Tag: rental prices

INE: Rental Prices Decreased By 0.4% In August

22 September 2015 – El País

The average price of rental housing in Spain decreased by 0.4% in August, with respect to the same month last year, according to the Consumer Price Index (CPI) published by the National Institute of Statistics (INE) earlier this month.

As such, rental prices have recorded 29 consecutive months of decreases and are in keeping with overall CPI (-0.4%). In terms of the monthly trend, rental prices remain unchanged and so, the cumulative decrease for the first eight months of the year amounted to 0.3%.

By autonomous region, rental prices decreased in every region, with the exception of Cataluña (0.3%), the Balearic Islands (0.3%) and Galicia (0.1%), as well as Melilla (0.7%). Meanwhile, the most marked decreases were recorded in La Rioja (-2.9%), Valencia (-1.3%), Madrid (-1.1%), Murcia (-1%), Castilla y León (-0.7%), Castilla-La Mancha (-0.7%), Andalucía (-0.6%) and Asturias (-0.5%).

Aragón, Cantabria and Navarra recorded decreases in line with the national average (-0.4%); and the Canary Islands, Extremadura, País Vasco and Ceuta experienced decreases of -0.2%.

Original story: El País

Translation: Carmel Drake

Azca & Diagonal: The Most Sought-After Office Space In Spain

17 July 2015 – Expansión

According to the consultancy firm JLL, the scarce supply and improving economy will cause office rental prices in Madrid and Barcelona to rise by more than anywhere else in the EMEA region over the next five years.

Specifically, the consultancy expects that office rents will rise in Madrid by 6.2% each year on average, from €25/m2/month in 2014 to €34.5/m2/ month in 2019. Meanwhile, rents in Barcelona will increase by 5.3% per year, to €23/m2/ month by the end of 2019. The highest rents will be seen in the prime areas, i.e. in the central business districts: Azca in Madrid and Avenida Diagonal (between Francesc Macia and Maria Cristina) in Barcelona.

In fact (…) prices in Barcelona will not only rise on Diagonal, they will also increase on Paseo de Gracia. Overall, rents increased by 6% in Q2 2015 in Barcelona, to reach €19/m2/month on average in those two areas.

According to JLL, only 15,000 m2 of office space is currently available on the best section of Diagonal, out of a stock of around 275,000 m2 in that area, which represents an availability rate of around 5%, a figure not seen since 2008.

In fact, between 2010 and 2011, large companies such as Axa, Unilever and KPMG decided to leave the business district and move to more peripheral areas. Axa left ‘La Illa’ to move to WTC Almeda Park in Cornella, where it rents 9,000 m2; KPMG was the pioneer in moving to the new Plaza Europa business district in 2010, where it rents 6,000 m2 in Torre Realia BCN. And in 2011, Unilever moved to the Viladecans Business Park, where it rents 7,000 m2. (…).

More office space is available in Madrid: up to 46,458 m2. Moreover, that figure is expected to increase to almost 108,000 m2 in the next two years, as almost 23% of the total surface area of 475,784 m2 in the area becomes available. (…). This is partly due to BBVA’s upcoming move to its new headquarters in the neighbourhood of Las Tablas – the bank currently occupies the building at Castellana, 81, where it will leave a space measuring 24,000 m2, which is expected to become available in Spring 2016. Furthermore, KPMG is going to move from Torre Europa (pictured above) to Torre Cristal (in the Cuatro Torres complex) and will free up around 21,000 m2 of space at Castellana 89 from next year. Finally, space will become available in Torre Ederra (Castellana, 77), recently acquired by GMP, which is going to undertake a complete renovation of the property, to be completed at the beginning of 2017.

Until then, 9.9% of the total office space in Madrid is immediately available. Most is located in Torre Titania (on Calle Raimundo Fernández Villaverde, 65), which accounts for 34% of the available space. The remainder is spread across other office buildings in the area, including the Masters I and II buildings (Calle General Perón, 38), the Mapfre building (Calle General Perón, 40) and the Alfredo Mahou building (Plaza Manuel Gómez Moreno, 2). (…).

Original story: Expansión

Translation: Carmel Drake

Massimo Dutti, H&M & Uniqlo Seek Premises On Passeig De Gracia

22 June 2015 – Expansión

Rental prices are soaring on Barcelona’s Golden Mile / The three fashion chains have been negotiating with the owners of premises on the street for months to open mega-stores.

Barcelona’s Passeig de Gracia is one Spain’s most important retail streets, and store rental prices there have increased significantly in recent years. The luxury boulevard of the Catalan capital was the Spanish street where prices rose the most in 2014 (by 6.4%) to €215/m2/month, according to data from the retail-specialist consulting firm Ascana.

