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

The Housing Paradox: Supply Is Failing To Match Demand

21 June 2016 – El Confidencial

Spain is going to need 180,000 homes per year until 2025 to meet the demand being created by new households. In the Community of Madrid alone that means 25,000 new units. Those are the forecasts published by the real estate consultancy CBRE, which estimates that the existing stock contains around 300,000 homes, of which between 20-25%, in other words, around 75,000, will never be sold because no-one wants to buy them, either because of their locations or other characteristics.

(…) According to Samuel Población, the National Director of Residential Assets and Land at CBRE, “by the beginning of 2017, the stock of new homes will have pretty much been absorbed; what is left will be very localised and technical, which will drive the launch of new developments”. To give us an idea, in the centre of Madrid, there are currently only 800 (new) homes up for sale and in Barcelona, there are just over 1,000, according to estimates from Sociedad de Tasación.

Specifically, markets such as Madrid, where demand is high – house sales have risen by 13% in the capital in the last year – and where there is a shortage of new homes being constructed, account for almost one in seven of the new homes being built. Nevertheless, the available land inside the M-30 ring road has capacity for less than 1,500 homes. In Cataluña, demand amounts to 14,000 homes, of which Barcelona accounts for 7,900 units, ahead of the Balearic Islands, where demand reaches 7,544.

In fact, Madrid has become one of the most active markets from the point of view of the residential sector, given that almost 30 operations have been signed there in the last year and a half, which have involved a total investment of almost €1,000 million, in some cases exceeding €100 million each (such as the cases of the plots in Raimundo Fernández-Villaverde and Juan Bravo, 3). However, that activity contrasts with the paralysis that exists in other autonomous regions, such as Extremadura, Castilla y León and Castilla La Mancha, where demand is currently non-existent, according to Lola Martínez, the Head of Research at CBRE.

According to Samuel Población, this strong demand in Madrid has already had a direct effect on prices. “We have seen operations involving land, where prices have doubled in just a few months…”. In fact, although the consultancy firm forecasts that house prices will rise by 6% on average across Spain in 2016, it does not rule out the possibility of higher price increases in the centre of Madrid, where the average price of new homes amounts to €3,000/sqm, and where prices for new developments in the neighbourhood of Salamanca are as high as €10,000/sqm.

The lack of buildable land inside the M-30 ring road, the paralysis of the sale of public land and the high prices of plots owned by private developers means that the market for renovations is gaining strength in the centre of Madrid. Some of the most notable operations in recent months include the refurbishments of the former Agencia EFE building and the former tenement building in San Juan de la Cruz, which are both going to be converted into luxury homes. (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Ministry Of Development: Housing Permits Soared By 57% In Q1 2016

31 May 2016 – Expansión

More signs of acceleration in the construction sector. The number of permits to construct new homes have recorded their highest figure since 2011, although they are still a long way below the figures seen in 2006.

The number of housing permits granted by the college of architects to construct homes soared by 57% during the first quarter of the year to 16,782, the best figure recorded during the first three months of a year since 2011, according to the latest statistics from the Ministry of Development.

Despite the increase, the number of housing permits are still a long way below the highs recorded in 2006, at the height of the boom in the real estate sector (…).

The total number of permits granted for new builds, renovations and extensions during the three months to March amounted to 16,979, which represents an increase of 36% with respect to 2015.

By type of property, permits to construct housing blocks rose by 64%, to 12,425; whilst the number of permits granted to build family homes increased by 39% to reach 4,356 permits.

In terms of surface area, the average size of family homes amounted to 203.6 sqm, whilst the average size of flats stood at 118 sqm.

The number of permits granted started the year with a bang, up by 44% in January to 4,943. In February, the YoY increase amounted to 35%, with 5,663 permits, whilst in March the number doubled to reach 6,176.

Since the Ministry of Development began to compile these statistics in 1991, the number of permits granted hit a historical monthly low in August 2013, when just 1,585 licences were granted. The maximum high was recorded in September 2006, with 126,753 permits granted.

Original story: Expansión

Translation: Carmel Drake

Colonial To Pay Dividends Again After 10 Years

23 February 2016 – El Mundo

The Group generated profits of €415 million in 2015, thanks to the revaluation of its buildings.

