Tag: RE Forecasts

Gomez-Pintado: “We Will See Real Estate Companies On IBEX 35 Again”

8/01/2015 – Expansion

Juan Antonio Gomez-Pintado, the newly named chairman of Madrid’s Association of Developers, abbreviated to Asprima by its name in Spanish, holds a degree in Economics from the Esite business school and a Master degree in Real Estate and Construction Management.

Mr Gomez-Pintado (pictured) stepped into the chairman’s shoes when long-standing president Jose Manuel Galindo had left.

His ample, 30-year experience in the sector, first acquired in family office Agofer and then in Via Celere, pushed him to take an immediate decision about reorganization of the association’s structure.

“We must overcome an organizational paralysis. Before the recession, we had 276 members and now we are only 70. Our number-one goal is to get back our associates, and we have been doing it successfully so far. Some people disagreed with the previous management and now they are returning”, pointed out Mr Gomez-Pintado. The executive hopes to band together “125 to 150 members”.

Apart from getting the number of real estate firms back, Asprima’s new head works on better image of the entire industry. “I want to show a positive picture to the future society. We significantly contribute to job creation and the Spanish GDP. True, there have been some shameful cases, but that happens in every sector. The Public Administration has demonized us a lot”, he assures.

“We are an essential tool for Spain’s economic recovery as the industry encompasses 1.2 million jobless people”, the chairman adds.

The new growth stage has nothing to do with the previous boom. “We will be much more reasonable and instead of 800.000 homes, we will build 225.000. Besides, we will focus on the rehabilitation business and the Socimis” (REITs).

In this context, Mr Gomez-Pintado believes that the new players in the sector like Real Estate Investment Trusts or Socimis or servicers will play a relevant role in this beginning chapter for Asprima. “The Ibex 35 [the benchmark stock exchange market index of Spain’s principal bourse, translator’s note] will illuminate with big property managers again. On one side, there are the banks which have sold their REO platforms and now can go for trading, and on the other, there are the international funds teaming up with local companies [like Monthisa and Lar] to generate value within five-to-seven years”.

Next, Asprima will modernize and recycle both the member companies and the businessmen. To achieve that, the association will put a pressure on exchange of the knowlegde among the associates, something not practiced ever before. “We need all the real estate firms to be the leading ones because only one of such cannot be running the sector”, the chairman concludes.

 

Original story: Expansión (by Rocío Ruiz)

Translation: AURA REE

ST Says New Homes Depreciated by 2.2% in 2014

6/01/2014 – Cinco Dias

Average new dwelling in Spain cheapened by 2,2% throughout 2014, thereby cutting in its 2013 value loss of 7.8% by five points, appraiser Sociedad de Tasacion reports. In its latest update, the firm remarks that over the last six months the prices dropped by only 0.4%, compared with the 1.8% registered in the first half.

Precisely, average price per square meter in provincial capitals showed 1.994 euros, meaning a cost of 179.400 euros for a 90-sqm home. New housing has suffered a 40.2% value loss since its hights.

In 2014, new property prices fell in all the Spanish regions, above all in La Rioja (down 3.7%), Aragon (3.5%), Asturias (3.1%) and Extremadura (3%). On the other hand, the smallest depression was observed in Navarre (down 1.2%), Castille and Leon (1.7%), the Canaries (1.7%), Galicia (1.8%), the Basque Country and Andalusia (down 2% in both).

When it comes to the most expensive capital city, San Sebastian once more tops the ranking with a price of 3.336 euros per square meter, followed by Barcelona (3.129 euros) and Madrid (2.663 euros).

In turn, the most economic new homes are found in Badajoz, Caceres, Ciudad Real and Murcia as they are asking for less than 1.200 euros for a square meter.

According to Sociedad de Tasacion, home-price slump has cooled down due to easier access to financing and better economic outlook for the industry.

Moreover, there has been a significant rise in bulk asset purchases by foreign investment group. Apparently, among the demand for under-5-year-old properties reverberates interest of private buyers.

What Should We Expect in 2015?

In the ‘2015 forecasts’ section, Sociedad de Tasacion predicts there will be a correction in housing supply started at end-2008 to align with the demand. ‘The weak recovery traces seen a year ago now become clearer and clearer’, the company assures.

As a result of a decrease in Spanish household wealth which will not be compensated by a 0% inflation, combined with the uncertainty lingering over the labor market, new home sales will be crippled.

On the other hand, Sociedad de Tasacion believes that new housing supply will remain considerable throughout 2015, in spite of slow production pace, whereas the demand will start to rise in line with an increase in number of quality jobs and financing.

“The trend of switching from selling to renting will continue to grow, both in case of lease-to-buy or just lease properties”, portends the appraisal firm.

 

Original story: Cinco Días (after EP)

Translation: AURA REE

Investment in Home-Building to Rise 1.8% in 2015

19/12/2014 – El Mundo 

According to the latest projections of the European Commission, construction investment will improve in 26 member countries throughout 2015. In 2014, the growth rate is bound to show 0.7%. In regard to the EU 28, a rise of 2.4% is forecasted but it will also average at as little as 0.7% in the eurozone as a whole.

Ireland and Greece are likely to see their house-building investment skyrocketing by 11.3% and 10.3% respectively. The United Kingdom will show a 9.2% advance, Luxembourg 7.8% and Sweden 6.4%. Poland and Lithuania will increase by around 5%, and Hungary and the Netherlands will raise their bet on housing development by 3%.

Spain Above European Average

For the first time since the crisis began, Spain is expected to register positive figures in terms of construction. The European Commission predicts a 1.8% rise for Spain, much above the eurozone average. Germany ranks just behind it with 1.6%, followed by Austria and Ireland with 1.4% predictions each.

Italy, Portugal are found among the countries deemed to underperform next year but not as much as Bulgaria (down 2.2%), France (2.3%) or Cyprus (a fall of 4.8%).

 

Original story: El Mundo

Translation: AURA REE

Spanish Banks’ NPL Ratio Falls to 12.9% in October

18/12/2014 – Invertia

According to the provisional data published by the Bank of Spain today, the total value of soured loans dropped to 178.38 billion euros, levelling out to June 2013.

The default rate links seven consecutive months of decline, however it is not so visible as the current credit balance shrank by 0.43%. Precisely, the sector’s overall credit registered in October showed by 6.01 billion euros less than in September.

Not taking into account the recent methodological changes, the non-performing loan rate would stand at 13.16%, down from the previous month’s 1.38 billion euros to 1.35 billion.

The default dipped down in December 2012 and February 2013 as a result of accounting changes after the bad bank of Spain received toxic asset transfers from main entites (Bankia, NCG Banco, Catalunya Caixa, Ceiss, BMN and Caja3) in two phases.

The financial entities maintain their provisions, although there have been some cuts in October bringing them down to 105.74 billion euros. In September, it showed an amount of 106.67 billion.

Progressive Fall to 10% Forecasted For 2015

Antonio Marcos, an analyst at XTB, estimates that the rate will sit at 10% in 2015 due to reduction in non-payment and an increase in lending to companies and families.

Original story: Invertia

Translation: AURA REE

House Price Correction to Show 42% in 2015

16/12/2014 – El Economista

By the end of 2015, Spanish housing is expected to reach a 42% value drop-off counted since the 2007 peaks, portends property listing web site Pisos.com.

The projection matches other forecasts by the industry’s leading statistics providers like Tinsa which reports the average price of homes in Spain is currently settled on levels from before 10 years ago.

Another Decline of 8%

The adjustment in values have revived the real demand during 2014, and, as the web points out, prices will mark an 8% dip-down at the end of this year. However, 2015 is seen more optimistically.

‘After years of going through the floor, main indicators of the sector have started to steer upwards. Shy optimism reverberates in the 2015 forecasts as everybody wishes the poor numbers went out and balance returned to the market’.

Pre-Owned Homes

The real estate web site highlighted the existing properties as the main engine of the 2014 growth in the market. Trust in new housing is much lower, despite the fact that new building permits jumped for the first time since 2011.

During the third quarter, residential construction also showed the first quarterly rebound since the crisis broke.

 

Original story: El Economista

Translation: AURA REE

Where to Find Your Spanish Dream House?

12/12/2014 – Expansion

Countless opportunities have emerged in the real estate sector this year. After seven years of doom and gloom, deals in the market began to flourish. Housing sales jumped up by 13.7 per cent year-on-year in September and showed 27.024 transactions in total, reported the National Statistics Office of Spain (aka INE).

Logically, rock-bottom prices might have triggered the upsurge. According to the latest update by Tinsa Tasaciones Inmobiliarias, home values in the country dropped by 41.5 percent on average from the 2007 peaks. Slumps picture different in each region and ‘in some of them adjustment may be still pending’, Tinsa claimed.

Projections remark that prices will continue to fall in areas of a great surplus and no demand. ‘We predict that in 2015 correcting trend will prevail. In big city centers, home values seem to have stabilized and in prime areas some rebounds are expected’, said Dario Fernandez, Residential Head at JLL.

The market analysts agree that this is the right moment to buy a dwelling but it is advisable to study the situation in each region ahead. They also positively value private buy-to-lease deals. Average Spanish home (80 sqm at 1.450 euros each, at a rent of 542 euros monthly) returns 4% annually. The yield may reach 8% in line with property location and type, experts assure.

The Regions of Spain

Real estate market shows fresh traces of stabilization in metropolises like Madrid and Barcelona where huge bargains may soon fall short, above all in their centers and prime areas. In these cities, housing prices dipped by 2.2 percent from the last year, the least among other places in Spain. ‘Still, there exist some interesting opportunities in specific areas demonstrating economic growth potential and referring to pre-owned properties, but their prices are closer to reality’, points out Luis Leirado from TecniTasa.

Resales in Madrid and Barcelona became by 45 percent and 47 percent cheaper over the last eight years, informs portal fotocasa.es.

Vicenç Ramon, executive of RtV Grupo Inmobiliario, maintains the view and thinks the best deals are found in residential zones and mature neighbourhoods of both cities, where the economic level and demand are high, ensuring good, mid-term returns.

But to poach truly discounted properties, one should rush to the Mediterranean Coast, specialists encourage. Average depreciation of houses there in many cases crosses 50%. For example, in Valencia, there is an abundant supply with nice outlook due to tourist flows. The same conditions apply to some areas of Andalusia, above all to those located at the fringe of the coast.

Moreover, in these areas housing supply is usually represented by repossessed units at dramatically low prices which sometimes do not compensate for the cost of construction. In addition, lending terms and conditions are attractive, including 100% mortgages. However, experts warn that such a bargains are often situated far away from prime zones. Discounts applied by banks reach 60 percent.

Before You Buy

Analysts conclude that home buyers should take a selective approach and consider other factors before signing the contract. ‘A private purchaser should dispose of a saved amount equal to 20-35 percent of the final price, especially when it is not a REO unit, as banks usually finance 80 percent of their properties’ appraisal values. What is more, the buyer will have to bear additional costs which may be around 10-15 percent of the final price’, specialists remind.

Other Aspects

On the other hand, the investor must be up-to-date with taxation laws currently in force, as although the new amendment which will become valid in 2015 will affect mostly the vendors, purchasers may also feel its impact in shape of transaction costs. Marta Garcia, Product Manager at Tinsa, calls for paying a close attention to energy certificate of the home, which may range from A- to G-class. An average apartment usually has a B-class (second most-efficient), meaning expenses of 400 euros annually, while if the same dwelling had a G (the least efficient), it would generate a cost of 2.100 euros annually.

 

Original story: Expansión (by D. Esperanza)

Translation: AURA REE

Construction to Fully Emerge From Depression, Grow in 2015

11/12/2014 – Expansion

Recognized property market specialist Julio Gil, director at advisory firm Horizone and the new chairman of the Foundation for Real Estate Research (Fundación de Estudios Inmobiliarios), said in an interview with Expansion that after seven years of collapse, the worst is over and ‘adjustment in housing is practically a fact’. According to him, next year will be better than 2014.

‘A year and a half ago, signs of life in the property industry disappeared. Now we are at a turning point, marking the first phase of recovery. Prices in Madrid and Barcelona went stable and undoubtedly the prime markets of the main cities of Spain is emerging from the recession’, Mr Gil explained.

Moreover, the expert admitted that the year 2014 was the stabilization time after hitting the bottom. Prices still need some adjustments as by now they have achieved it in different ways. Thus, in Madrid the values dropped by 42 per cent and in other regions the correction has not crossed 25 per cent.

Asked about his opinion for the upcoming year, Mr Gil said ‘the real estate activity will rebound in 2015. If if comes to prices, there will be a moderate decline. Demand will be conditioned by demographics and employment‘.

Moreover, the economist reckons the moment to buy-to-lease is favorable as risk posts low and returns project well. ‘Demographic change will be the key to preventing subsequent property depreciation in the long run’, he assured.

The specialist also pointed out that still there are multiple opportunities of buying an interesting units at good prices.

In reference to banking sales, Julio Gil gives the following piece of advice: ‘this is the moment to implement a scheme of real estate sales to foreigners. This is one of the greatest potentials of the sector. Spanish residential tourism market is tremendously competitive all in terms of prices, infrastructures and services. What is more, holiday housing has cheapened by 50 percent. For these reasons, the time is perfect to export this type of product’.

Asked to specify the measures, the expert said the power lies in taxation and applying incentives to purchases by foreign investors. The plan would show a way out for the REO volume in banks and assets of real estate managers.

Morever, he is convinced that the industry needs better lending and a decrease of the tax on property rehabilitation.

 

Original story: Expansión (by Juanma Lamet)

Translation: AURA REE

Banks Return to the Real Estate Market of Spain

11/12/2014 – Expansion

From being avoided like the plague, Spanish real estate started to invoke apetitte again. Spanish banks still want to offload the property they have repossessed after the real estate bubble burst, which made them lose millions and haunts them with default hitting more than 55 percent (56.27 percent in case of CaixaBank). However, now, confident about the economic reactivation and better outlook for the property market, they support developers which survived the recession. Slowly and for only some projects, they lend and buy assets which before they could sell to vulture funds only.

‘If you are a professional developer with a financially stable company, you will carry on. Spain will continue to be a country abundant in real estate deals and the market will revive. Banks will start lending again, more rationally though’, explained Joan Carles Amaro, Financial Management and Control professor at Esade business school.

The Exposure

So think the entities. Banco Sabadell has already announced return of loans to developers. The first half of the year data compiled by the Bank of Spain shows that banks lent 161 billion euros to developers during that time. Still, the number posts far away from the 2009 volume (€32o billion). The entity’s CEO Joan Bertran calculates that from now on, the sector may destine for new housing construction 5.5 billion euros each year.

Currently, Sabadell finances around 1.000 new dwelling units of real estate developers, a figure that went up after the summer. Of these, 400 have been financed in the last quarter of the year.

Not only do the banks lend more but also propose their own development projects. Santander, BBVA and Sabadell have ongoing plans including building of 8.000 homes on the real-estate-owned land in their balances, in areas of Madrid, Catalonia, the Valencian Community, the Basque Country and Andalusia. Specifically, Sabadell has 1.500 houses under construction now inside its own property developments managed by Solvia. Of these, 640 are already finished and almost all sold-out, located in Alcala de Henares, Barcelona, Cordoba, Seville and Alicante (Playa de San Juan beach).

Apart from approving more loan applications, the entities keep assets which they were unable to sell before, neither to the vulture funds, nor at scandalously low prices. Now they believe the assets will gain on value and they will sell them with profits.

Thanks to this increased trust and favorable look at the industry, highly indebted developers like Grupo Sanjose could restructure their debt in exchange for real estate assets.

Similarly, Santander raised its exposure to the sector by buying a 19.07% stake in Metrovacesa from Bankia for 100 million  euros. The company is specialized in tertiary asset lease.

Property Sales

In their struggle to sell the REO units off and reduce as much as possible the number of new repossessed properties, the banks managed to transfer 40.000 properties in the first half of the year, up 10 percent from H1 2013. They sold more homes, at lower discounts and at more considerable prices, earning around 4.5 billion euros, 20 percent more than in 2013.

Divestments

The odds are high that in short-term the sales will increase due to the decisions of the banks to shift management of their REO, as well as the risk, onto opportunistic funds specialized in this field.

 

Original story: Expansión (by G. Martínez & S. Saborit)

Translation: AURA REE

Tinsa: Home Prices Will Hit the Bottom in 2015

11/12/2014 – Expansion

According to Spanish appraisal firm Tinsa, home values could bottom out during the next year, depending on the economic development and employment. Moreover, the company portends a considerable recovery for the industry in 2015.

Tinsa’s head of the Product and Diversification department Pedro Soria said that although the outlook for growth and employment are optimistic and since 2013 housing prices have been stabilizing, new jobs give lower salaries, they are usually temporal and part-time, resulting in poor buyers’ solvency and weak demand.

After floor-level year 2013 with sales reaching barely 300.000 properties, Tinsa estimates that an improvement in expectations observed since the beginning of 2014 will be translated to an increase of between 15 per cent and 20 per cent in terms of sold homes.

Referring to the stock and its absorption, the appraiser calculates it will show 340.000 dwelling units.

Mr Soria believes the volume may be digested significantly in 2017. However, this does not mean that a certain surplus located badly and demonstrating doubtful quality will disappear as well.

Also, Tinsa predicts that in 2015 there will be a notable reactivation in housing development, above all because the ongoing year has already seen positive numbers of new building permits.

Thus, 2014 may close with 40.000 permits but 2015 will probably double that, reaching 80.000, which will allow to avoid supply deficit in 2017.

