Tag: Sociedad de Tasación

Tinsa, Sociedad de Tasación and Gloval: Leaders in the Appraisal Sector in Spain

The turnover of the main appraisal companies associated with the AEV amounted to €274.3 million in 2019, down by 4% compared to the previous year.

The turnover of the 22 most representative appraisal companies in the sector, those associated with the AEV, amounted to €274.3 million in 2019, which represented a decrease of 4% compared to the previous year.

According to the AEV (‘Asociación Española de Análisis de Valor’ or Spanish Association for Value Analysis), this decrease is ‘consistent’ with the total volume of appraisals carried out, which decreased by 5.27% compared to 2018, to a total of 1,100,000 appraisals in 2019. The data comes at a time when the Bank of Spain is warning that the absence of transactions due to the market shutdown is preventing the performance of realistic valuations. As such, it is advising against applying the comparison method.

Real Estate Companies Reset their Strategies for the Post-Coronavirus World

Real estate companies are preparing to escape the doldrums generated by the coronavirus with both defensive and commercial business strategies.

Real estate companies are preparing to overcome the slump caused by the Covid-19 coronavirus pandemic as soon as possible with both defensive and commercial business strategies. They intend to reorient themselves towards changes in consumption and to lower forecast purchasing power.

Several executives have explained the way in which their companies are facing this post-pandemic challenge. A few days ago, Juan Fernández-Aceytuno, CEO of the appraisal company Sociedad de Tasación, revealed that his company has chosen to reduce wages and cut expenses rather than implement temporary redundancies (an ERTE or ‘temporary employment regulation file’ in Spanish).

New Build Homes have Appreciated by 148% over the Last 25 Years

New build homes have experienced a significant increase in value over the last 5 years. According to data from Sociedad de Tasación, new build properties appreciated by up to 148% between 1995 and 2019, despite the severe decrease suffered by the real estate sector following the 2008 financial crisis.

Specifically, the average unit price of new build housing in Spain amounted to €989 per square metre in 1995, whereas in 2019, that value had risen to €2,453/m2, according to data from ST.

ST: House Prices Rose by 9% in Madrid & 7.8% in Cataluña in 2018

7 April 2019 – Público

According to the “House Market Study in the Community of Madrid and Cataluña” report published by Sociedad de Tasación, house prices rose by 9% in Madrid and by 7.8% in Cataluña in 2018.

Specifically, Madrid recorded the second highest increase in house prices of all the autonomous regions in 2018, with the average price reaching €2,389/m2.

Meanwhile, Cataluña, which registered the third highest rise in house prices, saw its average price increase to €2,297/m2.

The average increase for the country as a whole was 5.5%, with the highest average price rise observed in the Balearic Islands.

Original story: Público 

Translation/Summary: Carmel Drake

Registrars: House Sales Exceeded 134,000 in Q2 2018

4 September 2018 – Expansión

The housing market is performing well, so much so that forecasts indicate that more than half a million house sales will be completed this year (…) whereby returning to pre-crisis levels.

During the second quarter of the year, 134,196 units were sold, up by 12.4% compared to the same quarter in 2017. That is the highest figure recorded in a second quarter since 2008, when 152,630 sales were registered, according to real estate statistics published yesterday by the College of Registrars.

The slight moderation in GDP growth, which is expected to rise by 2.7% in 2018, according to Government forecasts, has not prevented the real estate market from reaching cruising speed. Domestic demand, which is continuing to sustain the Spanish economy, is allowing for a reduction in the unsold stock of homes, thanks to the pull of large Spanish cities. The strong demand that is driving these figures is also having an impact on prices, which rose by 10.7% between April and June.

“The statistics are continuing to reflect the excellent performance of the sector”, said Ferran Font, Head of Research at Pisos.com, given that during the second quarter, the highest volume of transactions for 40 months was recorded.

The drivers of the increase in prices and demand relate to the increase in consumer confidence in the economy, which has boosted private consumption, and the greater weight of housing as an investment alternative, in a volatile environment where interest rates are low. This behaviour is feeding the forecasts of the experts, who expect 2018 to close with house sales of between 500,000 units, according to the ratings agency S&P, and 600,000, as predicted by the consultancy firm Jones Lang La Salle (JLL).

Nevertheless, the market is not evolving in a homogenous way. On the one hand, the sale of second-hand homes is driving the figures, accounting for 83% of total sales, whilst new build homes are more expensive. Thus, second-hand house sales between April and June recorded their highest figure since the middle of 2007, with 111,537 sales, up by 12.2% compared with Q2 2017. Although by volume there were significantly more second-hand house sales in Q2, it is also worth noting the growth rate of the sale of new build homes, which rose by 12.9% to reach 22,659 units sold.