Its profits in 2015 were 15.6% lower than in 2014, when the figures reflected the positive accounting effect of the deconsolidation of Asentia.

After 10 years, the Colonial Group is going to distribute dividends once again, distributed from its results for the financial year 2015. The real estate company will allocate around €47 million for payment to its shareholders, 59% of whom are individual investors. The rest of the Group’s capital is held by the Villar Mir Group (15%), the Qatar Investment Authority (13%) and Aguila LTD (7%), a fund owned by (the Colombian group) Santo Domingo (…).

Colonial’s share price closed 2015 at €0.62, after improving by 29% during the year. Shareholders will receive a dividend of €0.015 per share. The company, led by Juan José Brugera, generated a net profit of €415 million last year, after receiving revenues from rental income of €231 million, up by 9% YoY, due to a 6% increase in rental prices, as well as the impact of new acquisitions made in 2014 and 2015. The Group’s profits in 2015 were 15.6% lower than in 2014, when the results reflected the positive accounting effect of the deconsolidation of Asentia (which was not repeated in 2015).

The real estate company, which operates in Barcelona and Madrid, as well as in Paris, through its French subsidiary Société Foncière Lyonnaise (SFL) recorded a 20% increase in the valuation of its assets, to €6,913 million, with 4% of that amount relating to its most recent operations in Paris. In 2016, the firm wants to continue its pace of investment, at around €300 million per year, even though that figure rose to €475 million in 2015. It will also continue to operate in the office segment in its three geographical markets, through both renovations and new builds.

Original story: El Mundo (by M. T. Coca)

Translation: Carmel Drake

Ministry Of Development: Housing Permits Rose By 39% In 2015

29 January 2016 – Expansión

Permits for the construction of new homes are at a five-year high, but the figures are still tiny compared with their pre-crisis levels.

The number of permits requested for the construction of new homes soared by 39% last year, to around 48,600, according to official data published by the Ministry of Development for the 11 months to November.

In this way, requests for the construction of new homes recorded a second consecutive year of increases and reached a five-year high, not seen since 2011.

Between January and November, requests were made for 44,577 permits to construct homes, which represents an increase of 35% compared to the previous year.

If we assume that this rate of demand was maintained during the last month of the year (around 4,050 per month), then the total would have amounted to around 48,600 permits by year end.

Despite these figures reaching their highest levels for five years, they still fall a long way below the series maximum, recorded in 2006, just before the crisis when the sector was at the height of its boom and 865,561 permits were requested. To put this into context, the number of permits requested during the whole of last year was equivalent to the number requested in just one month in 2006.

During 2015, 69% of all permits requested related to the construction of new blocks of flats, with 33,900 units, representing a YoY increase of 45%.

The other permits requested last year related to single-family residences, with 14,700 requests in total, up by 27% compared with the previous year.

More renovations

Similarly, in 2015, the number of permits requested to renovate or restore homes increased by 14%, to reach 25,668.

By contrast, during the same period, the number of requests for home extensions decreased, albeit more moderately (by 3%), from 1,485 in 2014 to 1,428 in 2015.

Original story: Expansión

Translation: Carmel Drake

CBRE: Renovations & New Builds Will Drive Inv’t In 2016

28 January 2016 – Expansión

The real estate sector is entering 2016 with optimism and is glimpsing a panorama of new opportunities, thanks to a boost from the property development and residential redevelopment segments, which are being reborn for the first time since the start of the crisis. That is according to the findings of CBRE’s Real Estate Barometer, prepared on the basis of the opinion of almost 100 directors (in the sector).

The study shows that the real estate sector will take off once again in 2016, driven by the recovery in rents in Madrid and Barcelona, the construction of new developments and the return of land as a sought-after asset. (…).

In terms of residential real estate development, 49% of the directors surveyed think that the segment for refurbishments is the one with the most opportunities. Nevertheless, the most interesting finding is that, for the first time since 2007, 40% of the directors surveyed point to new housing as a segment with significant potential, double the figure that thought the same a year ago.

Specifically, almost half of the directors surveyed believe that the number of new homes will amount to between 100,000 and 175,000 in 2016, compared with 40% in the previous survey, whilst an additional 20% expect that range to amount to between 175,000 and 250,000, compared with 15% a year ago. (…).

