Tag: recovery

House Prices Rose By 2.5% In 2014, After Six Years In Decline

16 February 2015 – Expansión

Changing trend / The Association of Registrars (el Colegio de Registradores) reports the first house price increase since the real estate bubble burst. House purchases by foreigners break historical records.

The housing market is generating positive results in a disparate and heterogeneous way, step by step, but it is on the road to recovery and that is what matters. The figures vary a lot depending on the statistical source chosen, but the trend does not: the residential real estate market has changed direction and is heading towards the famous light at the end of the tunnel. That was certified by the Association of Registrars yesterday, which announced a 2.55% increase in house prices in 2014.

This is the first rise in house prices since the crisis erupted in 2008. Based on these results, the cumulative decrease in prices from the peak levels achieved in 2007 is almost -32%, according to the registrars’ methodology, which is based on the methodology of repeated sales, proposed by the economists Case and Shiller, which takes into consideration only data from those homes that have been sold at least twice during the period under analysis (1995-2014, in this case).

The Repeated House Sale Price Index (Índice de Precio de la Vivienda de Ventas Repetidas or IPVVR) “shows the change in the trend that we have observed during the last few quarters, leaving behind a long period of price decreases, and making way for a phase characterised by stability and small quarterly increases”, say the registrars.

Specifically, the IPVVR “shows that prices increased by 0.91% during the last quarter, taking the cumulative annual increase to 2.55%”. In this way, 2014 “was the year in which the house price trend turned a corner”, they explain.

This means that “in terms of prices, the real estate market seems to be bottoming out and heading towards price consolidation, at levels similar to those last observed in 2003”.

Sales

77,881 house sales were recorded during the fourth quarter of 2014, representing an increase of 7.33% on the same period in 2013. In 2014, 318,928 house sales were recorded in total, which represented a decrease of 3.1% with respect to 2013. This data is almost identical to that compiled by INE (319,389), although according to the National Institute of Statistics (Instituto Nacional de Estadística or INE), the volume of sales increased by 2.2%. In both cases, the data shows a trend towards stabilisation.

One of the main stories to come out the registrars’ statistics is that the purchase of homes by foreigners reached a new record high last year: accounting for 13% of all transactions. Foreigners acquired 41,492 residential properties in total, whereby completing five consecutive years of growth, up from from 4.24% in 2009.

The composition of nationalities remained relatively stable, although the decline in the number of Russian investors was noteworthy; they moved from third place (in the ranking of foreign purchasers) to sixth place in a single quarter. Thus, the British led the ranking, accounting for 18.6% of foreign purchases in the fourth quarter, followed by the French (9.4%), German (7.2%), Belgian (6.9%), Italian (6.1%), Russian (5.8%), Swedish (5.8%), Chinese (4.1%) and Norwegians (3.7%).

Finally, mortgage debt per household grew by 0.89% year-on-year in the fourth quarter.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

NH Has Raised Its Room Rates By Between 15% & 40% After Renovating Hotels In Spain

13 February 2015 – Expansión

The CEO of the NH hotel Group in Spain, Hugo Rovira, says that “customers are not fools, if you offer them quality, then they are willing to pay for it”, but he recognises that “if you give out peanuts, then you will attract monkeys”, after sharing his opinion that “retaining customers through low prices is not sustainable, there will always be cheaper competitors”.

The NH Hotel Group is spending 25% of its turnover on the renewal of its gastronomic offer, a major commitment for the hotel chain, which regards high quality gastronomy as the “saviour” of the sector as a means of differentiating itself.

And so it is with good reason that NH has invested almost four million euros in the renovation of its gastronomic offer, a fundamental part of the transformation that the chain is undertaking in virtually all of its hotels.

The renovation of its facilities has resulted in “an increase in the room rates at NH hotels across the country, of between 15% and 40% of the original cost, depending on the establishment”, according to the CEO of the NH Hotel Group in Spain, Hugo Rovira.

Rovira stresses that “it is hard to see how it could have got any worse in Spain” and that the commitment to high quality culinary tourism has led to the “salvation” of the sector, differentiating NH accommodation thanks to its wide-ranging gastronomic menu, without renouncing the commitment to offer customers the best service.