In terms of prices, the situation is different. In general, new build homes are more expensive than second-hand homes. According to a report published by Pisos.com yesterday, the price of second-hand homes amounted to €1,612/sqm in August, up by 5.5% compared to a year ago.

By contrast, the price of new homes in Spain rose by 5.9% in June, according to data from Sociedad de Tasación. Nevertheless, that figure is skewed by the pull of the large capitals. “The average prices of new homes in Spain rose by 5.9%, but that figure decreases to 2.8% if we eliminate the impact of Madrid and Barcelona, which means that prices are in line with other fundamental factors of the Spanish economy”, indicate sources at Sociedad de Tasación.

The average price of a 90 sqm home in a provincial capital is around €205,600, whilst in the other cities, the average price amounts to €1,605/sqm, which represents a rise of 2.9% compared to 2017.

The Spanish market is still growing at several speeds, with the large cities acting as links in a chain pulling up prices and sales. Madrid, Barcelona and Alicante are the provinces where the most homes were sold during the second quarter (…).

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Tinsa & Sociedad de Tasación are the Banks’ Preferred Appraisal Companies

17 May 2018 – Expansión

Last year, the banks commissioned appraisals for properties worth €200 billion. The valuation of these assets was performed by a well-nourished group of entities that have been authorised by the Bank of Spain to undertake these types of operations.

Tinsa and Sociedad de Tasación swept the board in this sector, with market shares of 28.7% and 13.9%, respectively, according to the total revenues for the sector for 2017, which amounted to €284 million, according to data from AEV, the main trade association.

The appraisal sector was particularly badly hit by the consequences of the real estate crisis, given that their valuations, which in some cases did not reflect the reality, contributed to the inflation of the real estate bubble which then burst.

The appraisals performed last year represent one third of those recorded in 2007 when the figure reached €600 billion according to data from the Bank of Spain.

There was also a lack of professionalism in this sector, on which the Bank of Spain has imposed several sanctions in recent years, in some cases on firms that have now disappeared.

More control

Following the crisis, the banks also liquidated their own appraisal companies and, since then, independence and professionalism have reigned.

“The Bank of Spain has increased its control over the sector in the last three years, something that is good news and that works in our favour”, says Juan Fernández-Aceytuno, CEO at Sociedad de Tasación. By way of example, he comments that the supervisor now “requires us to provide 350 information fields for every appraisal”. (…).

In another change, Santander commissioned its appraisals from half a dozen different companies last year, namely: Tinsa, Eurovaloraciones, Ibertasa, Tasaciones Hipotecarias, Krata and Hispania de Tasaciones.

The group explains in its accounts for last year that its strategy, when it comes to choosing these entities, is governed by “the requirements of independence, neutrality and credibility to not undermine the reliability of their valuations” (…).

BBVA works with fifteen appraisal companies including Tinsa and Sociedad de Tasación. The bank confirms that it engages these entities due to “their reputation, independence and recognition in the market, given that they are capable of providing valuations that most appropriately reflect the reality of the market in each region” (…).

Bankia is the entity that engaged the fewest appraisal companies in 2017. It hired Tinsa, Gesvalt, Tecnitasa, UVE and Arco Valoraciones. Sabadell, by contrast, reports in its accounts for last year that it worked with around 30 firms.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

ST: Madrid & Barcelona Sell 93% of their New Housing Stock in Just 2 Years

18 May 2018 – El País

In the cities of Madrid and Barcelona, the two main real estate markets in Spain, there are just 4,114 homes in new developments available for sale (9,920 in both provinces), the bulk of which have been put on the market within the last two years. Moreover, there are no longer many finished homes on offer, like during the years of the crisis, but rather mostly developments under construction or units that have not even been started yet, which are being offered off-plan and whose prices have risen by so much since 2016 that the supply of homes for less than €150,000 is currently insignificant.

Given the shortage of construction projects, the supply of new homes may be exhausted within eight months in the case of the Madrid region (nine in the capital) and within just under 14 months in the Catalan province (12 months in the municipal area), something that is going to accelerate the price rises seen in recent months, according to ST (Sociedad de Tasación), which has compiled a census on the developments that are currently up for sale.

Over the last two years, both real estate markets have done an about turn and not only due to the increase in prices. In the Community of Madrid, 93.7% of the stock of new homes has been exhausted since 2016, according to Sociedad de Tasación. The appraisal company registers a current supply of 6,319 homes, which represents an increase of 15.8% with respect to 2016. This calculation includes 346 homes that were already up for sale in 2016 and which have not been sold, plus 5,973 new units.