Prices have bottomed out

In terms of prices in the residential market, 83% of the directors surveyed think that prices have now bottomed out, compared with 46% last year. Of the remaining 17%, 38% forecast that prices will fall by less than 5% in 2016, whilst a similar percentage expect prices to drop by between 5% and 10%. Nevertheless, the responses certainly point to the two-speed evolution of the market, with localised, rather than generalised, increases in prices, primarily in Madrid, Barcelona and the Costa del Sol.

In the same way, the directors surveyed expect rental prices to rise. Specifically, 95% believe that rental prices will increase in centrally located offices, compared with 76% a year before. In the same way, 65% expect rental prices in the industrial and logistics segment to increase this year, compared with 31% a year ago. (…).

“2015 was undoubtedly a record year for real estate investment in Spain, with total investment amounting to almost €13,000 million. If we analyse the players behind these purchases, we see that the Socimis invested 42% of the total, but other domestic buyers, financial institutions and real estate companies that had been recapitalised also grew in importance”, says Lola Martínez-Brioso, Head of Research at CBRE.

Regarding the Socimis, 55% of the directors surveyed think that the growth of these companies on the stock market is sustainable, compared with 45% who think the opposite.

The study also reveals that institutional funds will lead the investment market in 2016. Specifically, 33% expect institutional investors to be the most active this year, followed by collective vehicles (30%) and real estate investors (28%). By contrast, only 4% think that vulture funds will be the most active players.

Offices

Meanwhile, offices will continue to be objects of desire. Thus, 42% of the directors surveyed will prioritise this segment, followed by 22% who plan to focus on the residential segment. Something similar is happening with the investment plans of those surveyed looking beyond Spain, since 35% say that offices will be their main objective abroad.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Ministry Of Development: Housing Permits Reach 5-Year High

30 December 2015 – Expansión

The number of permits requested to construct new homes shot up by 29.2% during the first ten months of the year compared with the same period last year, to amount to 39,871 certificates, according to data from the Ministry of Development.

If the same rate of permit requests has been maintained during the last two months of the year, 2015 will come to an end as the second year of consecutive increases and with the highest volume in five years, since 2011, when the number of certificates reached almost 48,000.

Demand for permits to construct new homes thus maintained the growth trend that it had been recording for months and which allowed it to close 2014 with the first increase (in the number of permits) since 2006. Nevertheless, it still falls a long way short of the record figures reached before the crisis.

For the time being, during the first ten months of the year, 70% of the permits requested related to the construction of new blocks of flats, with 27,827 units and a cumulative YoY increase of 32.8%.

The other authorisations requested related to single family residences, with 12,028 requests, i.e. 21.6% more than during the same period a year earlier.

The number of permits requested to renovate and restore homes also increased between January and October, by 12.9%, to amount to 21,474 requests.

By contrast, the number of requests to expand homes decreased during this period, by 12.2%, from 1,318 during the first ten months of 2014, to reach 1,156 during the same period this year.

Original story: Expansión

Translation: Carmel Drake

What Can We Expect From The Housing Sector?

30 November 2015 – Cinco Días

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

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

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

Macro-economic figures

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

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

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

New Projects

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

Refurbishments

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

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Ministry of Development: Housing Permits Up By 27% YoY

30 September 2015 – El Economista

According to the latest information from the Ministry of Development, the number of permits granted by the college of technical architects for the construction of homes shot up by 27.5% during the first seven months of the year to 28,870, the best figure recorded during that period since 2011.

Housing permits started the year (2015) with an increase of 37% to 3,466 in January. In February, the YoY growth rate shot up to 57%, before decreasing in March by 13.5%. In April, the number of permits increased again by 50%, then by 22% in May, 48% in June and 12% in July.

This growth in the number of permits comes after a slight increase (0.003%) was recorded during 2014 to 34,873, the first rise in the construction sector indicator after seven years of decreases.

Despite the increase recorded during the 7 months to July, the total number of housing permits still falls well below the maximums registered in 2006, during the height of the boom in the real estate sector, when 496,071 permits were issued during the first seven months of the year, 94% more than this year.

New builds, renovations and extensions

The total number of permits granted for new builds, renovations and extensions during the seven months to July was 45,345, which represents an increase of 20.3% with respect to 2014.

By type of property, permits to construct blocks of housing increased by 31% (to 20,184 licences), whilst the number of permits for detached homes rose by 19% to 8,671.

In terms of surface area, the average size of detached homes was 202 m2, whilst the average size of flats was 112 m2.

The number of housing permits began to decrease in 2007, when it fell by 24.8%, since when the downwards trend continued to record its lowest ever annual figure last year.

Since the Ministry of Development began compiling these statistics in 1991, the number of permits reached its historical minimum in August last year, when just 1,585 permits were granted. The historical maximum was recorded in September 2006, with 126,753 permits granted.

Original story: El Economista

Translation: Carmel Drake

Ministry Of Development: 100,000+ Homes Sold In Q2 2015

25 September 2015 – Cinco Días

Improved access to credit and the increase in employment have been spurring on house sales for almost a year now and the upwards trend continued in the second quarter of the year. In fact, more homes are now being sold than a year ago in 14 of the 17 autonomous regions, when just a few months ago, the increase was being observed in just half of the country. And for the first time in five years, more than 100,000 homes were sold in one quarter, a figure not seen since 2010. (…).

A shortage of new homes

The numbers published yesterday by the Ministry of Development showed that house sales grew by 13.9% during the second quarter of the year compared with the same period in 2014. In total, 104,530 house sales were recorded, the best quarter since 2010, thanks primarily to the boost in the market for second hand homes and the activity in large cities.

By type, 91,499 second hand homes were sold between April and June, an increase of 22.6% with respect to a year earlier. But the most significant result is that second hand properties accounted for 87.5% of the total market in Q2 2015 – the segment continues to gain weight quarter after quarter, as the number of unsold properties in new developments dries up. In fact, the purchase of newly constructed homes increased by just 2.5% YoY in Q2 2015, to 13,031 properties, a volume equivalent to just 12.5% of the total number of transactions closed during the quarter. Nevertheless, it is worth remembering that the classification between new and second hand homes is clouded by the fact that many of the latter are actually new; they are classified as second hand because they come from developments that were included in real estate portfolios owned by banks or Sareb (and were finished more than two years ago). (…).

The other revelation disclosed by the Ministry of Development’s statistics relates to the classification of unsubsidised homes versus VPOs, which confirms the trend that has been observed in recent quarters: increasingly fewer VPO homes were sold in Q2 2015 for two reasons. The first is that the Government’s most recent housing plan tightened the conditions whereby individuals can sell those kinds of homes and the second is because no new VPO developments have been initiated since 2012, since the Executive of the PP has been more focused on (the promotion of) rental housing and renovations. Evidence of all of this is that only 4,590 VPO homes were sold between April and June, i.e. VPOs accounted for just 4.4% of all operations.

By autonomous community, house sales increased in 14 regions, led by La Rioja, where the volume of activity shot up by 44.2%, the Balearic Islands (+30.1%) and Cantabria (+29.4%). At the opposite end of the spectrum, a YoY decrease in house sales was recorded in 3 regions: Navarra (-14.7%), Extremadura (-1.5%) and País Vasco (-0.6%).

Another one of the findings from these statistics is that a few large capital cities behaved like hotspots in the market. Madrid, Barcelona and Valencia were the cities in which the most homes were sold between April and June, with 8,252 homes, 3,590 homes and 1,975 homes sold, respectively.

The housing market also recorded a positive result when we look at the figures for the last twelve months (July 2014 – June 2015), with 382,471 house changing owners, an increase of 13.3% compared with the previous twelve months (July 2013 – June 2014). In terms of the nationality of purchasers, the statistics reveal that foreigners bought 17.7% of all homes sold during the quarter.

Specifically, foreigners residing in the country acquired 17,307 homes, an increase of 17.2%, whilst operations closed by non-resident foreigners amounted to 1,244, up by 5% compared with the same period last year.

The provinces in which foreigners purchased most homes were Alicante (4,141), Málaga (2,517), Barcelona (1,470) and Madrid (1,173).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake