BBVA Predicts House Building Boom In 2016

5 January 2016 – El Economista

BBVA predicts that there will be a “boost” in house construction over the “next few quarters”, in light of the favourable development, at the end of last year, of indicators such as cement consumption, employment in the sector and transactions involving land.

Those are the explanations provided by BBVA in its latest “Real Estate Flash Report for Spain”, which states that the 13.2% reduction in new build construction permits in October, following an otherwise positive 2015, “may well be temporary”.

On the other hand, the financial institution says that “the other variables reflect that construction activity is likely to continue to grow, although from very low levels”.

Firstly, the report argues that cement consumption recovered in October after decreasing in September; and that the number of employees registered for Social Security purposes in the construction sector also experienced “robust” growth during the months of October and November, putting an end to the lethargy of the previous four months.

In the same way, the financial institution says that business owners’ opinions regarding the future evolution of the residential sector improved in November as a result of an increase in order books.

Finally, the report points out that the land transaction data relating to the third quarter reflects a 72.3% YoY increase in terms of the surface area of land sold.

In parallel to the improvement in property developer activity, BBVA highlighted that demand for housing is continuing to grow thanks to the improvement in the economy. Moreover, it forecasts that, if the current trend in terms of house purchases remains stable, almost 400,000 homes will have been sold in 2015.

Original story: El Economista

Translation: Carmel Drake

Husa Emerges From Bankruptcy After €130M Reprieve

28 July 2015 – Expansión

Yesterday, Husa managed to secure the support of its two main creditors, Deutsche Bank and Banco Sabadell, for its proposed agreement to exit from the bankruptcy proceedings that it has been immersed in for the last year and a half.

The hotel chain owned by the former President of FC Barcelona, Joan Gaspart (pictured above), will surrender assets worth €80 million to the banks and others worth a further €25 million to the public administrations. A discount of more than 95% will be applied to its ordinary loans, which amount to more than €90 million.

Twelve companies filed for creditors bankruptcy in total, of which eight will go into liquidation, leaving an unpaid balance of €40 million, therefore, in total, the company will benefit from a “reprieve” of around €130 million.

Yesterday, at the creditors’ meeting for four of the group’s companies, Husa secured sufficient support for two of them: Hostelería Unida 2 and Jardines de Albia. Hostelería Unida is expected to also secure sufficient support (based on the agreements made yesterday and the support it expects to receive by post from the overseas financial institutions). A fourth company, Solsibu, is still waiting to secure sufficient support.

Creditors

Husa won the support of its two large creditors only: Deutsche Bank and Sabadell. The other creditors that participated in the meeting yesterday, such as the Social Security, the Tax Authorities and other suppliers of the group, all voted against the proposed agreement.

One of them, the company Denbolan, which operates in the temporary work sector, spoke at the meeting, stating that it would appeal against the proposed agreement. “It is regrettable that the law is designed in such a way so as to inflict the most harm on small creditors”, said its legal representative.

After the meeting, the President of the Husa Group, Joan Gaspart, said that he was “saddened by the gravity of the situation”, but also “grateful and hopeful about the future”.

The former President of Barça is hopeful that the support received yesterday will represent “a second chance” for Husa, which will work in collaboration with its new partner, Park Street. (…).

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

BBVA: The RE Recovery Depends On 3 Cornerstones

5 June 2015 – Idealista

According to BBVA Research, the real estate sector showed clear signs of stabilisation during the first quarter of 2015. The entity has based its findings on: the opening of mortgage credit; the slight variation in house prices; and the recovery in construction activity.

The data supports this recovery. The volume of house sales increased by 2.3% YoY in Q1 2015, maintaining the trend seen in recent months. The General Council of Notaries confirmed the trend with the sale of 34,756 homes in March alone.

This growth in demand, coupled with interest rates at historic lows, has allowed more growth in the mortgage market, with a YoY increase of 22% in mortgage lending during the first quarter of the year and an increase of 20.4% in the volume of loans granted for new house purchases during the first three months of the year.

Meanwhile, house prices dropped slightly (by 0.1%) during Q1 2015 to reach €1,459/m2 on average, according to data from the Ministry of Development; they continue evolve heterogeneously by region. Whilst the Canary Islands and Aragon experienced the highest increases during the quarter (higher than 1%), Cantabria, Murcia and Asturias suffered the most significant decreases.