The rate of absorption in Madrid capital has been more marked, where more than 97% of the homes put up for sale over the last two years have been sold, in such a way that now there are 3,067 homes on the market (3,007 of which are new units), 42.1% with respect to 2016. 98% of this supply comprises properties that have been put on the market over the last two years.

In this new real estate cycle, the supply of finished properties has lost weight over the total, with such homes now accounting for just 7.5% of the total stock in the Community of Madrid, compared with 58.1% in 2014. 60.5% of the supply registered now corresponds to homes that have not been started yet and 32% to homes under construction. Specifically, the current supply of finished homes has decreased by 75.8% with respect to the census in 2016 and the volume of properties under construction has grown by 54%, whilst the supply of homes not yet started has risen by 75.1% (…).

In the province of Barcelona, 89.6% of the stock has been absorbed in just two years. In addition to the 289 homes that are still on the market from 2016, 3,312 new units have been identified, bringing the total current supply to 3,601 homes, 28.9% more than in 2016. And in the Catalan capital, 93.4% of the supply that has come onto the market over the last two years has been sold and today the current supply amounts to 1,047 homes. 93.2% comprise homes that have been put up for sale within the last two years.

Here too there has also been an increase in the weight of homes under construction (50.9%), at the expense of the supply of finished homes, which account for 12.4% of the total stock in the metropolitan area, compared with the 29.9% that they represented in 2016. Specifically, the current supply of finished homes has decreased by 53.6% with respect to the 2016 census, and the supply of homes under construction has grown by 65.7%, whilst the volume of homes not yet started has increased by 54.8% (…).

Larger and more expensive homes

Another feature of the new real estate cycle is that the homes for sale are larger and also more expensive than they were two years ago. In the Madrid region, homes with surface areas of between 100 m2 and 150 m2 are gaining weight, and now represent 62.2% of the total, compared with 45.8% in 2016. By contrast, homes measuring less than 100 m2 are losing weight, down from 36.1% in 2016 to 22.1%.

In terms of prices, there are increasingly fewer homes that cost less than €150,000, which have gone from accounting for 25.6% of the supply to just 15.2% in the Madrid region and from 13.6% to 9.7% in the Spanish capital. By contrast, the proportion of homes costing between €150,000 and €300,000 has increased, according to ST.

In the Barcelona metropolitan area, homes costing less than €150,000 have gone from accounting for 15.9% of the total supply to just 4.8%. And in the city itself, the appraisal company has not been able to identify any units on the market for less than €150,000. What’s more, homes costing more than €500,000 have grown from representing 24% of the total in 2016 to 39% in 2018.

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake

ST: Rental Yields Soar in Sevilla, Valencia & Tenerife in Q1

2 April 2018 – Expansión

The three cities recorded increases of more than 16% during the first quarter, whilst the national average improved by 7.6%. Barcelona offers returns of 8.7% and Madrid 7.5%.

Buying a home to let it out has become one of the most attractive investment options of recent times. The returns offered by renting a home, in an environment of low interest rates and moderate inflation, are greater than other options, such as those generated by debt and deposits. In this way, during the first quarter of 2018, the average rental yield in Spain amounted to 8.2%, according to the Real Estate Sector Trends Report for 2018, compiled by Sociedad de Tasación. Although Barcelona is the province that offers the highest return (8.7%), the overheating of prices there is reducing margins, making it a safer location but with less potential. In that context, Sevilla, Valencia and Sant Cruz de Tenerife are emerging as interesting targets.

The evolution of residential yields in Spain, which soared by 7.6% during the first quarter of this year, suggests a sustained trend over the coming months, favoured by an increase in demand, the strong performance of the economy and the growth in house prices, which rose by 4.3% in April.

The increase in prices is still more pronounced in Spain’s provincial capitals. In Barcelona, for example, prices rose by 10.2% in 2017. In that province, rental housing generated a return of 8.1%, representing an asset with “very limited risk”, according to analysis from Sociedad de Tasación. It was followed by Lérida, also in Cataluña, where rental housing offered a return of 8.45%.

Although prices are high in Barcelona, they have not had an impact on rental yields, something that has happened in other areas, such as the Balearic Islands. The return offered by a rental home in the islands fell by 3.2% during the first quarter. That reduction could be due to the increase in house prices in recent years due to the tourist rental boom, which has reduced the scope for further increases. In Palma de Mallorca, for example, the number of beds from unregulated tourist rental platforms now exceeds the supply of hotel beds by 100%, according to data from Exceltur, which may, in turn, have an impact on prices. In fact, the Balearic Islands is the autonomous region where the most effort is required to buy a home in all of Spain.

An average citizen would need to allocate his entire salary for 14.9 years to be able to buy an average home in the Balearic Islands, twice the national average (7.5 years). That conclusion can be deduced from Sociedad de Tasación’s real estate effort index, which shows that, despite the increase in incomes, buying a home in many cities in Spain is still prohibitive for many.

In this context, markets such as the one in Valencia are interesting. Not only is it the province with the third highest rental yield (8.11%) in the country, it also ranks highly, in second place, in the increases in returns: an increase of 16.7% that more than doubles the evolution of the most profitable province, Barcelona, which saw its yields rise by 5.2% during the first quarter.

In terms of Madrid, although the average rental home in the province offers a yield of 7.46%, which is below the Spanish average, that is due to the differences between the rental market in the capital and other cities in the province.

Sevilla is the province that leads the yield increases. During the first quarter, yields there soared by 17.7%, well above the rises in Madrid (6.2%). In third place was Santa Cruz de Tenerife, where letting a home is now 16.2% more lucrative than it was a year ago.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Are Spaniards “Condemned” to Buying Second-Hand Homes?

4 February 2018 – El Confidencial

Only 18% of the homes sold last year were new build properties. 

It is the dream of thousands of Spaniards: to buy their own home and, wherever possible, for that home to be brand new. Nevertheless, it is a dream that now, more than ever, only a lucky few are managing to realise. In 2017 – based on data for the 11 months to November from the National Institute of Statistics (INE) – more than 350,000 second-hand homes were sold in Spain – comprising second and subsequent sales for statistical purposes – compared with just 77,500 new homes – first sales -. In other words, the latter accounted for just 18% of the total number of transactions.

That has not always been the case. At the height of the crisis – between 2008 and 2013 – and as a consequence of the huge stock of unsold new homes that was generated during the real estate bubble, sales of both types of homes were pretty much the same. However, all indications are that new homes are going to continue to be a scarce product and only affordable for the lucky few, given that estimates for the property development sector as a whole indicate that activity is going to normalise at an output rate of around 150,000-200,000 units per year, a figure which the experts consider corresponds to the natural demand for housing, in other words, to the creation of new homes. These numbers come in stark contrast to the 850,000 new homes that were approved in 2006, the highest figure in the historical series.

To put it in context, 81,500 (new home) permits were granted last year, up by 27% compared to the previous 12 months, but still only half the number that property developers expected to reach and 10 times fewer than at the height of the boom.

Property developers dream of reaching those figures in the short term, nevertheless, some voices have already started to warn about the possibility that they may not be able to achieve it due, on the one hand, to a lack of land – plans and urban development projects have been suspended all over Spain, and in particular in markets with lots of demand for housing such as Madrid – but also, and above all, due to a lack of financing.

There will not be financing for 150,000 homes

That was stated publically this week by the President of Property Developers in Madrid (Asprima), Juan Antonio Gómez-Pintado. “The problem is that the market is heading towards 150,000 homes per year, whilst bank financing looks set to provide for just 65,000 homes” (…)

Despite those storm clouds, if there does end up being enough money to go round, will people on the buy-side be able to afford the new homes? For months, real estate debates have been raging about the fact that the homes that are being built at the moment are not affordable for most buyers, which primarily constitute owners looking to reposition themselves – people who already own a home and who want to sell it to buy a better one -.

“The demand is not willing to assume future increases in house prices (…)”, said Ignacio Moreno, CEO of Inmoglacier just a year ago.

The lack of product for sale and the high costs of construction are being passed on in the final prices of homes and also in the prices of land. And all indications are that the rising spiral is set to continue and may even intensify. “Land prices are going to continue to rise, following in the footsteps of housing but multiplied by three. In other words, if house prices go up by 5%, land prices will rise by 15%”, calculates Mikel Echavarren, CEO at Irea.

Price gap

In this way, according to data from INE, during the third quarter of 2017,  the prices of both new build and second-hand homes rose by 7%. And it is the very lack of new build product that is inevitably pushing up prices. But that same shortage is also forcing demand towards the second-hand market, which is also pushing prices up, although, at the national level, the price gap between second-hand and new build homes has been increasing in favour of the latter (…).

