Speculation Returns To The Market For Land In Madrid & Along The Coast

11 April 2016 – ABC

During the years of the crisis, investors regarded land as one of the least attractive assets. In fact, in the face of scarce demand and the paralysis in the construction sector, land values fell to historic lows. (…).

Sales of urban land, the substratum of real estate developments, are growing again after nine years of consecutive decreases. And they are doing so at a healthy – and on occasion, vertiginous – rate in certain areas of the country where the housing market has already started its recovery, such as the more illustrious areas of major cities, including the north of Madrid and established areas along the coast (Málaga, Palma de Mallorca and the Canary Islands). So much so that a warning is now spreading amongst analysts and agents in the sector: the scarcity of developable land – which does not require land planning approval – in certain areas, and renewed interest from investors is generating a new “overheating” in the price of transactions, something not seen since the burst of the real estate bubble.

The latest “Market Trends” report prepared by Solvia, the real estate arm of Banco Sabadell, warns that the expectation of a strong recovery in value is incubating operations of a speculative nature. “The fact that the supply of well-located land is scarce in areas with demand, that there is widespread liquidity in the market and that there is fierce competition to acquire assets, means that land purchases are being made for speculative purposes, in certain specific cases, for subsequent resale at significantly higher prices”.

In this sense, the study, which does not cite who is behind such transactions, highlights the cases of the Madrilenian neighbourhoods of Valdebebas and Montecarmelo. In the case of the latter, the price of land has risen by between 40% and 60% to €2,400/m2.

Montecarmelo and Valdebebas

Fernando Rodríguez de Acuña, Director General of Operations at the consultancy firm RR de Acuña y Asociados distinguishes between three players in the race for land: the financial entities and large investors, who have put their assets up for sale “in stages” and the small and medium-sized funds, which are more prone to speculative operations given that they seek high short-term yields. The confluence of these players has given rise to a situation in which both the activity and value of these real estate assets have increased significantly, if we exclude the statistical effect of operations carried out by financial entities foreclosing unpaid debt. Thus, the number of transactions carried out by operators in the sector (developers, funds and cooperatives) increased by 37% in 2015 compared with the year before and by 60% in terms of transaction volume. (…).

According to the experts, two operations in particular have caused prices in the land market in the Spanish capital to sky-rocket: firstly, the sale of 14 plots containing more than 93,000 m2 of buildable space, by the Valdebebas Compensation Board to the property developer Pryconsa for more than €55 million and secondly, the acquisition of a plot of land in Montecarmelo by Cogesa, which belongs to the Dragados group, for more than €20 million. (…).

Original story: ABC (by Luis M. Ontoso)

Translation: Carmel Drake

RR de Acuña: Spain’s Housing Market Recovery Will Be Asymmetrical

17 September 2015 – Expansión

Real estate trends / RR de Acuña’s “Real Estate Yearbook” confirms the “stabilisation” of the upward trend in the market.

The recovery in the housing market is going to be long and asymmetrical. On the one hand, progress will be mild but steady in large cities and consolidated areas on the coast. On the other hand, provinces with a lot of stock are in for a long, idling journey. Finally, in the prime areas – districts in the centre of the regional capitals, exclusive urbanisations and luxury developments – growth will be much more marked. What does the photo look like on aggregate? The sector will continue to stabilise, without bubbles or depressions.

Those are the main findings to be drawn from the Spanish Real Estate Market’s Statistical Yearbook for 2015, prepared by RR de Acuña y Asociados. The forecasts made by the real estate consultancy firm are promising, but prudent.

After seven consecutive years of declining house purchases, 2014 marked “a turning point in the property cycle” and 2015 and 2016 are expected to close with figures that are clearly positive. Firstly, the trend in house prices is expected to normalise. In other words, the cost of buying will increase but “not excessively”, said Fernando Rodríguez de Acuña, Project Director at the company, yesterday, during the presentation of the report.

It is true that house prices will increase “significantly” in the most consolidated areas and in those regions that have smaller stocks of unsold property. In these areas – above all, Madrid, Barcelona, Valencia, Málaga and Alicante – homes will become between 3% and 5% more expensive during 2015 and 2016.

But, residential property prices will increase by even more in certain very important – the real estate sector is a market that must be divided into submarkets – . “In prime areas, prices will rise by more than 5%”, said Rodríguez de Acuña. In other words, “in the best neighbourhoods of the central districts of Madrid and Barcelona, and in the VIP areas of Marbella and Palma de Mallorca, amongst other areas”.

More sales of second hand homes

Moreover, sales will increase in Spain by more than 10.5% in 2016, and 2015 is expected to close with fewer transactions involving new homes and less self-promotion, but with a net recovery of 9.6% in the market for second hand properties. (…).

Other data also points to a considerable amount of realistic optimism. Mortgage lending will soar “clearly” by more than 20%, assures Rodríguez de Acuña, on the basis of another report from his firm that has not yet been published. (…).

Unsellable homes

The stock of unsold homes will decrease by 117,000 over the next two years. But here, two important observations are required: firstly, mortgage financing still barely accounts for one fifth of its previous levels and the total stock of homes still exceeds 1.5 million units. (…).


The Real Estate Yearbook for 2015, which is dedicated to its creator, Fernando Rodríguez y Rodríguez de Acuña, who died recently, devotes an entire section to one indicator, which is key to defining the different speeds of the recovery: the time required to sell all of the stock (‘el tiempo de disolución del stock’ or the TDS). In other words, the number of years it will take for demand to absorb the excess supply of homes for sale. Only Madrid and Navarra have a TDS of less than 3.5 years.

Meanwhile, Barcelona, Sevilla, Alicante, Málaga, Granada, Huelva, Vizcaya and Guipúzcoa all have TDSs that range between 3.5 and 5.5 years. At the negative end of the spectrum, some provinces have TDSs that exceed 10 years. Their stock is almost unsellable. In any case, the surplus is gradually decreasing, in general terms, and the cranes are returning, albeit very slowly. (…).

In summary, “the forecast restoration of the balance and subsequent growth in the real estate sector” will be two “slow” processes and there will be “different speeds in the recovery of the real estate sector, which will vary by geographical area”.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Sareb Owns One Third Of Spain’s Problem Banking Assets

17 September 2015 – Expansión

Sareb is playing a key role in the clean up of Spain’s financial sector. According to a study conducted by the consultancy RR de Acuña y Asociados, proof of that is the fact that it now owns one third of the sector’s problem assets.

The firm calculates that the Spanish banking system’s exposure to problem real estate assets amounts to €259,049 million in gross terms, plus a further €32,337 million in doubtful mortgage debt.

According to the study, which is based on the latest available figures, Sareb has loans and real estate assets worth €44,263 million, which in gross terms – before they were transferred – would have been worth €94,750 million.

RR de Acuña y Asociados also highlights that the transfer of assets from entities with public aid to Sareb meant that the first (entities) recorded extraordinary valuation adjustments of €12,700 million. The assets transferred by Bankia, Catalunya Banc, NCG Banco – now Abanca -, Banco de Valencia, BMN, Ceiss, Liberbank and Caja 3 had an initial appraisal value of €106,970 million. Excluding provisions, RR de Acuña y Asociados has identified a mismatch of €12,694 million between the transfer value to Sareb, which the entities must have borne themselves.


Although the volume of problematic banking assets has stopped increasing over the last few years, the consultancy warns that it will take time for the entities to digest the leftover real estate assets: “Although the trend in the volume of doubtful assets is stable and is even recording some small downward variations, if we take into consideration the precarious financial situation of the property development and real estate construction companies, all indicators show that the level of exposed assets will continue to behave in the same way, for the next two years at least”, says the report. This means “a decrease in the volume of loans and an increase in the volume of real estate assets”.

As such, the real estate firm observes “an over-supply”, which means that it is “unlikely that house prices will begin to increase in the coming years”.

Meanwhile, yesterday, Sareb announced the repayment of a senior debt tranche amounting to €47.3 million after amending the asset transfer contract it holds with Catalunya Banc.

The asset transfer agreement between the two entities established that either of the parties could make adjustments to regulate the transfer completed in 2012, for a period of 36 months following its signing.

Original story: Expansión (by J.Z. and J.M.L.)

Translation: Carmel Drake