Luxury Home Sales Soared in Marbella, Ibiza & Valencia in 2017

8 March 2018 – Eje Prime

Although the focus in the residential market tends to be on Madrid and Barcelona for almost all indicators, Marbella, Ibiza and Valencia are emerging as the leaders of the luxury home segment in Spain. The offer of sun and beaches along the Mediterranean Coast, accompanied by the economic recovery across the country, attracted lots of big shot investors in 2017, who purchased more homes at higher prices.

Along the Coast del Sol, where the exclusive Marbella resort stands out, the luxury residential market grew by 28% during the first half of last year. In total, 160 luxury home sales were recorded during the first two quarters of the year, up from the 125 transactions signed during the same period in 2016.

Moreover, the value of those homes in the area multiplied by almost five times during the year. The percentage of international investors in prime residential properties along the Málaga coast reached 31% during the fourth quarter of 2017, according to data collected by Lucas Fox for its report about luxury housing.

Estepona and the coast of Mijas are tipped as the two areas to watch this year since they will see the most new build projects (…).

Meanwhile, in Ibiza, the lack of residential stock and the high permanent demand that has existed on the island for several years, caused prime house prices to rise to €5,165/m2 on average in 2017, up by 51% compared to 2016.

Similarly, the volume of sales in the Balearic Islands rose by 10% last year, with a total of 215 transactions. Of its many highlights, “the interior of the island is a ‘love at first sight’ place for many overseas buyers”, says Rod Jamieson, Commercial Director at the real estate agency. Areas such as the town of Santa Gertrudis “are a magnet for artists and writers”, states the executive.

Making a beeline from the Balearic Islands to the peninsula, Valencia is also taking advantage of the recovery in the luxury residential market in Spain. Sales of high-end properties grew by 85% according to data from Lucas Fox, with an increase in the sales value of 72% (…).

A hopeful outlook for 2018 

For 2018, forecasts in the sector indicate that more luxury homes are going to continue to be sold with a value that will also record increases. Juan Luis Herrero, Partner at Lucas Fox in Valencia, highlights that in the city “confidence in the real estate market is going to continue to grow”. In his region, “there is going to be more movement in the market for new build developments, both in Valencia as well as on the outskirts, and international buyers are going to continue to play a very important role in the market, especially in areas such as Eixample, Ciutat Vella, Alameda, Ciencias and Patacona” (…).

Meanwhile, Jamieson points out that “the official data indicates that the market has recovered from the crash of 2008, and in some areas, the number of transactions is reaching similar levels to those seen before the crisis” (…).

Along with Valencia, another province that is aspiring to grow significantly over the next few months and years is Girona. “We believe that 2018 is going to be a decisive year for new build developments along the Costa Brava”, says Tom Maidment, Partner at Lucas Fox. “In 2017, the province of Girona saw a YoY increase of 25% in the sale of new building developments, and we expect that this figure will increase considerably over the next two years (…)”.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Large Companies Also Focus On The Rental Housing Market

26 September 2016 – El Mundo

The rental market is becoming one of the symbols of the new real estate cycle. It has gone from being an almost residual market to becoming one of the stars of the residential sector. Gone are the prejudices that used to weigh down on this regime – it seems like the best is yet to come: all indications are that the sector has a promising future ahead thanks to its potential for professionalization.

Currently, the rental market accounts for around 25% of the residential stock. The latest official data comes from 2014, when, according to Eurostat, 21.2% of Spaniards lived in rental accommodation. According to the experts, that percentage that has been increasing ever since and it is much higher in the major cities. Spain has not had this many tenants since the 1960s.

Despite the significant increase in rental accommodation, Spain is a long way below countries such as Germany (where 47.5% of homes are rented), Austria (42.8%), Denmark (36.7%), the UK (35.2%) and France (34.9%). On average, 29.9% of homes in Europe are rented. This European reality indicates that the rental market in Spain still has potential for growth.

Experts agree that one of the maxims of the new real estate cycle will be a more balanced relationship between ownership and rental. They agree that to reach this goal, the sector, which is currently mainly in the hands of individual landlords, will have to be professionalized. This professionalization has been underway for years and is now starting to consolidate itself on a large scale.