Nevertheless, the price per square metre of a new build home is not always more expensive than a second-hand property. El Confidencial has compared the prices per square metre of new build homes in several districts of Madrid and Barcelona, as reported by Socieded de Tasación at the end of 2017, with the prices of second-hand homes, according to the real estate portal Fotocasa, and found that in some cases second-hand homes are more expensive.

How is that possible? The real estate portals show asking prices – not the prices at which operations are actually closed. According to a recent study performed by this real estate portal, in the last year, 71% of buyers obtained an average reduction (on the asking price) of €14,000, a figure that in the majority of cases represented a discount of 10% on the initial sales price (…).

On the other hand, for statistical purposes, when we talk about second-hand housing, we are not always taking into account the age of the property, but rather the number of times that the home has changed hands. Many developments in the hands of the banks are considered second-hand because there has already been a prior transaction involving that property – from the bankrupt property developer to the bank, for example – This means that when such a home is sold it is considered as a second-hand property, even though it may never have actually been lived in. And the prices of those units tend to be higher than those of homes that are several years old (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Spain’s Housing Sector is Heading for Another Golden Cycle

6 February 2018 – Cinco Días

Ten years ago, the largest real estate bubble of the democracy was about to burst, and although it was not the first, it was by far the most spectacular:  not only were residential property prices extremely high, everything relating to property was excessive: the volume of homes built, the amount of credit granted and the number of sales recorded. And although there were those who warned that the bubble would burst and the consequences would be dire, no one guessed how dramatic they would actually be.

Now, a decade later and four years after the recovery began, the consensus amongst analysts is that we are starting a new golden cycle that shares almost no similarities with the one that burst in 2008. The most optimistic observers even forecast five years of stable and sustained increases in house prices, as well as an increase in house sales and in the construction of new properties boosted by the global economic recovery.

In terms of prices, the forecasts for 2018 range between a conservative 3% increase and an average of 6% for the whole country. Nevertheless, regardless of the figure projected for the country as a whole, all of the studies agree that house prices will rise at different speeds this year. Madrid, Barcelona (but not the rest of Cataluña) and the Balearic Islands will clearly perform better than the rest, with price increases in the double-digits. And although they will record their fifth consecutive year of rises, prices will still be around 27% below their former peaks, on average, according to Eduard Mendiluce, CEO of Anticipa Real Estate.

The forecasts for this year are not surprising if we take into account the latest figures for 2017, relating to the third quarter, which show an annual increase in house prices of 6.7% YoY (…).

In terms of the areas that will see the most activity, Victor Pérez Arias, Managing Director of the international real estate fund manager ASG Iberia, says that the Mediterranean Arc will continue to account for a great deal of activity, spurred on by the pull of overseas demand (..).

According to the CEO of Servihabitat, Julián Cabanillas, given that more than 470,000 homes were sold in 2017, the psychological barrier of 500,000 is going to be exceeded again this year, something that has not been seen since the fateful year of 2008.

One of the determining factors in the return of house purchases to positive rates was the reopening of the credit tap. Nevertheless, access to financing is still a long way from the free bar decreed at the beginning of the 2000s. The granting of a mortgage now requires certain solvency criteria, which forces future borrowers to have savings – and that requirement was avoided in the past on too many occasions. This prudence on the part of the banks is one of the keys that, according to the experts, differentiates this cycle from the previous one and distances the ghost of a new bubble.

In fact, the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, says that whilst the volume of mortgages granted is considerably below the volume of purchases, the market will be healthy and that is what happened in 2017. With the official figures yet to be published, all indications are that around 470,000 house purchases were recorded in 2017, whilst the banks granted no more than 320,000 mortgages (…).

The previous crisis also hit property developers hard, given that demand was stopped in its tracks from 2008 onwards, following the outbreak of the global economic crisis, whereas just two years earlier, the number of new housing permits had set a new record, with more than 800,0000. Numerous companies had started projects without any presales, convinced that they would sell all of the units quickly. Given that it takes between 18 and 24 months to build a housing development, many buildings were finished only to spend years unoccupied. In this way, construction was suspended, above all, from 2009 onwards and even today, just 10% of the record volumes reached twelve years ago are being built.

Nevertheless, given that in the large cities and certain areas along the Mediterranean Coast, the absorption of stock has evolved at a good pace in recent times, for the experts, it seems that the time has come to increase the rate of construction once more. That is what the National Director of Residential and Land at CBRE, Samuel Población, thinks. He expects the supply of new homes to start to increase from the end of this year, although its impact will be greater in the second half of 2019. That consultancy firm is sure that despite this rise in supply, prices will not increase by less than 5-6%, with Madrid, Barcelona and a large part of the coast as the most dynamic markets (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake