the case of homes that are leased for more than three months. The 90-day limit draws a line between what is considered a home for tourist use and a property in the collaborative economy.

Obtaining a licence is not going to be easy. It will be subject to zoning, following in the footsteps of cities such as Barcelona. Once the Special Plan comes into force, it will not be possible to change the use of a home located within the inner two rings from residential to tertiary, given that those properties account for the majority of the regulated and unregulated tourist supply. Together with this new plan, the Town Hall has approved a moratorium that prohibits the granting of tourist licences of any kind for one year.

Putting a cap on rents

The objective of the plan is to preserve residential use in the central areas of the city that, with the tourist boom and rise of online platforms, are seeing rising rental prices.

In this vein, the Town Hall wants to establish maximum rental prices. To that end, and as it already did in the case of the request for the tourist tax, the delegate for Sustainable Urban Development, José Manuel Calvo, yesterday asked Sanchez’s Governments for the necessary powers.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Spain’s Banks Are Queueing Up to Finance Rental Housing

4 July 2018 – El Economista

One of the major challenges facing Spain in the residential market is the organisation of the rental home segment in light of the fragmentation that exists and the boom that is currently underway. There is currently a great deal of demand, but there is also a distinct lack of supply, and the new Housing Plan approved by the Government is not proving sufficient to incentivise the supply with the granting of aid to property developers that build rental housing. In light of this situation, we ask ourselves whether the opportunity that currently exists in Spain to organise the rental market is being taken advantage of?

“I think that the professionals and investors who have launched portfolios thanks to the creation of Socimis are taking good advantage of the opportunity, but I believe that some important players are simply not supporting the sector, such as the Public Administrations. Both nationally and locally, but above all locally, they are failing miserably and this is generating price tensions due to a lack of supply”, explains José Luis Ruiz Bartolomé, Director General of the consultancy firm Chamberí Asset Management.

Along the same lines, José María Cervera, Corporate CEO of Renta Corporación agrees and states that the public sector has been left on the sidelines. “Private capital has taken the initiative in this new segment of the market because it has seen a business opportunity and is looking for returns. And the public sector is going to have to enter, but now the arbitrage and those who are institutionalising it are in the private sector, and so they are going to place more rental properties on the market”.

For all of these reasons, during 2018, we are observing the creation of a new industry. Given that in Spain there are 18.5 million households, according to the latest figure from the Active Population Survey (EPA), and of those, 22% are rental homes, there are 4.7 million rental homes in total. Of that portfolio, only 5% are owned by institutional companies; the remaining 95% are owned by individuals.

“The Public Administration has done something important, which is to reorganise the real estate sector and separate property promotion and development activities, by creating Socimis that operate under a special framework. That has brought us closer to a situation that is more similar to those seen in other European countries. Now, we will have to see how the different players that are emerging in this market position themselves, and in two or three years, we will see the consolidation of this sector, which means that the Public Administrations will have to continue refining their regulations so that the sector can develop and be brought into line with those of other European countries”, says Nicolás Díaz-Saldaña, CEO at Témpore (Socimi of Sareb).

Nevertheless, not all of the experts in the sector concur. David Botín, Director of Real Estate Development at the ACR Group, says that this opportunity is not being leveraged. “It is possible that we are seeing the beginnings of a new rental market, but to date, just 22% of our households are renting and that supply is being provided almost exclusively by individuals. As such, it is very hard to fathom how we will reach the percentages seen in other countries such as Germany, where rental properties account for 48.3% of the market or the United Kingdom (36.6%). It is really hard to increase the stock in Spain because there are 19 million homes, and so a 1% increase means placing 190,000 more homes on the rental market, and that would take between three and four years (…). At that rate, nothing is going to happen quickly. No market works if there is no equilibrium between supply and demand. We need a large and varied supply for this market to work effectively”, he adds.

It is true that, historically, Spain has been a country of property owners, but the cultural and socio-economic changes that have been happening in recent years are drawing some new business lines, where the rental market is taking centre stage and is starting to become institutionalised. The new players in this market are: on the one hand, the Socimis, which are listed companies that serve as investment vehicles with tax benefits. The largest of them is Testa, which will debut on the stock market soon and which is owned by Santander, BBVA, Acciona and Merlin Properties. There are also others such as Azora, Vivenio (Renta Corporación), Témpore (Sareb) and Fidere, amongst the largest. Within this market, we can also include the servicers, which although they do not own properties, manage them, such as Solvia (Sabadell), Anticipa (Blackstone), Haya (Cerberus), Altamira (Apollo and Santander). And then, there are companies owned by the banks, such as Building Center (Caixabank) and other types of companies such as Alquiler Seguro, family offices, etc.

Therefore, now that the new players required to institutionalise this market are starting to be created, the next step is to develop a portfolio of assets. “We are going to need to reach agreements with property developers to build homes for rental (…), and at Sareb, we are going to use some of the land that we have for the co-development of rental homes (…)”, says Nicolás Saldaña.

That is a formula that is starting to spark interest. According to the experts, property developers have always been reluctant to enter the rental market, because they didn’t see it as their business, but in the end, the market trend has changed and whilst the sale and purchase segment will continue to exist, so too will the rental sector and property developers will have to participate (…).

The rental segment is a market that has always existed in the hands of individuals, but now, it is being professionalised, thanks to the arrival of overseas capital. “Investors have contributed many things, besides capital. They have contributed methodologies, rigour, professionalism (…). The banks were not open to this business before, they only financed promotion, but that has changed. For six months now, everyone has been wanting a piece of the pie and now there is a queue of financial institutions wanting to finance this type of business (…)”. Says José María Cervera (…).

Investing in residential properties is profitable. The gross return from investing in rental homes has increased to 7.3% from 6.3% a year ago, due to the strength of demand for rental properties, according to the real estate portfolio Idealista (…).

Original story: El Economista (by Luzmelia Torres)

Translation: Carmel Drake

Ministry Of Development: Finished Homes Fell By 4.9% In Jan

30 April 2017 – El Mundo

In January 2017, construction of 2,973 homes was completed in Spain, which represented a decrease of 4.9% compared to the same month in 2016, according to data from the Ministry of Development.

In this way, the number of finished homes in Spain began 2017 on a negative note, after recording nine consecutive years of decreases in 2016. Since the peak of 2007 (641,419 homes), the figure decreased by 94% with respect to the end of 2016.

Of all of the homes completed in January 2017, 99% (2,945) corresponded to private developments and 1% (28) to Public Administrations.

In comparison with the figures recorded in the same month in 2016, the construction of homes by private developers decreased by 5.3%, whilst the number increased in the case of Administrations from 16 to 28 constructed homes.

In the private segment, 1,918 homes were constructed by companies, representing a YoY increase of 5.3%; 956 were built by individuals and communities of owners (-21.2%) and 26 by cooperatives (-59.4%). In addition, there were 45 construction completion visas relating to another type of private developer.

Meanwhile, the liquidation value of the material execution of the construction work rose by 27.86% in January, to €444.7 million.

Renovations rose by 4.7%.

Permits to renovate or restore homes in Spain amounted to 1,785 units in Spain in January 2017, which represented an increase of 4.7% with respect to the same month in 2016 (1,705 permits).

In this way, permits to renovate homes began 2017 on a positive note, after recording two consecutive years of increases, although the rise in 2016 (2.7%) was more moderate than in 2015 (13.4%).

In 2014, permits to renovate homes recorded four consecutive years of decreases and dipped to a minimum in the historical series prepared by the Ministry of Development, but that trend was broken in 2015, and the new trend was consolidated in 2016 and maintained at the beginning of 2017.

Meanwhile, permits to expand properties doubled in January, from 89 during the first month of 2016 to 197 in 2017.

Original story: El Mundo

Translation: Carmel Drake

DCN Would Generate 214,000 Jobs & Increase GDP By €14,000M

20 April 2017 – El Mundo

The Distrito Castellana Norte (DCN) project planned for the North of the city of Madrid, in what is known as Operación Chamartín, would generate 214,000 jobs in total, of which almost 120,000 would see the light during the construction of the project, whilst another 94,000 would be created once the building phase comes to an end. Moreover, the project, which would involve an investment of more than €6,000 million, would increase GDP by €14,000 million and would generate revenues of €3,340 million for the public administrations from the economic activity that this initiative would create.

These data are detailed in the report Effects on the creation of employment of the project to lengthen the Castellana, which has been prepared by two professors from the Universidad Autónoma de Madrid (UAM), Antonio Pulido and Julián Pérez.

The developers of the project, which group together BBVA and Grupo San José, understand that a “reductionist” project, such as the one proposed by the Town Hall would “not only deprive Madrid of the necessary infrastructure to ensure an optimum quality of life for its inhabitants and visitors, it would also inevitably have a lower capacity to generate jobs”.
During the forecast 19-year construction period, almost 120,000 full-time jobs would be created, equivalent to 0.6% of total national employment, of which 52,650 would be direct jobs, 42,037 would be indirect jobs and 23,104 would be related jobs. Of those, 80,445 would be created in the Community of Madrid.

Once the neighbourhood has been constructed, the experts calculate that the new activities that would arise in the area would result in the creation of another 94,000 jobs, of which 63,000 would be direct and 31,000 would be indirect. These would be full-time jobs, which would likely be maintained over the long term.

The development of DCN would allow the creation of 6,200 jobs each year, on average. This job creation rate would mean an average reduction in employment in Spain of 0.03%. In the Community of Madrid, the decrease would amount to 0.12% and in the city of Madrid to 0.27%.

Focus on wealth

In their report, Pulido and Pérez calculate that the construction of the DCN project, with an investment of almost €6,050 million, a figure equivalent to nearly 0.6% of Spain’s GDP, would increase domestic production by €14,000 million and would generate new income amounting to €5,400 million. 78% of the new wealth generated would remain in the Community of Madrid.

That means that the project’s contribution to GDP would amount to €286 million each year, which represents an average of €117 per Spaniard per annum. Specifically, the annual income would be €71 for every inhabitant of Madrid, €35 for every inhabitant of the Community and €1.5 for every inhabitant of Spain.

Meanwhile, the public administrations involved in the project would receive tax revenues amounting to €3,340 million, a figure equivalent to 0.6% of the annual state budget for Spain. (…).

Original story: El Mundo

Translation: Carmel Drake

Gómez-Pintado: House Building Up By 15% In 2016

6 October 2016 – Expansión

Yesterday, the Chairman of the property developers association APCE, Juan Antonio Gómez-Pintado, opened the association’s National Conference with moderate optimism. “We have not recovered completely”, he said, but he highlighted that his forecasts point to “a 15% increase in house construction” in 2016, “with signs of continued increases in 2017 and 2018”.

Gómez-Pintado highlighted that the major problem in the sector is the large latent demand for housing from young people who find themselves dissatisfied. For this reason, he asked the public administrations “to address” this debate. We need “stability regardless of whoever is in Government”, he said. He also urged property developers to “reduce production costs by focusing on innovation”.

“We face a significant challenge, to facilitate access to housing for young people (…). If not, the current improvement will be a new mirage”, added the Chairman of the association of property developers.

The Secretary of State for Finance, Miguel Ferre, did not take the hint and refused to discuss the possibility of any incentive plans for the sector. In his opinion, the fact that VAT has not been increased for property renovations and that a very favourable fiscal framework has been created for the Socimis are “measures that already carry weight” in the residential sector.

Ferre highlighted that the Socimis – listed real estate investment vehicles – already hold more than €9,300 million in assets and have a stock market value of more than €5,000 million. “It is one of the things that this minister is most proud of”, he said, referring to Cristóbal Montoro, who he stood in for at the conference. There are currently 30 Socimis in Spain, and 25 of them are listed on the Alternative Investment Market (MAB).

On the other hand, Ferre emphasised that, thanks to the fact that work to repair and renovate homes still carries a reduced VAT levy, of 10%, means that “the turnover of repair and renovation companies has increased by 13%”. The European Commission has mobilised €4,200 million of investment for potential low-carbon economy projects and “those funds should be redirected to building sustainability”, he added. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Ministry Of Development: New Builds Up By 2% In YTD April

11 July 2016 – El Economista

Between January and April 2016, construction of 14,098 homes was completed in Spain, which represents an increase of 2% compared with the same period last year (13,818), according to data from the Ministry of Development, compiled by Servimedia.

In this way, the number of finished homes in Spain continued its positive trend during 2016, after eight consecutive years of decreases leading up to and including 2015. From its peak in 2007 (641,419 homes), the figure dropped by 93% in 2015 (to 45,152).

Of the total number of new homes completed during the fourth months to April, 98.6% (13,842) related to private developers and 1.4% (256) to public administrations.

The construction of homes has increased by 1.6% in the case of private developers compared to a year earlier and by 34.7% in the case of public administrations.

In the private sector, 8,118 of the homes were constructed by commercial companies, with a YoY increase of 9.6%; 5,415 corresponded to individuals and communities of owners (+9%) and 219 related to cooperatives (-62.2%). Moreover, 90 other work completion licences were associated with private developers. (…).

Original story: El Economista

Translation: Carmel Drake

Home Loans Drop To Lowest Level Since 2006

3 November 2015 – Cinco Días

In November 2008, after fifteen years of continuous growth, the debt held by households peaked at more than €912,000 million. As the economic crisis hit, unemployment rose and wages were devalued, families began to get rid of those liabilities as they tried to rebuild their accounts. And according to statistics from the Bank of Spain, it seems that the process is not over yet. In September, total household debt decreased again to reach its lowest level since 2006 – €728,747 million. The difference between these two figures represents a decrease of €185,000 million.

The collapse of the mortgage market has played a decisive role in this deleveraging process, with mortgages representing more than two thirds of household debt. In November 2008, loans taken out to purchase homes amounted to almost €680,000 million and in the seven years since then, that figure has decreased by 16.5% to reach €567,000 million. A difference of €112,000 million and suggesting the weight of housing in the process to reduce household debt: six out of every ten euros relating to the reduction of household liabilities have corresponded to loans linked to house purchases.

The overall picture of debt in the three major sectors (companies, households and public administrations) shows divergent trends. In November 2008, the figure amounted to €2.6 billion, of which €1.25 billion (48.7%) was in the hands of companies, encouraged by the tax benefits to take out debt and by the facilities that the banks offered on their loans. They were followed by households, with €913,000 million (35.4% of the total), and then public administrations, with €405,740 million (15.7% of the total). By September 2015, the figures and percentages had changed significantly. Now the public sector holds most of the total debt figure (€2.7 billion). In August (the latest available data), public administrations held debt amounting to €1,050,000 million (38.8%), followed by companies, with €927,000 million (34.2%) and households, with €729,000 million (27%).

The two main findings to be drawn from the analysis of this data are that public debt has tripled in both percentage and relative terms, and the speed of the adjustment has been much greater for companies than for families. Company liabilities have decreased by €330,000 million in seven years, which means that its weight over the total Spanish debt has decreased by 14 points in the same period.

Original story: Cinco Días (by Carlos Molina)

Translation: Carmel Drake

Increase In Number Of Homes Promoted By Public Sector In 2015

11 May 2015 – El Economista

The construction of 170 homes, promoted by Public Administrations, was completed in Spain during January and February, which represented an increase of 24% with respect to the same period in 2014.

In this way, homes promoted by the public sector began 2015 on a positive note, whereby bringing an end to the negative trend experienced in recent years, according to data from the (Ministry of) Development, compiled by Servimedia.

In 2014, Public Administrations promoted 482 homes, down 27.8% from a year earlier and far below the 5,652 homes recorded in 2010.

In terms of the weight that the public sector has over the total number of finished homes, it accounted for 2.5% of the total (6,807 homes) during the first two months of the year.

Original story: El Economista

Translation: Carmel Drake