The third element of this improving environment is: construction activity. Despite the decline in the granting of permits for new constructions during the first quarter of the year with respect to the previous two quarters, YoY growth amounted to 23%. Moreover, the number of individuals registered for social security in the sector increased slightly, by 0.4%, in April compared with March, whilst unemployment continued to decrease in the sector.

Original story: Idealista (by David Marrero)

Translation: Carmel Drake

Real Estate Starts To Drive GDP Again After 7 Years In Decline

6 April 2015 – El Mundo

On the demand side, household consumption and the recovery in investment in the construction sector are the components that drive growth. And, on the supply side, construction has reappeared on the scene again after seven years of harsh decreases. The same elements with which the crisis started in 2007.

In light of this data, the recovery is therefore bracing itself with identical components to those that led to two recessions, in particular the return of property.

The fact is that, although it is likely that errors from previous periods will not be committed, for example, the abolition of tax deductions, incentives for developers and easing of credit, housing has had an important impact both on the banking sector, as well as on the economy as a whole. For this reason, many analysts think that the production model of the Spanish economy should be more diversified and depend to a lesser extent on construction.

Most of the indicators suggest that the property market has been stabilising since 2014 and is now brimming with strength. The recovery in the gross added value of the sector is already materialising. After 24 consecutive quarters of negative growth, with annual decreases of more than 15% in 2010 and 2012, the sector recorded its first, albeit meagre, upturn (0.02%) in the third quarter of 2014 and bounced back forcefully in the fourth quarter, growing by 3.4%.

All of this has meant that construction at current prices (€53,829 million) accounted for 5.1% of GDP. It still only accounts half of what it represented at the start of the crisis in 2007 (10.1%). But experts expect a rapid acceleration.

In terms of investment in construction, possibly catapulted by the activation of public works in the face of new electoral commitments and also by the increase in building (activity), the sector recorded its first positive annual growth rate since the crisis (and the second quarterly increase) after 26 quarters of consecutive decreases. Therefore, the decline is deemed to have come to an end.

Specifically, residential investment increased by 0.4% in inter-quarterly terms during the last three months of 2014, whereby completing four quarters of gains. According to the Bank of Spain, all of this seems to mark “a change in the cycle for this component of demand”. Moreover, the indicators available from the first quarter (of 2015) point to a continuation of this trend in a context in which new building permits recorded a new upturn.

Meanwhile, the notarial statistics show that house transactions increased by 20% at the end of the year, with an average transaction volume of 30,000 homes per month. This recovery is concentrated in the segment of used homes and is continuing to benefit from the increase in purchases by overseas citizens. Now Spanish citizens have joined the drive to make house purchases.

Other indicators in the real estate market also show the same trend, with an increase in house sales and in house prices. Thus, in 2014, for the first time since the crisis started, the segment experienced a positive average annual increase (0.3%) following decreases of 10.6% and 13.7% in 2013 and 2012.

But, as Santiago Carbó and Francisco Rodríguez note in a report prepared for Funcas about the start of the recovery in the market, the real estate and construction sector “have unquestionable importance for the economic growth of Spain”. For this, they say that now that the economy is recovering “the role of (the) construction (sector) will become significant, sooner or later”. Above all, it is important for the generation of employment. In this way, construction contributed more than any other sector to the creation of more than 96,000 new Social Security memebrs in February; construction alone accounted for 26,000 jobs, i.e. more than a quarter of the total. The number of social security contributors has returned to one million (people); in 2006, there were 2.5 million. In terms of employment, the number of people has decreased by 62,000 with respect to the same month last year.

The emergence of the construction sector in (terms of GDP) growth will be more important this year and in the future. According to the Bank of Spain, the recovery of the added value of construction companies has continued during the first months of 2015. Meanwhile, Funcas indicates that, as a result of the more vigorous than expected behaviour of consumption and construction, GDP (growth) should reach 3%, versus the 2.8% that the Bank of Spain currently predicts.

Original story: El Mundo (by Francisco Núñez)

Translation: Carmel Drake

The Number Of People Out Of Work Fell By 13,528 In February

4 March 2015 – El Mundo

The construction and industrial sectors were the main drivers behind job creation, once again.

The labour market offered a breath of fresh air yesterday, after starting the year on a bad note. The number of people out of work decreased by 13,538 in February, the largest drop in this month for 14 years; and the number of people registered with Social Security increased by 96,909, the best figure in this month since 2007, according to the Ministry for Employment. The construction and industrial sectors were the main drivers behind job creation.

Traditionally, February tends to be a strange month for employment, with highs and lows, and since 2008, when we began to feel the first effects of the crisis, unemployment has always increased in this month, except for last year when the figures decreased by 1,949 people. This year, the number of unemployed people decreased by 13,538 in February. Despite this decrease, the number of people out of work in Spain is still worryingly high, with more than 4,512,123 people registered with the Public Employment Services (formerly Inem). This figure is even higher than the one Mariano Rajoy inherited when he arrived at La Moncloa for the first time.

By sector, unemployment increased in the agriculture sector only in February (by 467 people), whilst it decreased in construction (10,091), industry (6,535) and the service sector (233).

In light of this data, the Government is optimistic and confident that it will achieve its objective of creating three million new jobs by 2019. Currently, the total number of people in paid work amounts to 16,672,222.

The increase of almost 100,000 new taxpayers in February partly offset the significant decrease in the number of jobs in January, when the number of taxpayers decreased by 200,000, following the end of the Christmas season.

By sector, construction – one of the hardest hit by the crisis – was where the most jobs were created (26,968), together with industry (15,097). Meanwhile, the service sector registered 61,842 more taxpayers, thanks to boosts from education (16,203) and hospitality (14,012).

However, the resurgence in the construction sector concerns the opposition party and the trade unions. The PSOE’s (Shadow) Secretary of State for Employment, Luz Rodríguez, says “the return to property could mean that we exit the crisis through the same door that we entered it”.

In terms of the number of contracts, 1,226,950 contracts were registered in February, up 12.5% compared with the same month last year. Nevertheless, the majority (more than 90%) were still temporary. Only 120,181 contracts were permanent, equivalent to 9.8% of the total number. Nevertheless, the Ministry for Employment highlighted that these figures are 23% higher than in January last year.

In terms of the number of hours worked, 71,754 of the permanent contracts were for full-time positions (16,804 more than in the previous year, an increase of 30.58%) and 48,527 were part-time (5,673 more than in February 2014, an increase of 13.24%).

However, these figures are not good enough for the trade unions UGT and CCOO, which report that the jobs that are being created are “precarious” and “low quality” and that the wages are “clearly insufficient”. Moreover, they point out that the inequalities between men and women are increasing and that young people are being left behind. Thus, whilst the unemployment rate decreased for men in February (with 19,587 fewer unemployed men than in January), they increased for women (with 6,319 more unemployed women), taking the total number of unemployed men and women to 2,117,980 and 2,394,173, respectively.

Furthermore, the number of unemployed young people under the aged of 25 increased by 2,569, and the number of foreign unemployed people increased by 3,030. In the opinion of the USO trade union, these figures show that “the recovery in terms of unemployment is not on the right track”.

By autonomous region, Madrid was the community where unemployment increased the most in the month of February, by 2,411 people to be exact; followed by Andalucía, with 2,121 more unemployed people and Castilla-La Mancha with 139. Meanwhile, unemployment decreased in 14 autonomous communities.

In terms of the coverage rate, i.e. the percentage of unemployed people that receive benefits or allowances, it continued to decrease in an alarming way.

During the month of January – the latest month for which data is available – it amounted to 56.49%, i.e. five points lower than in the same month in 2013. This means that almost one in every two unemployed people registered with the former Inem, does not receive any kind of financial aid. Moreover, total spending on benefits amounted to €1,962 million in January, which represented a 17.7% decrease compared with the same month last year.

Original story: El Mundo (by Isabel Munera)

Translation: Carmel Drake

Social Security Auctions a Building in Madrid Chamberi District For €7.6 Mn

19/12/2014 – El Pais

The Social Security Fund has awarded a six-storey building (plus attic area) located at 41 Breton de los Herreros street to a co-operative managed by Domo Gestora. The property stands in Chamberi, one of the northern residential neighborhoods of Madrid found within boundaries of the central districts.

Starting at an asking price of 5.8 million, the deal closed at 7.565 million euros.

Once rehabilitated, the conveyance will feature 29 apartments of one to three bedrooms with built areas ranging from 66 to 135 square meters. Prices will start from 206.000 euros plus VAT. The block will be situated inside a gated development with gardens. On the ground floor, there is going to be a 120 square meter retail space.

Other co-ops of Domo have recently acquired several upmarket residential plots: one on the Raimundo Fernandez Villaverde street close to the Paseo de la Castellana avenue and another in the district of Retiro.

 

Original story: El País

Translation: AURA REE