The tourism boom in Barcelona is continuing to drive demand in this street, and it is still one of the areas where international brands “must” have a presence. And the shortage of available stores means that prices are continuing to rise. All of this, despite the fact that the retail surface area on Passeig de Gracia has increased in recent years, since the first floors of many buildings have been incorporated into the stores. “And despite the fact that large premises mean lower average rental prices”, explains Eduardo Rivero, Managing Partner at Ascana.

Negotiations

As a result, rental agreements are taking longer to finalise. That is the case of the three mega-deals that have been under negotiation for months and which have not yet been agreed. The Japanese firm Uniqlo has been trying to lease premises on Passeig de Gracia for several years and has been negotiating with the owners of number 18 for months.

Massimo Dutti’s negotiations to lease the store that Vinçon will vacate, at number 96, have also been going on for months. And the other mega-store, created by sacrificing office space at number 11, is where H&M has been trying to open its flagship store since last year.

The volume of transactions on Passeig de Gracia, both in terms of investment and rental, has slowed down in recent months. According to Rivero, the number of retail property purchases has decreased for two reasons: the fall in profitability for the purchaser and, above all, the shortage of assets for sale. (…). The same is happening in the rental market. (…).

New brands are still arriving on the street, although to a lesser extent than a few years ago. In 2014, a total of 23 transactions were signed and 15 new brands arrived, most of them fashion industry names.

New stores

The upper end of the Paseo de Gracia is the real golden mile of the city. There, twelve deals were closed last year, all of them involving luxury brands such as Dior, Versace, Rabat, Frey Wille, Carmina Shoemaker and Wolford.

The extension of the time to close operations has driven the proliferation of temporary shops, known as pop-up stores, such as those run by Brandy Melville, Levi’s and Twin-Set. According to Ascana, these temporary incursions allow companies to verify the degree of consumer interest in a brand and evaluate the success of any possible permanent facilities. And whilst they all continue to look for space, rental prices continue to rise.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

RE Sector: Are The Mistakes Of The Past Being Repeated?

3 June 2015 – Expansión

Overseas investors are exerting significant buy-side pressure, which is driving up property prices; the experts hope that rental prices will increase accordingly, otherwise another bubble will begin to grow, they fear.

The mass entry of foreign capital into Spain’s real estate market after six years of absolute drought has led to significant changes in the sector, but some (experts) fear that the mistakes of the past may be repeated. At a meeting of experts from the real estate sector, organised by Expansión and KPMG, the speakers agreed that the (economic) cycle has now changed, but they warned against the speed of the price increases in certain segments and the indebtedness of some transactions.

CBRE’s CEO in Spain said that “two years ago, we could not have dreamed of such a rapid recovery”. He added: “From the outside, the investment sector validates that Spain will do its homework and that rental prices will recover, however these rents must increase, since they are the lifeblood of the sector; if not, we will be inflating a new bubble”.

The director of the Masters in RE Consultancy at the University of Barcelona, Gonzalo Bernardos, is more pessimistic. “We are witnessing a new cycle of growth that is going to result in further price rises in Spain; whether that is harmful or not will depend on the financial institution, but I personally have serious doubts as to whether the banks have learned anything”, he said.

(…)

By contrast, the partner responsible for Real Estate at KPMG in Spain, Javier López Torres said that “banks are reviewing transactions with tremendous care, they are not managing land any more”. And he confirmed that “in a residential building, for example, the loan to value ratio must not exceed 50%”.

The CEO of Hi Partners, Alejandro Hernández-Puértolas also thinks that “the analysis that banks are currently performing with respect to hotel assets goes beyond their mere value, it is completely different from a few years ago”. He said that “increasingly, there are more sophisticated investors in this segment: it will be an important year for investment by private equity firms, Socimis and private individuals”.

Rebound effect

All of the speakers agreed that there has been a rebound effect in Spain after the investment drought. However, the co-founder of Elix, Jaime Lacasa, is concerned about the debt that is accompanying the investment operations. He thinks that “the banks’ models are too short-termist” and…he considers that many people are practically being forced to invest their money.

The CEO of Colonial, Pere Viñolas, also thinks that “the mistakes of the past will be repeated in the future: significant errors may already be happening in some deals in Spain”, he said. In Madrid, for example, “players are investing in office buildings on the outskirts, at very dubious prices. In general, in the prime areas, property values are now just 30% below the peaks reached in 2007 and the recovery in terms of rental income has not even started yet”.

(…)

Financing

Martínez-Laguna wanted to point out that the property (ownership) business should be distinguished from the property development business…Lacaso affirmed that in the development sector “the riskiest financing is to developers; if we solve that, then financing to end buyers is not risky”. He also called for “regulation of the development sector..”.

Bernardos thinks that “Spain will be fashionable for a few more years” and also that “the Catalan independence process will crush the office market in Barcelona”.

Original story: Expansión (by Marisa Anglés)

Translation by: Carmel Drake

Idealista: Rental Prices Rose By 1.8% In Madrid In Q1

8 May 2015 – El Confidencial

The property crisis; the difficulties faced by thousands of citizens when it comes to buying a home; and the havoc wreaked by evictions have all resulted in a significant boost to the (residential) rental market in Spain. Over the last seven years, many citizens and families have been forced out of the property market and, given their need or desire to become independent or start a family, their only exit has been through the home rental market.

Thus, although owned homes still win by a landslide over rented homes – 78% to 22%, i.e. a very similar level to the one seen at the end of the 1980s – the fact is that in recent years, the balance has tipped a little less towards the property side and although, many experts consider that it is unlikely that we will reach the levels seen in other parts of Europe, where rental properties account for 50% of the residential market in some countries, it is clear that something is changing. “The rental market is here to stay and not just as a lifestyle option, but also as an investment”, says Fernando Encinar, Head of Research at idealista.com.

The rental market in the Community of Madrid is showing the first signs of recovery, as too is the sale and purchase market. Similarly, some areas are sparking greater interest than others in terms of demand, which, in turn, is starting to create a certain amount of tension in terms of prices.

The differences between neighbourhoods are clear. It does not cost the same to rent a flat in the centre of the capital or in the neighbourhoods of Chamberí and Salamanca, where the price per square metre is around €14/m2 (€1,120 for an 80m2 flat) as it does in Villaverde, Carabanchel or Puente de Vallecas, where the price per square metre barely exceeds 8€ (640€ for an 80m2 flat).

These price differences are explained, in part, by the location of the homes – clearly, it does not cost the same to live in the centre of the city as it does in the suburbs – but also due to the excess supply, in places such as Carabanchel and Vallecas, and the strong demand, in areas such as Sanchinarro and Las Tablas, where the experts detect a lot of activity due to the presence of Telefónica and the future arrival of BBVA.

(….)

The tension in terms of rental prices is palpable. Madrid ended the winter with a quarterly increase in rental prices of 1.8%, taking the average price per square metre in the capital to €11.60, however, that represents a cumulative decrease of 15.8% from its record high of €13.80/m2 in 2008.

Moreover, during the first three months of the year, the increase in rental prices was generalised, with rises in almost every district in Madrid, with the exception of Villa de Vallecas and the neighbourhood of Salamanca, according to the data from idealista.com, which also reflects significant increases in the districts of Barajas (5.8%), Retiro (4.7%) and Hortaleza (3.6%).

(….)

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Bank Of Spain: Residential Rental Yields Rise To 5%

18 May 2015 – Expansión

Residential market / The average annual return on rental properties is equivalent to 3.1x the return on public debt – a historical record. Demand for rental property has soared by 42.5% in three years.

After seven-years in decline, it seems that the housing sector is back. The residential market is oozing optimism once again, although it is also full of caution, learned during the post-bubble era, and  uncertainty, inherent in a recovery that is still recent.

But the data is improving and housing has become a good investment once again, above all due to the significant rental returns offered nowadays. Investors looking for yields that exceed those on deposits and public debt are on the hunt for properties in good locations, with high demand, with a view to buying them to let.

The data endorses this trend, since the rental income for a residential property offers an annual gross return of around 5%. On average, 4.7%, according to the Bank of Spain. It is the highest percentage recorded since June 2003, during the height of the housing bubble, although other reports, such as the one published by idealista, puts the figure even higher, at 5.3%.

The gross yield is a percentage of the total price of the house covered by the annual rental income. This yield, published by the Bank of Spain, also takes into account capital gains.

Taking into account the data from the body led by Luis María Linde, the average annual rental yield is no less than 3.1x the return generated by public debt on the secondary markets during the last quarter (1.5%). That is a historical record for this comparative ratio, which dates back to 1991. Meanwhile, bank deposits offer a return of 0.6% each year.

What does all this mean? Simply, that the moment is ripe for investment in buy-to-let housing, especially for small investors. The price of homes is beginning to increase and so are rentals, which means that the market is at an impasse of high returns without much risk. Moreover, the percentage of citizens who prefer to rent rather than buy has risen sharply, from 11.4% in the boom years to the current rate of 19%. In the past three years alone, the rental market has expanded to include one million more homes; it has grown by 42.5%.

On the other hand, the price of homes is starting to rise, specifically by 2.65% during the first quarter of the year, according to the registers. This trend towards stability in terms of property prices points to an easing of returns in the rental market, and so analysts believe that now is the best time to invest (rather than waiting to invest over the next few quarters).

According to the experts, the prime areas of the large cities are those that offer the safest opportunities, due to their significant demand, although without exorbitant returns. For example, the Madrid neighbourhood of Retiro, where the average price per square metre for sale is €3,289 and for rent is €11.6/m2/month, according to the index prepared by IE Business School and Fotocasa. A property measuring 100 m2 with these parameters would have an annual return of 4.2%. A second-hand home measuring 100 m2 in the Goya neighbourhood (Madrid) would have a return of around 4.7%.

“Homes in the best locations are the most attractive to rent. They will go up in price and there is no risk of default or lack of demand”, says the real estate consultant José Luis Ruiz Bartolomé. “It is possible that rental prices will also start to rise, although by less that sales prices. The rental margin will narrow, but that is because certainty will increase as well; I do not see that as a bad thing”, he adds.

And in the peripheral areas? “You have to look at where there is more demand than supply”, says Ruiz. Julio Gil, President of the Foundation for Real Estate Studies agrees: “It is the best option for small investors, due to the returns and minimal risk”.

Some properties offer higher yields than housing, such as commercial premises (7.2%) and offices (6.7%), according to idealista.com. Garages yield 4.5%.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Foot Locker To Open A Megastore On c/Preciados

16 April 2015 – Expansión

The sports equipment company is going to lease the building located at number 6 on the Madrid street, which has a surface area of 2,000 square metres.

Changes are afoot on Spain’s most sought after shopping street. In a few weeks time, the building located at number six Calle Preciados in Madrid will house a new tenant: the American company Foot Locker. The firm, which specialises in sports equipment will replace H&M, which vacated the property at the end of March to open its flagship store in Spain.

Foot Locker – which until now leased a smaller property at number 17 (on the same street) – will incorporate its signature brand the “House of Hoops” into its new premises in Preciados; the brand was created by the American company in conjunction with the sports brand Nike. The decision to open a flagship store, which will include this new concept, comes after Foot Locker has been testing its new brand, which specialises in basketball-related products, in a pop-up store in other premises on Gran Vía, 36, just a stone’s throw from Preciados.

The building, which is owned by a Spanish family office, has a surface area of 1,960 square metres, distributed over six floors. CBRE advised on the transaction.

The move represents the largest rental transaction involving retail premises on the Spanish high street in 2015. There have not been any major changes of tenants on Preciados for almost two years; the Madrid street competes with Portal del Ángel in Barcelona as the most expensive shopping street in Spain.

“It is a highly sought-after retail area that is very popular with large brands, and so it is rare for property to become available”, says the consultancy firm Ascana.

Last year, only four stores had a change of tenants and only one of those affected premises larger than 100 square metres. Specifically, a store measuring 110 square metres, which is now leased by the make-up firm Mac, after Bijou Brigitte vacated the property. Numerous offers are now expected for the premises at number 17, which Foot Locker has left empty.

Rental prices

This scarce supply has meant that rental prices on Preciados have not been hit by the decreases experienced on properties in the rest of the Spanish market. There, rental prices reach €248/month per square metre for the smallest premises (those measuring between 100m2 and 200m2), according to real estate sources.

Rental prices in the larger stores, such as the one leased by Foot Locker, are lower, amounting to around €100 per square metre per month.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Madrid: Destination Of Choice For Wealthy Investors

5 March 2015 – Expansión

For the first time, the Spanish capital enters the top 20 on the list of locations preferred by wealthy individuals for investing their capital.

The improved perception of the economy and the possibilities for obtaining returns on investments have placed the Spanish market and more specifically its major cities, Madrid and Barcelona, amongst the destinations of choice for investors with estates worth more than $30 million (€26.8 million).

Specifically, Madrid is ranked at number 18 on the list of large investors’ favourite locations around the world.

“Firstly, vulture funds make purchases, then institutional investors arrive and finally the wealthy individuals come”, explains Humphrey White, Director of Capital Markets at Knight Frank in Spain.

Amongst the attractive features of Spain’s cities, Mr White highlights the price of their luxury properties, which are much more affordable than those of other European capitals. Thus, according to Knight Frank’s report, with one million dollars, an investor can purchase just 20 square metres of residential property in London, 50 m2 in Paris and 68 m2 in Rome, whereas in Madrid he/she can acquire 133 m2. “If you have a lot of money, you can achieve a very attractive return from luxury housing in Spain. The highest prices currently stand at around €10,000/m2, compared with the levels they reached at their peak of €14,000/m2”, explains Alberto Costillo, Managing Partner of the Luxury Residential Department at Knight Frank.

Nevertheless, the price of luxury housing increased by more than 5% in Madrid in 2014. “It is worth noting that the price of premium property in Madrid rose by 5%, in contrast with the downward trend in Europe, where prices decreased by 0.4% on average. We expect this trend to continue”, says Kate Everett-Allen, partner in International Research at Knight Frank.

By country, wealthy investors from Mexico, Colombia, Argentina and Venezuela tend to opt to buy property in Madrid, whereas other millionaires, such as the Russians, prefer Barcelona and other coastal regions. Importantly, Spain’s cities have an opportunity in the Russian market, given that more than a third of the wealthy investors from that country have indicated that they intend to leave Russia during 2015, according to findings by The Wealth Report.

London

Although Spain has now entered the elite ranking of locations desired by millionaires, the first position on the list is held by London, which ousted New York a few years ago as the most favoured destination. New York moved down to second place; Hong Kong is ranked third. In terms of where these wealthy investors live, London leads that list too, for another year, with 4,364 resident millionaires, followed by Tokyo with 3,575 and New York with 3,008.

Meanwhile, Madrid is home to 544 individuals with estates worth more than 30 million dollars, whilst 438 live in Barcelona. “There are 63 new millionaires in Spain this year and one third of them are living in Madrid and Barcelona”, says Humphrey White.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Calle Serrano: The Most Expensive Street In Spain

4 March 2015 – Cinco Días

Tenants now pay rents of €32 per square metre on the exclusive Madrileñian shopping street

The most expensive rents in Spain are paid on Calle Serrano in Madrid (€32 per square metre), followed by the Paseo de Gracia in Barcelona (€29 per square metre).

According to a study conducted by TecniTasa, after these iconic streets in Madrid and Barcelona, the next most expensive rents in Spain are paid in Pamplona, where tenants are charged more than €25 per square metre.

Rental costs in Santander, Marbella and Cádiz now exceed €17 per square metre, and so these cities replace La Coruña, San Sebastián and Bilbao in the list of most expensive rental prices.

By contrast, the report indicates that the lowest rents are paid in the cities of Castellón, Elche, Huelva, Almería, Granada and Torrent, in Valencia, where the cost per square metre amounts to less than €2 per month.

The study concludes that house rental prices are continuing their downward trend in Spain, however these decreases are more significant in the more expensive areas, whilst the prices in the cheapest neighbourhoods are showing slight increases in some cities.

Rental housing on one of the iconic streets of cities such as Madrid, Barcelona, Pamplona, La Coruña, San Sebastián and Bilbao costs more than €2,000 per month.

This data contrasts with the values charged in the cheapest neighbourhoods of Alicante, Elche, Almería, Castellón, Granada, Huelva and Torrent, where it is still possible to rent a home for less than €200 per month.

Original story: Cinco Días

Translation: Carmel Drake

Rental Prices Fall Again In January By 0.6%

16 February 2015 – Cinco Días

Navarra, Murcia and La Rioja recorded the most significant decreases.

Rental prices decreased again in January by 0.6%, i.e. by a tenth of a point less than in the previous month, representing almost half of the general index (-1.3%) and almost two consecutive years of cumulative decline, according to data published today by the National Institute of Statistics (el Instituto Nacional de Estadística or INE).

By autonomous region, the main decreases were recorded in Navarra (-1.9%), Murcia (-1.8%), La Rioja (-1.8%), Valencia (-1.4%), Madrid (-1.4%), Pais Vasco (-1%), Andalucía (-0.8%) and Castilla-La Mancha (-0.8%). Reductions were also observed in the Canary Islands (-0.3%), Cantabria (-0.3%), Aragon (-0.3%), Asturias (-0.2%), Extremadura (-0.3%), Galicia (-0.3%), Ceuta (-0.3%) and Castilla y León (-0.2%), although these were below the average recorded. Rental prices remained stable in the Balearic Islands and increased only in Melilla (+0.9%) and Cataluña (+0.1%).

On the other hand, house maintenance costs increased by 0.7% year-on-year, i.e. by two percentage points more than the overall rate and were virtually unchanged with respect to the end of 2014.

Original story: Cinco Días

Translation: Carmel Drake