Testa Residencial

A recent example is the maturity of the professional leasing market is Testa Residencial, the new subsidiary of Merlin Properties, created following the merger of the residential portfolios previously owned by the Socimi and Metrovacesa. This joint venture, which is still in its gestation period and which is expected to adopt the Socimi structure, was born with 4,706 homes, all operated under leases. Merlin’s major commitment to residential leasing is even more important if we take into account the fact that it has become the largest real estate group in Spain and the eighth largest in Europe.

In addition, Testa Residencial’s extensive supply will grow even more thanks to upcoming injections of properties (in exchange for shares) from Banco Santander, BBVA and Banco Popular, three shareholders inherited from Metrovacesa. (…). As such, the firm will end up managing a portfolio of 10,000 units, allowing it to complete with the main real estate companies in this market.

Testa Residential is launching itself into a sector in which two large companies have competed until now: Azora and Larcovi. The first, founded in 2003, has more than 12,000 rental homes under management in different funds and companies (for example, Azora and Hispania) and is the largest private entity in this market. (…).

Concha Osácar, the founding partner at Azora, takes it as read that the rental market will continue to grow for several reasons: the increase in geographical mobility for employment purposes, the limited access to credit to make (house) purchases, the elimination of tax incentives to acquire a home, the change in mentality (“especially amongst young people”) and growing demand from families looking for better homes.

Alongside Azora, Larcovi represents the tip of the iceberg of the professionalization of the sector. It manages more than 9,000 units (…).

“To satisfy the growing demand, the supply will have to be increased. We estimate that Spain will need between 1 million and 1.2 million additional rental homes to bring it into line with its European counterparts”, says Osácar. (…).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

Solvia: Madrid Sets The Pace Of Spain’s RE Recovery

24 September 2015 – El Mundo

The (average) recovery currently happening in the Spanish housing sector is characterised by its uneven nature. It really depends on the area of the map you look at. You could almost say it varies by neighbourhood. That is one of the main findings from the first “Solvia Market View” report about the trends in the real estate market, prepared by Solvia and presented in Madrid by Javier García del Río, the Director General of the servicer. As the study points out, the engine of the recovery is clear: it’s Madrid.

“Madrid is setting the pace of recovery in the sector. It is ranked as the hottest market, with a significant volume of development activity, especially in the North and North-East of the city; and prices there are rising” according to the report. Besides Madrid, it is mainly Barcelona and the Costa del Sol that are showing the best signs of recovery from a real estate perspective, in the form of increases in prices, transactions and residential construction activity.

In other words: “The clean up of prices has now concluded in Madrid and Barcelona”, according to García del Río, who highlights the “demand for prime (RE)” factor when he talks about the Costa del Sol. “In other areas”, he adds “the emerging recovery in the property sector still needs to be consolidated”. And he offers advice for this to happen: “Make the product attractive to buyers” (both in terms of the price and quality of properties).

In his opinion, the real estate sector ought to know how to benefit from the “favourable wind that is blowing” at the macroeconomic level at the moment (in terms of the economy, employment, financing, etc) and “move towards a higher degree of sophistication”, with micro analysis by neighbourhood. “Before, the market was driven by supply, now it is driven by demand”, he says. In this way, García del Río talks about a positive “gentle recovery” in terms of overall prices. And he dismisses the desire for any sharp increases: “A rebound like the one we saw in 1993 would not be a good thing right now”.

These general trends set out by García del Río are already bearing fruit for Solvia. Across the country, this servicer – “which was born out of necessity” (to sell Banco Sabadell’s assets)- has seen how the sales prices of its homes increased by 3.9% between January and May 2015, with respect to the same period in 2014. Similarly, Solvia has increased its rate of sales by 1.5% and has tripled its sales of land. “We are aiming to become one of the largest real estate companies in the country, but we also want to improve awareness about the sector”, he says.

Finally, García del Río, does not hesitate in stating that “the rental market needs to grow because socially Spain needs it, above all, to drive mobility, albeit through good operators”, he specifies. At the end of 2014, Solvia estimated that the percentage of rental homes over the total residential stock amounted to 17.6% – with levels exceeding 25% in cities such as Madrid and Barcelona -. Between 2015 and 2017, rental homes are expected to account for between 20% and 30% of Spanish homes at the national level.

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake