Private Companies Start Building VPO Rental Homes Due to Lack of Public Resources

11 June 2019 – Idealista

Housing and the need for public-private partnerships to build affordable homes was one of the hot topics during the recent election campaigns. But the reality is that the public administrations do not have the resources to fund any substantial residential programs.

In addition, Spain has traditionally been a country of homeowners and so most of the few affordable homes that the state has been building have been sold rather than put up for rent. This represents a major problem for the growing population of renters in the country, which some estimate currently account for 23% of total demand, compared with the European average of 34%. The Bank of Spain’s official figure for 2017 was 16%. Regardless, private companies are entering the market to fill the gap.

One such example is Azora, which has been managing social housing for rent since 2004 through its fund Lazora. It estimates that Spain needs 2.5 million mostly affordable rental homes to bring it in line with the European average. That would require an investment of approximately €300 billion over the next few years, a mammoth figure.

Azora actually sold its Lazora portfolio, containing almost 7,000 homes (private and social) to CBRE and Madison in 2018. They committed to continue investing capital in the sector and have already committed more than €200 million in various projects to build 1,200 more homes.

Azora still manages almost 14,000 social and private rental homes across the country and has recently been joined in the sector by the property developer AQ Acentor, the real estate arm of the German fund Aquila Capital. Specifically, AQ Acentor is planning to build 1,450 VPO rental homes in Villaverde, Barcelona, Valencia and Málaga. The numbers are not huge but they will go some way to plugging the gap.

Meanwhile, in the public sector, according to data from the Ministry of Development, 5,167 VPO homes were built in 2018, of which just 353 (6.8%) were dedicated to rental. In 2017, 4,938 VPO homes were constructed, the lowest absolute number since records began, of which 355 (7.1%) were dedicated to rental. Madrid accounted for most of the new VPO homes in 2018 (2,418, of which just 78 were dedicated to rental).

Azora considers that more institutional investment is required to make up for the housing deficit and that “to attract such capital, we need solutions and policies that promote and facilitate the construction of new rental homes”. It remains to be seen whether the politicians can put their ideological differences aside and come up with a clear and consensual housing policy for the benefit of the country at large.

Original story: Idealista (by P. Martínez-Ameida & Ana P. Alarcos)

Translation/Summary: Carmel Drake

País Vasco is Committed to Social Housing for Rent Not Sale

25 March 2019 – El País

País Vasco is going to stop building public housing for sale. From 2020 onwards, all of the public developments will be for rental, after it was revealed to be the preferred option for 52,000 of the 64,000 applicants registered on the waiting list for social housing properties. The aim is to boost supply whereby avoiding a shortage that could lead to a bubble.

The regional Government’s commitment to the rental sector is huge. According to data from the Government itself, investment in the segment in Euskadi will amount to €1.12 billion between 2018 and 2020, which is €48 million more than the State is planning to allocate to its housing plan for Spain as a whole during the same period (€1.07 billion).

The Basque Government already owns a stock of 13,340 social housing units for rent, and it is currently building 4,600 more.

Another one of the major battles facing the Basque Government is how to get the more than 20,000 empty homes in the region onto the residential market. This year, the Government is set to approve a decree that fixes the fee for empty homes at €10/m2, which the Town Halls will then be able to apply if they so decide.

It has also launched a program of subsidies of up to 60% of the rental payment for young people aged between 23 and 35 who want to leave home.

Original story: El País (by Pedro Gorospe)

Translation/Summary: Carmel Drake

Málaga has 3 Macro-Projects in the Pipeline for 2030

20 March 2019 – Eje Prime

Málaga is giving itself a makeover. It wants to be known as a smart city or the museum city, rather than the tourism hub for the Costa del Sol. To this end, the Town hall of Málaga is managing more than thirty projects to be launched over the next ten years. And the outlook is bright. The city offers high returns both on the high street, as well as in shopping centres and prime offices.

In this context, the Mediterranean city is working on three major projects. The first is a special plan for the port, which covers 1 million m2 of space, where a 37-storey hotel, three office buildings, a customs building and a large auditorium are going to be built if all of the relevant approvals are granted.

The second is the Los Martiricos development, a residential project on a site spanning 67,000 m2, where the plan is to build 220 social housing properties and 450 private homes. Offices and a commercial area will also be constructed if the corresponding building permits are approved.

The third major project is planned for the site of the former Repsol plant, where the Town Hall of Málaga wants to create an office area. Alternatively, it could build four blocks of social housing properties on that site.

The Andalucían city has many other projects underway. Most respond to the growth in residential demand, especially in the market for alternative assets, such as halls of residence for students and nursing homes for the elderly. But overall the real estate sector is booming. In fact, construction permits rose by 40% in 2018.

Original story: Eje Prime (by Marta Casado Pla)

Translation/Summary: Carmel Drake

Barcelona Fines Two Funds €2.8M for Leaving 24 Flats Empty

4 March 2019 – Eje Prime

The mayor of Barcelona, Ada Colau, has fined two investment funds €2.8 million for leaving two properties empty for more than six years on Calle de Aragó and Calle Pau Claris, in the Eixample district. The fine has been issued under the Right to Housing Act from 2007, which establishes penalties for the poor use of homes that have a social function and which ought to be inhabited.

If a property remains vacant for more than two years, its owner may be fined by between €90,000 and €900,000 per home. In total, the buildings subject to these fines comprise 24 homes.

Colau defended her housing policy and pointed out that the fines form part of a comprehensive approach by her government that includes the construction of 70 new developments, the requirement for private developers to build 30% social housing and conditioning any help for renovations on maintaining rental prices.

The fines could be reduced if the owners agree to let the Town Hall include the flats in their social housing stock.

Original story: Eje Prime

Summary/Translation: Carmel Drake

High Land Costs Drive up House Prices in the Balearic Islands

27 February 2019 – Diario de Mallorca

The property market in the Balearic Islands is experiencing the perfect storm. Very high land prices are driving up the cost of the few new homes that are being built. As such, local residents are facing serious difficulties when it comes to affording a home.

Not only are land prices high; in many cases, the plots are owned by large business groups, which are opting to hold onto them to benefit from further capital appreciation rather than develop or sell them immediately. What’s more, the few new homes that are being developed are very expensive, beyond the reach of most local families.

These factors are compounded by the complete failure on the part of the public authorities to construct any social housing in recent years, which only serves to aggravate the housing shortage in the market.

There is a great deal of demand, not only from local families, but also from foreigners, who want homes of their own on the island, and from seasonal workers moving from other parts of the country. Moreover, supply is limited and as such, prices are soaring. This situation is made worse by the fact that many overseas buyers and renters can afford to pay more than most islanders, which is driving out the locals.

All in all, it’s a gloomy picture for island residents.

Original story: Diario de Mallorca (by F. Guijarro)

Summary/Translation: Carmel Drake

Cevasa Tripled its Profits YoY to €46.6M in 2018

28 February 2019 – Eje Prime

Cevasa’s profits soared in 2018. The company closed last year with a net profit of €46.6 million, multiplying its result from the previous year three-fold when it amounted to €15.5 million. In terms of revenues, they remained stable, with a slight increase of 8.4% to reach €15.8 million by December 2018.

The company’s operating result amounted to €61 million at the end of last year, an exponential increase with respect to the previous year, when it amounted to €17.5 million.

The company, whose full name is Compañía Española de Viviendas en Alquiler (the Spanish Company for Rental Housing) is dedicated to the private development of social housing units for rental. It currently has thirty housing developments underway, located primarily in Barcelona and the surrounding area.

Original story: Eje Prime

Translation: Carmel Drake

Valencia Transfers 8 Plots to Cooperatives for the Construction of 118 Social Housing Units

2 February 2019 – Valencia Plaza

On Friday at a meeting of the Local Government, the Property Department of the Town Hall of Valencia, led by María Oliver, approved the transfer of eight plots of land to cooperatives for the purpose of constructing 118 social housing units in several of the city’s neighbourhoods, in particular in the Nou Moles and Massarrojos areas, with 46 and 20 homes, respectively. The formula chosen by the Town Hall transfers the land for a period of between 50 and 75 years.

The councillor for Housing and Property, María Oliver, said that the objective is “to limit the capacity for speculation”. And in that same sense, she insisted that “people will no be allowed to be removed from their neighbourhoods” (…).

All of the publicly protected housing, known by their initials VPP (‘viviendas de protección pública’) will be distributed between the districts of l’Olivereta, Poblats Marítims, Quatre Carreres and los Pobles del Nord, Sud and Oest, and will comprise exactly 118 homes, according to the calculations performed by the Housing Department (…).

Original story: Valencia Plaza 

Translation: Carmel Drake

Blackstone will be the Landlord of 25,000 Rental Homes by the End of 2019

31 January 2019 – Voz Pópuli

Blackstone, one of the largest investment companies in the world, expects to end the year with 25,000 rental homes under management in Spain.

Eduard Mendiluce (pictured above, left), the man from Blackstone who leads the US giant’s real estate emporium in Spain, has explained that the firm believes in the Spanish market, as it has done since 2014, and will end 2019 managing 10,000 more rental homes that it currently owns (15,000).

“We continue to believe in the fundamentals of the residential sector in Spain”, said Mendiluce at a conference about the real estate sector organised by Iese in Madrid. “Spain was one of the countries that suffered the most during the real estate crisis of 2008; prices are still 30% below their maximums”, he said.

The CEO of Aliseda and Anticipa explained that the US fund’s strategy in Spain in terms of real estate involves renting or buying and selling second-hand homes worth between €120,000 and €150,000. “When you have more than 200 homes under management in a given municipality, the business becomes profitable”, he explained.

Blackstone has invested almost €26 billion in the Spanish market over the last five years. In March 2014, it purchased 40,000 problem mortgages from Catalunya Caixa for €3.6 billion.

Since then, it has purchased: Banco Popular’s toxic property, together with Santander, for more than €5 billion; the Socimi Hispania for €2 billion; and 50.01% of the rental home Socimi Testa for €947 million. Last year, it bought Cirsa, a leading company in the gaming industry in Europe in a deal worth €2 billion.

In terms of the criticisms directed at the rental policies of Blackstone and other funds from certain sectors, Mendiluce has highlighted that in Spain, the funds own just 3% of the total rental housing stock, and that the rest is in the hands of individuals.

“I think that it is difficult to manipulate prices when you only account for a small percentage (of the market)”, he said. “I firmly believe that if there has been very concentrated price inflation in a handful of towns, then that has been due to a lack of supply”, and he pointed out that Spain has the lowest percentage of social housing in Europe.

Fashionable market

Juan José Brugera, President of the real estate company Colonial, was very optimistic about the real estate sector in Spain.

“We are in an expansive phase of the cycle, we are facing lower growth, but growth is growth, and it’s strong in Spain”, he said at the conference organised by Iese. “In the rental cycle, we are still in the growth phase, we have potential for rental growth that we believe ensures a strong performance over the next two or three years” he said.

“The Spanish market is fashionable at the moment, we predict expansive behaviour”, he said. “I have a positive vision, the stock market is behaving a bit strangely, but I think that is due to certain turbulences, both external and internal, that are generating uncertainty”.

Original story: Voz Pópuli (by Alberto Ortín)

Translation: Carmel Drake

Town Hall of Barcelona Looks for Private Partners to Promote Social Housing

30 January 2019 – Eje Prime

The Administration is looking for a private property developer. The Metropolitán Area of Barcelona (AMB) has opened a process to choose a partner for the public company Habitatge Metròpolis Barcelona, which is planning to build social housing in the city and its metropolitan area.

The entry of a new shareholder will be carried out through a capital increase whereby €12 million will be contributed, according to Expansión. Cevasa, Visoren, Neinor and Sogeviso are some of the interested companies. Meanwhile, the company’s existing shareholders will subscribe another €12 million capital increase in equal parts.

The bidding process will be open for two months. The objective is to raise capital, but also to increase awareness about the development and the management capacity of the stock of rental homes.

The objective involves constructing a stock of social housing properties comprising 4,500 units over the next ten years. The AMB will contribute two estates in Sant Boi de Llobregat and Montgat, and the Town Hall of Barcelona will contribute €6 million.

Original story: Eje Prime

Translation: Carmel Drake

Carmena Approves Los Berrocales, the Largest Housing Development in the South of Madrid

24 January 2019 – El Confidencial

The Government Board chaired by Manuela Carmena will give an important boost to the urban development area of Los Berrocales on Thursday. It is the largest in the city and the first to receive the green light of the sites that comprise the project known as the Developments of the Southeast (Los Desarrollos del Sureste). The Town Hall of Madrid and the Compensation Board for the area have finally agreed the initial text for the urban planning agreement for the management of the buildable land, which will see the construction of 22,000 homes on the largest land bank in the south of the city. 50% of the homes, around 11,000, will be dedicated to social housing.

The General Plan for the city of Madrid obliges the parties involved to sign an urban planning agreement for the management of this area. The Administration and the urban planning entity are signing the commitments assumed by both for the development of the area. According to comments made to this newspaper, the agreement reflects the obligation of the Compensation Board to urbanise the land (which spans 8,305,812 m2 in total) over the course of six phases, during which the planned buildings will be constructed and the services implemented. The project will run until 2034. Moreover, the agreed texts establish the criteria to ensure the equitable distribution of profits and charges between all of the owners (…).

The total buildability amounts to 3.3 million m2, of which 2,247,121 m2 will be dedicated to residential use. 50% of that will be for private housing, 31% for price-controlled housing and 19% for social housing (that latter two percentages correspond to 11,000 homes). The rest will be dedicated to industrial, tertiary, office and commercial use.

In terms of facilities, more than 2 million m2 will be converted into green space, 1.9 million m2 will be used for public facilities and services, 1.7 million m2 for infrastructure and 228,830 m2 will be used for social integration homes.

The agreement reached with the Compensation Board represents a victory for the municipal Government and specifically, for the Sustainable Urban Development department, led by José Manuel Calvo, five months before the end of the current legislature (…).

Following the green light from the Governing Board, the text of the agreement must be submitted for public consultation – a comment period – and afterwards, it will go to the municipal plenary. From that moment, the urban planning entity will be able to start work on the execution of the project.

Original story: El Confidencial (by Paloma Esteban)

Translation: Carmel Drake