Tecnocasa: Average Rents Reached €8.54/sqm In 2014

19 February 2015 – El Mundo

Rental prices (in 2014) were slightly higher (+0.47%) than at the end of 2013.

The market is suffering its greatest declines in Madrid (-1.57%) and Barcelona (-0.59%).

The typical landlord profile: pensioners (28%), Spanish nationals (96%) and married (70%).

The typical tenant profile: single people, with permanent employment contracts, aged between 25 and 44 years old and Spanish.

The Tecnocasa Group has presented its first report about the residential rental market in Spain (a groundbreaking study). Highlights show that the average cost of rental homes amounted to €8.54/square metre (in 2014), which is slightly higher (+0.47%) than at the end of 2013.

With these figures on the table, Tecnocasa says that “rental prices have remained stable (upwards)”, although it acknowledges that there has been a slight decline in the two largest Spanish cities. Specifically, rents became 1.57% cheaper in Madrid and 0.59% cheaper in Barcelona, where prices amount to €10/sqm in absolute terms.

One must go back to 2007 to find the last report about rental prices nationwide. The then Housing Minister, María Antonio Trujillo, presented the OEVA (the State Observatory for Rental Housing or ‘Observatorio Estatal de la Vivienda en Alquiler’), which was the first official survey about the market. It was also the last. That study reported that the average price of rental housing was €7.20/square metre.

Tecnocasa’s study shows that the profile of landlords, i.e. of the people that lease out their properties, includes a high percentage of pensioners (28%), Spanish nationals (96%) and married people (70%). In terms of the profile of tenants, they are single, with permanent employment contracts, aged between 25 and 44 and, for the most part, are Spanish.

Lázaro Cubero, Director of the Department for Analysis and Reports (Departamento de Análisis e Informes or DAI) at the Tecnocasa Group, notes that rental prices have decreased by less than purchase prices in the last year, which means that “the yield a landlord can obtain by renting out a home that he/she owns is now greater”. Specifically, this yield has increased to 7.41% on average for the whole of Spain.

These figures represent the findings of the first report about the rental market conducted by the Tecnocasa Group and the Univerisdad Pompeu Fabra (UPF), based on a study that analyses data extracted from the property rental agreements brokered by Tecnocasa’s network (of agents) in Spain between 2012 and 2014.

Original story: El Mundo

Translation: Carmel Drake

The Five Largest Banks Sold 19% More Properties In 2014

10 February 2015 – Cinco Días

Banks are stepping on the gas in the race to reduce the weight of properties on their balance sheets. Last year, Santander, BBVA, CaixaBank, Sabadell and Popular sold 86,726 properties in total, an increase of 18.7% on the 73,000 units sold during the previous year. However, this boost in the rate of sales has not been reflected on the revenue side.

In fact, revenue from this activity grew by only 6.4% from €10,699 million in 2013 to €13,619 million last year, due, in large part, to the reductions in the sales prices being applied by these entities. The pressure being placed on real estate assets by the significant provisions imposed by the Government in 2012 has allowed these five large companies to sell off 230,000 properties in just three years.

CaixaBank holds the record for the number of transactions – in 2014, it sold 23,400 of its own properties or 35,870 if we include those owned by developers that it supports. Some of this success was based on its commitment to the rental market, which accounted for €1,132 million of the €2,512 million generated from its foreclosed assets (or €5,432 million if we include sales conducted by third parties), whereas it takes an average of four years to sell foreclosed assets.

Overall, Caixabank generated losses from this activity amounting to €1,148 million, an impact that the bank hopes to mitigate between 2015 and 2016. This drive should be helped by the Texan fund TPG, which now controls the entity’s real estate company Servihabitat.

Another one of the entities that recorded the best results in this field in 2014 was BBVA, which opted to retain control of Anida, its real estate platform, contrary to the general trend towards outsourcing. BBVA sold off 23,069 properties in total, including both its own properties and those owned by the developers it finances and whose homes it sold; in total, it recorded income of €1,932 million.

As a result, BBVA generated 18% more cash in 2014 than in the previous year. The company says that it has noted “more buoyant demand” in “an environment in which prices are slowly stabilising”. The entity, chaired by Francisco González, celebrates the fact that its losses in this area decreased to €876 million in 2014 from €1,252 million in 2013. And explains that this improvement is based on a lower volume of outstanding properties that need to be cleaned up and the “the launch onto the market of foreclosed assets with a smaller adverse effect”.

Banco Sabadell follows next in the ranking; it has also decided to retain control of its real estate company, Solvia, and is considering a potential IPO, as it observes a gradual improvement in the market. The entity sold 16,172 properties in 2014, both owned and third party properties, for which it generated turnvoer of €2,744 million; in both cases these figures represented a decrease of 12% on the significant number of sales it recorded in 2013.

Banco Santander, which recorded strong sales during the early years, reduced its clearance rate to 11,615 properties last year, however the higher value of the remaining assets allowed it to still generate revenues above the €2,000 million it achieved in 2013.

Finally, Banco Popular is one of the entities that seems to have benefitted most from the outsourcing of its real estate platform, Aliseda, which is now controlled by a consortium of funds comprising Kennedy Wilson and Värde Partners. The entity, chaired by Ángel Ron, increased its sales from 3,900 properties in 2013 to 8,600 units last year, and doubled the corresponding turnover, from €732 million in 2013 to €1,503 million in 2014.

“We would not be able to increase sales at this rate if the provisions were not sufficient”, reflected the bank’s CEO, Francisco Gómez at the most recent results presentation, where he stated that these provisions have enabled the entity to account for “the properties at market prices”. As a result, the number two at Popular hopes to “increase the value generated from real estate sales over the next few quarters”.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Citizens Now Perceive Housing Market As Stable

10 February 2015 – El Mundo

51.5% of citizens expect prices to remain stable over the next year.

This stability in the market is driving the demand for home ownership.

8.4% of Spaniards rented properties in 2013; this figure has now increased to 13.3% and is set to continue to rise.

After institutions such as the International Monetary Fund (IMF) and the Bank of Spain (Banco de España or BdE) echoed the end of price decreases, the forecasts made by Spaniards about the real estate market indicates that they expect stability to continue in 2015.

Proof of this is that 51.5% of the 1,510 people surveyed think that house prices will remain largely unchanged over the next year. This is reflected in the Consumer Confidence Index (Índice de Confianza del Consumidor or ICC) prepared by the Centre for Sociological Research (Centro de Investigaciones Sociológicas or CIS).

On the other hand, the feeling that prices will rise is softening, with only 23.9% of those surveyed believing that prices will rise, i.e. 2.2% fewer than last month. This perception differs from the results recorded in January 2014, when up to 30.4% of those surveyed by the CIS strongly expected an adjustment. Furthermore, now only 17.8% expect prices to continue to decrease.

Once this forecast has been drawn for the real estate market, the intention of citizens to buy a home during the next year grows bit by bit, in a very calm way. 3.9% of respondents say that they are thinking about buying a house, in a period that has already been dubbed as the year of recovery in the sector by experts.

With regard to the rental of properties, the indicators reflect the growing prominence of rentals (since April 2013, when the ICC began to ask survey participants about the topic). In 2013, 8.4% Spaniards lived under this regime, whilst the latest data shows that this figure has risen to 13.3%.

It seems clear that high yields, the professionalization of the sector and a change in the mindset of society have helped the rental model to gain strength in Spain. One more sign of the equilibrium towards which the real estate sector is headed.

Original story: El Mundo (by Pablo Ramos)

Translation: Carmel Drake