“Coffee for everyone is not good” said Rovira categorically to journalists on Thursday morning at a business breakfast. Specifically, the executive was referring to NH’s decision to provide a top class service both in room and in its restaurants.

By way of example, Roviro explained that NH continued to serve the best products in its minibars throughout the crisis and generated more or less the same volume of sales, with an increase of up to 20% in recent years.

Rovira also wanted to highlight the trend towards recovery in the Spanish market and he noted a “slight recovery”, although he made it clear that “we still have a long way to go, but at least we are on the right track”.

Positive outlook for 2015

In fact, the outlook for 2015 in our country is “good”, according to the CEO, who said that results from the last quarter of 2014 showed signs of recovery “both in terms of corporate clients and families”.

And he said that “clients are not fools, if you offer them quality, then they are willing to pay for it”, but he recognises that “if you give out peanuts, then you will attract monkeys”, after sharing his opinion that “retaining customers through low prices is not sustainable, there will always be cheaper competitors”.

NH seeks to differentiate itself and continue to maintain its image of high quality service through two clear commitments (a line of restaurants that serve products with Designation of Origin (Denominación de Origen or DO) and “show-cooking” or “Domos”, led by renowned chefs and apprentices from the hotel chain’s culinary school).

Renovations and relaunches

The NH Hotel Group is immersed in its renovation and relaunch plan, for which it has a total budget of €220 million to spend between 2013 and 2018; 55 hotels have signed up to the plan, of which 20 are located in Spain.

Other lines of action, such as the so-called “open bars” represent another model for the local market, as the company offers a service “similar to those provided in VIP lounges at the airport” in which clients can access “self service” bars.

Original story: Expansión

Translation: Carmel Drake

Fitch: House Prices In Spain Have Bottomed Out

12 February 2015 – El Mundo

The ratings agency expects prices to stabilise at their current levels, 40% below their peak.

It also predicts that the increase in house prices will be “marked” by the greater availability of credit and a substantial improvement in the labour market.

The credit rating agency Fitch Ratings expects house prices in Spain to stabilise at their current levels, 40% below the peak levels recorded before the crisis. The agency notes that the data now shows that an equilibrium has been reached and prices will not decrease any further.

According to its report about the mortgage market in Spain, the theoretical benefits of greater access to credit are still a long way off from compensating for the over-supply (of homes) and the lack of confidence caused by high unemployment. Similarly, Fitch adds that the increase in house prices will be “marked” by greater availability of credit and a substantial improvement in the labour market.

In this sense, it stresses that interest rates are currently low and that it expects debt servicing to continue to be manageable in the medium term, but it warns that households that are in the process of deleveraging remain sensitive to interest rate rises.

On the other hand, it considers that banks are more willing to grant mortgages to solvent customers and are gradually reducing their margins, as a result of their own lower financing costs. Nevertheless, the low forecast Euribor rates for 2015 will restrict any further decline in these margins.

The agency notes that, according to data from the National Institute of Statistics (el Instituto Nacional de Estadisticas or INE), house prices rose by 0.2% in Spain in the third quarter of 2014, the first time they had risen for two consecutive months since the third quarter of 2007.

Finally, Fitch notes that unemployment decreased by 2.3 percentage points year-on-year in the fourth quarter of 2014, to 24.2% and it believes that the “less bad” conditions in the labour market are reflected in a decrease in the number of loans falling into arrears.

Original story: El Mundo

Translation: Carmel Drake

Spain House Sales Rose Last Year (For First Time Since 2010)

11 February 2015 – Bloomberg

Spanish home sales increased last year for the first time since 2010, adding to signs that the property market is recovering from the worst recession in the country’s democratic history.

Transactions rose by 2.2 percent from a year earlier to 319,389 units, according to data compiled by the National Statistics Institute. That’s still far below the peak in 2006, when 955,186 properties were sold.

“We are out of the operating room but we are still in the hospital,” said Fernando Encinar, co-founder of Idealista.com, Spain’s largest property website. He said 2013 was “the worst year of all for Spanish real estate sales, so any comparison will look good.”

More than two years since applying for a European Union rescue of its banking system, Spain has become one of the fastest-growing economies in the euro area as exports surge and investment rebounds. The country is poised to have the highest growth since 2007 this year.

Tinsa, Spain’s largest homes appraiser, said today that home prices fell 2.7 percent last year, taking the drop since values peaked in 2007 to almost 42 percent.

Original story: Bloomberg (by Sharon Smyth)

Translation: Carmel Drake

Recovery Has Investors Stocking Up On Spanish Malls

11 February 2015 – WSJ

The Spanish shopping experience is getting a multibillion-dollar makeover as the nation’s economy improves and foreign investment flows in.

After a year of tepid recovery from recession, consumer spending is picking up. Retail sales rose 1.9% in November from the same month in 2013, the fourth consecutive monthly increase, after six years of decline. Although nearly a quarter of the workforce remains unemployed, the economy is expected to expand by 1.7% this year, compared with 1.1% in the euro area as a whole, according to the Organization for Economic Cooperation and Development.

That, in turn, is helping to fuel investment in the retail property sector. In all, investment in retail real estate totalled €3.34 billion ($3.78 billion) in 2014, nearly triple the amount of the previous year and topping the record of €3.1 billion in 2006, according to property consultant JLL, formerly known as Jones Lang LaSalle. At least 67% of investments came from outside Spain. There was more investment in retail than in any other class of commercial real estate over the past year, according to JLL.

International investors are expected to pump more money into retail properties this year, including new construction, according to Adolfo Ramirez Escudero, president of property consultant CBRE Group Inc. in Spain.

Much of the money will go toward large-scale projects that mix shopping and entertainment, known as retail resorts, as well as outdoor outlet malls that resemble small cities where shoppers can find discounted designer brands.

Developers see opportunities for strong returns because prices of land and buildings are still depressed six years after the financial crisis. With the prices of many commodities at relatively lower levels and Spain’s unemployment so high, builders can also construct projects at a reduced cost. Meanwhile, the number of tourists to Spain is at a record, bringing with them money to spend.

The entrance of big global investors is a sign that the Spanish market is stabilizing, said Pedro de Churruca, general director of JLL in Spain.

“People are clearly coming back to shopping centers as a consequence of higher disposable income,” said Ismael Clemente of Merlin Properties Socimi SA, Spain’s largest real-estate investment trust, which in July purchased Marineda City shopping center in La Coruña from a local developer for €260 million. The three-year-old retail complex is the second-largest in the country.

The shopping center opened “in probably the worst possible moment in Spain,” said Mr. Clemente, referring to Spain’s economic doldrums. “We saw that there was a clear upward movement expected in rent, so we thought it was an interesting bet.”

The U.K.’s Intu Properties PLC purchased Spain’s largest shopping center, Puerto Venecia in Zaragoza, for €451 million in December. The British real-estate investment trust also announced a partnership with Spanish developer Eurofund to build four more retail resorts in Spanish cities as part of a plan to invest £1.2 billion ($1.8 billion) over 10 years.

Construction on the first of these projects, Intu Costa del Sol in the Malaga suburb of Torremolinos, —is scheduled to begin in the second half of 2015 and be completed by 2018. The 1.9-million-square-foot development will include amenities Intu is known for: a minitheme park, a surf lake, artificial ski slopes and a gourmet market, as well as shops and restaurants of high-end chains.

Intu owns 18 U.K. shopping centers, but Spain is the company’s first international market, which it entered in 2013 with the purchase of Parque Principado shopping center in Oviedo.

“We’re keen to keep growing, and if we focus on the prime, best shopping centers in the market, there are few opportunities in the U.K.,” said Martin Breeden, regional director of Intu. “Spain is a market that seemed open to international investment and where, frankly, there are not a lot of good shopping resorts in existence.”

Intu has purchase options on land for similar developments in Valencia, Vigo and Palma de Mallorca.

The Intu Costa del Sol site is about 3 miles from Malaga’s most-visited shopping center, Plaza Mayor, which opened in 2002. Sonae Sierra of Portugal, which owns and manages Plaza Mayor, has joined with U.K.-based McArthurGlen Group and U.S.-based Simon Property Group Inc. to expand the 572,400-square-foot shopping area to include a designer outlet mall. The €115 million development will add 324,000 square feet of leasable area and be the first large-scale outlet mall in Andalusia. Construction is scheduled to begin in the second half of this year, and the first phase is set to open in 2017.

Joan Jove, McArthurGlen’s regional development director, said Plaza Mayor is a “very strong, established retail scheme” and the planned adjacent outlet mall will be one-of-a-kind in the region. Mr. Jove said the project is mainly targeted at the 10 million tourists who visit Costa del Sol each year.

Intu’s Mr. Breeden said he wasn’t concerned about competition. “We’re very confident that there will be fantastic demand for our project.”

Sonae Sierra said it also plans to spend €55 million to update four of its other shopping centers around Spain within the next five years.

Elsewhere, TIAA-CREF, a U.S. money manager, has formed a joint venture with Neinver, a Spanish outlet-mall developer, to create TH Real Estate, which will own properties in Spain and other countries. Among their projects is the €80 million Viladecans The Style Outlets in Barcelona, which is scheduled to open in 2016.

“There is still plenty of money chasing product, and plenty of people with big debt who want to sell product,” said CBRE’s Mr. Ramirez. “I expect big volume this year.” He said large transactions could start to level off by next year as prices increase.

Original story: WSJ (by Shaheen Samavati)

Edited by: Carmel Drake

Housing In 2015: Some Vital Statistics

10 February 2015 – Expansión

For translation of the first part of this article, refer to: Housing In 2015: More Sales And Higher Prices

Vital statistics about the housing sector in 2015

House sales: +7.5%: House sales have returned to positive growth. After seven years of decreases, in which the end of tax reliefs barely affected the market – only in an artificial way – a real increase in the number of house sales was recorded in 2014 (up 2.6%). According to the Real Estate Heart Rate Monitor (Pulsímetro Inmobiliario) from the Institute of Business Practices (Instituto de Práctica Empresarial), 7.5% more sales will be closed in 2015 than last year.

House prices: +2.5%: The key indicator for buyers is price, which, combined with necessity, is the factor that tips the balance towards the purchase of a home or not. According to the Real Estate Heart Rate Monitor, prepared by the Institute of Business Practices, house prices rose by 6.47% last year and will increase by 2.5% in 2015. The average value of homes sold in 2014 was €141,718 and this year will close with an average price of €145,261, i.e. we will see a return to 2012 levels.

Construction: +7.5%: Timidly, slowly, the cranes will return to the skyline of Spain’s major cities. In 2014, the construction of new buildings began to increase. Specifically, 37,418 new builds were started in 2014, an increase of 20% on 2013. In 2015, the upwards trend will continue, but it will be less pronounced. According to the IPE, at least the first brick will be laid on 40,225 homes, i.e. 7.5% more than last year.

Mortgages granted: +2.53%: The number of urban buildings financed through mortgages will return to positive growth after no less than eight years in decline. This year, 306,639 loans will be signed for the purchase of property, i.e. 2.53% more than the 299,064 recorded in 2014. Last year, the total volume of mortgages amounted to €39,472 million, i.e. 13.8% more than in 2013. In 2015, the figure will increase to €41,840 million, i.e. 6% more.

Average mortgage: +3.4%: The average size of the loans granted by financial institutions to cover the purchase of residential property in 2014 was €131,984, i.e. 15.8% higher than in 2013. This year the figure will continue to rise, to reach €136,477, i.e. 3.38% more than last year. The average mortgage is equivalent to 93% of the average sales price of homes (note, we should remember that mortgages are granted for all kinds of real estate property).

Construction permits: +5%: Having seen the beginning – timid but evident – of the recovery in the real estate sector, professionals in the market are starting to glimpse a more promising future. And so, permits for the construction of residential developments will grow again in 2015, after eight consecutive years of marked decreases. This year 64,591 permits will be granted. That is 5% more than last year and 24,000 more than the number of new homes started.

All properties: +1.8%: The report from the Institute of Business Practice focuses on the residential market in particular, i.e. the housing market, but the real estate sector is more broad. If we consider all urban properties – shops, shopping centres, offices, housing – 717,471 properties will change hands in 2015, i.e. 1.8% more than in 2014, the year in which the increase was similar, boosted by the arrival of vulture funds looking to purchase bargain properties with high yields.

Housing stock: -29.1%: For the fourth consecutive year, the number of surplus homes decreased in 2014, from 777,000 in 2013 to 662,761. That is, 115,000 fewer homes or 14.7% of the total. In 2015, the decrease in empty properties will be even greater. According to the IPE’s forecasts, the figure will drop to 469,708 properties this year, i.e. 29.1% fewer (193,000 homes). Valencia, Castilla-La Mancha and Andalucía account for 54% of the total stock.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

AEV Less Optimistic About Real Estate Recovery In 2015

4 February 2015 – Cinco Días.

House construction will not be revived until the upwards trend in prices grows stronger.

Analysts believe that the crisis “has cleaned up” the sector.

The macroeconomic recovery will come first, driven by increased activity and job creation, and then an improvement in the real estate sector. That is the expected path of recovery for the house building sector, one of those hardest hit by the recent crisis.

Paloma Taltavull, Head of the Department for Applied Economics at the University of Alicante explained this yesterday. She is one of the experts that has participated in a study conducted by the Spanish Association of Value Analysis (AEV), which represents more than 90% of the appraisers that operate in the market.

Thus, unlike the forecasters that resolutely claim that the real estate market will recover in 2015, the members of this organisation are much more cautious.

“Construction activity is still at historically low levels, with house prices now bottoming out, having been in decline since 2008”, state the conclusions of the study. However, for how long will prices remain at these low levels? That is the million-dollar question that all of the experts are asking themselves and to which investors, developers, vendors and buyers want the right answer. The problem is that getting the forecasts right with everything that still might happen seems, at the least, very complicated, according to the Chairman and Secretary of the AEV, Gonzalo Ortega and José Manuel Gómez de Miguel, respectively.

Two variables, in particular, always determine the future of this market: employment and access to credit. Although the official statistics for 2014 still need to be corroborated, it seems that there were more house sales in 2014 than in the previous year for the first time since the crisis began. And prices showed a clear trend towards zero growth or stabilisation.

Less property, more rent

And that was because last year was the first year in which Spain created jobs again, rather than destroying them. Moreover, financing terms were relaxed, thanks to the lowering of interest rates and the overall improvement in the banking sector.

However, according to the experts who prepared the AEV’s report, this recovery in employment is still insufficient to boost the housing market. Furthermore, the report highlights the “precariousness of the new jobs that have been created, along with wage deflation and mass youth unemployment” as the three most important factors that give us “few reasons to be optimistic”.

In this context, and given that the restrictive conditions surrounding access to credit for those that do not have a stable job and/or a certain level of income, the appraisers and experts at the AEV are unanimous in their view that “it will take a real and prolonged recovery for young people to be able to buy their own homes. Therefore, everything suggests that the majority of young people will opt to rent homes, whereby aligning with the European average”.

This is causing a build up in the back-log of demand from buyers, who still do not meet all of the requirements to make buying a house a reality. The appraisers’ report reveals that the most recent census data (2011) shows that almost 900,000 nuclei of new homes could have potentially been formed, but were not. If the improvement in employment continues, a large part of this potential demand will become effective and house prices will start to rise slowly as a result, “although we do not expect them to do so on a widespread basis or across the whole country until the end of this year”, predicted Taltavull.

And as for the construction of homes, the experience of past crises indicates that the return to previous levels of construction will be very slow over the next few years and will not become a reality until prices have recovered.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Housing: Rental Prices Are On The Rise In 7 Autonomous Regions

29 January 2015 – Expansión

Trend/ The rental market is showing signs of improvement, after seven consecutive years of decline. Rental prices are increasing again in seven autonomous regions and are now stable in three.

The trend in rental prices is starting to change. After seven years of uninterrupted decreases, there were signs of stabilisation in the market in 2014. Overall, prices decreased by 1.9%, but that represented the smallest decreased since the golden years of the bubble, in 2007. Moreover, rental prices in 10 autonomous regions are no longer falling (they are increasing in seven and stable in three).

Those are the main conclusions of a report, prepared by Fotocasa.es in collaboration with the IESE Business School, about Rental Housing In 2014. “In the space of a few months, we have gone from seeing decreasing rental prices across almost the whole country, to seeing year-on-year increases in seven autonomous communities; furthermore, the scope for further downward movement is now limited in certain other areas”, says the study.

The Balearic Islands led the return to rental increases, with an annual rise of 6.7%. It was followed by Cataluña (6.5%), Pais Vasco (6.1%), the Canary Islands (1.8%), Madrid (0.6%), Extremadura (0.5%) and Valencia (0.2%).

Moreover, for the first time in seven years, none of the autonomous regions recorded rental price decreases of more than -5%. In fact, the sharpest decline was in Castilla-La Mancha (-3.4%), followed by Asturias (-3.2%), Navarra (-2.9%), Murcia (-2.3%) and La Rioja (-2.1%).

“The year-on-year variation in 2014 (-1.9%) is more than three points lower than the decline recorded at the end of 2013 (-5.2%) and it brings us back to pre-crisis levels”, said Fotocasa.

Rental prices in Spain reached their historical peak in May 2007, at €10.12 per sqm per month. Since then, they have declined by 33.1% overall, with Aragon (-42.5%) and Cantabria (-37%) being hit particularly hard.

The report identifies 86 municipalities that recorded rental price increases last year. The most notable increase was in San Sebastián, the city with the most expensive housing in Spain (12.7%), followed by Sant Pere de Ribes (11.7%) and Calvia (11.5%).

In Spain’s two largest real estate markets, the changing trend is catching on more quickly. In 2014, the rental price per sqm increased in 10 of the 21 districts in Madrid and in 9 of the 10 districts in Barcelona.

Madrid and Barcelona

The most notable increase in the capital was in the Retiro district (5.5%), followed by the Centro (5.3%), Chamberí and Salamanca (4.1% in both). And the most marked decreases were in Vicálvaro (-7%), Puente de Vallecas (-5.7%) and Villaverde (-5%).

Meanwhile, in Barcelona, the largest increase in rental prices was recorded in the district of Les Corts (12.9%), followed by Eixample (9.8%), Ciutat Vella (9.4%), San Martí (8.8%) and Sarria-Sant Gervasi (8.5%). The only district to experience a decrease was Sant Andreu (-1.2%).

The most expensive area to rent a home in Barcelona is Ciutat Vella, with a average price per sqm per month of €13.60, followed by Sarria-Sant Gervasi (€13.04). Meanwhile, the most expensive district in Madrid is Salamanca, with an average price of €13.04 per sqm per month, followed by Chamberí (€12.96).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Homes: New Builds Are Returning To Cataluña

28 January 2015 – Expansión

Cataluña started to construct between 4,300 and 4,500 homes last year, putting an end to seven consecutive years of decline in the number of new homes started.

At a press conference, the President of Barcelona’s Developer Association, Lluís Marsa, explained that since 2006, when 126,000 homes were built, the number of new builds has decreased year after year to a minimum of 3,036 homes in 2013.

Although the increase in the number of new builds since 2013, compared with the estimated closing figures for 2104, reveals a growth rate of 48%, Marsa recalled that in absolute terms, the number is still very modest, and so the sector “is still a long way” from what would be considered normal, he said.

The Developers’ Association estimates that Cataluña should be building between 20,000 and 25,000 new homes each year, but Marsa did not hazard a guess as to how many years it would take for the region to reach that volume, although he did say he was certain that the trend would continue to be positive in 2015.

In any case, builders understand that, gradually, the market is returning to normal, since “the price correction process has now been completed”.

One example of this is the study presented today by the entity, in collaboration with the the Housing Ministry, the Town Hall and Barcelona’s Provincial Council.

The study analysed 815 housing developments in the province of Barcelona, covering 20,165 homes and concluded that only 24.1% of the properties were pending sale, i.e. 4,859 homes.

Although this study analyses the supply of new housing only, and not the stock (of second-hand homes) accumulated in recent years, the data serves to verify that the few developments that are currently being built in Cataluña are being located only in areas with proven demand.

In this way, from the supply of 4,859 homes in the province, 924 are located in the city of Barcelona. It also highlights the current supply in cities such as Terrassa (where 377 new homes are up for sale), Sabadell (250 homes), Badalona (485 homes) and Sant Cugat de Valles (133 homes).

The price per square metre in the province of Barcelona decreased by 7% in 2014 with respect to 2013, and amounts to €3,046.

In contrast, in the city of Barcelona, where there are homes for sale in 166 developments, the average price per square metre is €5,000, down 4.1% from 2013, according to the study.

Nevertheless, there are important variations between districts, since a buyer could expect to pay €9,146 per sqm (13.1% more than in 2013) for a new build in Sarria-Sant Gervasi, versus €3,034 per sqm for one in Sant Andreu.

Meanwhile, Marsa complained about the difficulties that developers face when trying to access credit from banks to start or finish developments, and he pointed out that the restructuring of the banking sector has substantially reduced the number of entities and even more significantly decreased the number banks willing to lend.

The high level of unemployment and the strict requirements that still apply when it comes to applying for mortgages are just two of the other difficulties that individuals face when they want to buy a new home.

Likewise, Marsa said that although during the ‘boom’ years, 50% of all homes sold were new builds, they now barely account for one in three sales, and he forecasts that second-hand housing will continue to gain ground over the next few years.

Original story: Expansión

Translation: Carmel Drake

Bank of Spain: Positive Outlook For 2015

28 January 2015 – Expansión

The Bank of Spain emphasises the “stimulation” of private consumption / It also highlights a “slight improvement” in the production of goods, car registrations and consumer confidence and acknowledges the positive trend in employment.

Although the spending power of Spanish citizens has not yet returned to its pre-crisis levels, it did improve during the last quarter of 2014. The construction sector, one of the areas hardest hit by the crisis, also experienced a revival. These are two of the conclusions of the January Bulletin issued by the Bank of Spain yesterday. One of the factors that has contributed to this progress is “an improvement in financing conditions”. That is, the depreciation of the euro, the decrease in interest rates and the collapse of oil prices. Another positive development is the “very favourable performance of the labour market”.

The supervisory body says that the construction sector experienced an “upturn” in the latter part of last year, evidenced by an increase in the number of Social Security enrolments and a rise in cement consumption. “The information indicates that the recovery in the construction sector will continue, a trend that, from the point of view of the type of work, will affect both the residential and non-residential segments”, says the report.

Furthermore, the Bank of Spain insist that “private consumption indices suggest that this component of demand experienced more dynamic behaviour during the final part of 2014”. According to the Bulletin, a “slight improvement” was observed in retail sales, car registrations (which recorded an increase of 0.2% in December following a decrease in November), the production of consumer goods and consumer confidence. The day before yesterday, the main association of car manufacturers, Anfac, reported that 2.4 million vehicles were manufactured last year, 11% more than in 2013.

Employment

According to the regulator, the improvement in the labour market also gives cause for optimism. The Bulletin states that the Labour Force Survey (LFS) for the fourth quarter of 2014 showed a quarter-on-quarter increase in employment of 0.9% in seasonally adjusted terms, with the creation of 434,000 jobs, which will benefit almost every sector (especially construction), with the exception of agriculture. In addition, the number of full-time employees grew at a similar rate to those hired on part-time contracts.

In terms of the performance of the industrial sector, the Bank of Spain said that the month-on-month decline in the industrial production index moderated in November by 0.4%, whilst the two most important indicators of progress in the sector (the European Commission’s industrial confidence index and the manufacturing PMI) remained at “levels that are consistent” with continued expansion in this area.

The report also celebrated the “dynamism” of foreign tourism. Nevertheless, it highlighted that both the export and import of goods grew at more moderate rates in November. The latter grew by 4.3% in November, compared with 9.9% in October.

Similarly, the Bulletin indicated that the evolution of prices during the last part of 2014 was greatly affected by the unstoppable decline in oil prices on international markets, which caused CPI to decrease by 1% in December, year-on-year.

Economy-wide growth

Meanwhile, the Secretary of State for the Economy, Íñigo Fernández de Mesa, also said yesterday that growth in Spain will be “much more intensive in terms of labour, because more jobs will be created with less growth, and less intensive in terms of credit” and (growth) “will be based on all of the engines that drive the economy”, both the export sector and internal demand. “We are confident that 2015 is going to be a year of consolidation”, since “for the first time in a long time, Spain is not only growing, but all of the imbalances are also being corrected”, he said.

“Spain has gone from being the problem-child of the euro zone to being the country that is generating the highest growth and helping to drive the eurozone economy in a more intense way”, he said. He also pointed out that “growth is now greater” in those countries in which “the most significant reforms have been carried out”.

Original story: Expansión (by Yago González)

Translation: Carmel Drake