In regard to the main players in the industry next year, Tinsa’s executive reckons the principal role will belong to the Socimis (Spanish REITs), vehicles that mostly target properties other than residential but this asset class also starts to appear in their strategies.

Foreign demand will continue to monopolize coastal areas and the islands. In fact, the litoral zones registering pricing stabilization or even first rises are dominated by international investors.

 

Original story: Expasión

Translation: AURA REE

Get Ready For Flat Prices & More Building Sites

1/12/2014 – Cinco Dias

In this last month of 2014, the real estate sector of Spain already notes that this year has been much better than the previous one. All the evidence is that this was the last annus horribilis for Spanish housing, at least for the moment. Both prices and development activity suffered abrupt drop-offs, reflected in, for instance, data showing that from more than 860.000 dwellings started in 2006, only 34.200 were finished till 2013. Secondly, prices have contracted by 30.7% on average since the 2007/2008 peaks, official statistics point out.

And this is the average as in some municipalities depreciation reaches 50%. A slight improvement in employment and recent return of lending seem to be the key factors for ‘the sector’s stability‘. It is predicted that prices will go down ahead but not as sharply as they used to. Moreover, experts await more cranes in desirable areas where ‘reasonably priced’ homes would be welcomed. In spite all these positive signs, specialists agree Spanish housing won’t come back to mid-2000 levels… will it?

The Prices

Over the past months, various statistical sources were repeatedly reporting seemingly contradictory data. Some said houses cheapened, while others claimed there have been first rebounds in prices, first in  month-on-month and then in year-on-year comparisons.

However, all contained a grain of truth. The catch is that each of them employs different periodical information. The calculations coming from the notaries are not equivalent to studies from the registrars (who base on deal figures from 2-3 previous months). Similarly, pricing reports using appraisal data are not comparable to a real-market study involving visits to new building sites.

The proof that all of them are reliable is that all conclude pointing at the same trend, also showing that the free-market laws apply. Thus, they coincide in showing an increase in sales, earlier stock absorption, a slowdown in pricing slump and reapearance of cranes in new property developments.

The Wealth Effect

Let it be the Ministry of Public Works’ data or the Appraisal Association’s, two sources which have been providing reports on Spanish housing for at least the last 20 years, average accumulative decrease of house values in the country posts 30%, meaning the same level as in 2004. As Maria Romero from Analistas Financieros Internacionales (AFI) says, the figures mean a negative equity for those households which acquired a dwelling ever since.

Still, statistics also show that in some geographical areas prices started to rise. Will the trend expand? ‘High unemployment rates and insufficient income especially affect the first-home buyers, as well as prospective demand. In any case, we do not expect any additional, deep adjustments’, claims Mrs Romero. Experts from Sociedad de Tasación portend the prices will continue to go down until finding what they call ‘the balance point similar to end-2000’.

The Stock

At the beginning of this new cycle, prices and sales in in-demand areas level out, whereas in the zones where product is in excess, prices are being squeezed down and new development seems impossible in there.

The increase in transactions contributes to faster absorption of new homes for sale which shrank by one-third since the 2010 peak (700.000 units).

The New Property Development

At the moment, large cities’ centers, excellently located neighbourhoods and those with good infrastructure were the first to see return of house construction. They are very carefully selected projects with 100% sales guaranteed and attractive prices. It is demonstrated by the fact that building permits bounced back in September for the sixth consecutive month (up 31.6% year-on-year).

Logically, developers strike areas of high demand and income per capita which proves better financial ability of the buyers.

Experts forecast further rise in building permits’ number in the next months, triggering a phenomena unseen since the recession began – more homes will be started than finished. In fact, works completion certificates keep steering down (by 35.6% annually in the third quarter). To compare, last year only 4% was started of what was constructed throughout 2006.

The Financing

Like individuals, developers also started to receive the ‘approved’ seal on their loan applications. Thus, as the Bank of Spain reported, not only mortgage lending to eligible customers is returning but also loans to developers become more and more common.

What is more, value added to investment in housing again increased quarter-on-quarter by 1.3% in Q3.

Recent studies reveal that in all European countries where homes regained value also the GDP grew up. That means that better conjuncture is vital for housing sales to confirm a recovery, which in turn feeds up economical well-being: from more real estate transactions, through related industries (decoration, repairs, etc.), vivid activity, more jobs, increased confidence, and here we go again, more housing sales.

 

Original article: Cinco Días (by Raquel Díaz Guijarro)

Translation: AURA REE