Tag: stability

Excem Socimi Residencial Launches Homiii, a Brand Specialising in Shared Rental Homes for Millennials

17 April 2018 – La Vanguardia

Excem Socimi Residencial, which, in less than two years of life, has accumulated an asset value of €30 million, with share capital of €12 million, has launched the brand Homiii for the professional rental of shared homes to millennial students and young professionals.

Excem’s Socimi estimates a (stock market) debut value of €1.40 per share, which would represent an appreciation of 40% for current shareholders. Its latest capital increase, in March, amounting to €4.1 million was backed by 40 investors in total.

Homiii (www.homiii.com) purchases properties for residential use, in particular, those that are characterised by their location – in the most central areas of cities -, their quality – they must be renovated, decorated and furnished – and their design – the firm prizes comfort and functionality -.

This professional rental management company has concentrated its efforts in Madrid during the first phase. After just 20 months, it has acquired 40 flats, with a combined surface area of more than 7,000 m2 and 252 rooms under management for the academic year 2018-2019, located in the neighbourhoods of Moncloa, Chamberí, Centro and Salamanca.

The CEO of Homiii and Head of Excem Socimi Residencial, Antonio Mochón, explains that they are “very satisfied” with the results achieved so far. “We have created a business from nothing, and, to date, we have incorporated 40 highly qualified investors who have contributed funding worth more than €12 million”, he said.

Moreover, he highlighted that the firm has dealt with “more than 400 clients and earned a satisfaction rate of 80% for the quality of the homes and the value added”. “Young people feel part of the Homiii community because we offer them a lot more than they are initially looking for. We specialise in adding value to investors and clients, in a market where there is more demand than qualified and professional supply”, he said.

The objective is to exceed 3,000 rooms in some of the main cities in Spain such as Madrid, Barcelona, Sevilla, Valencia, Bilbao, Málaga and Santiago de Compostela. The strategic plan for the business model is to close 2019 with investment of €70 million and to reach €300 million over the coming years through expansion across Spain.

Monchón indicates that one of his challenges has been to achieve security for investors: “a gross yield of 6%, a share price increase of 40%, a default rate of 0% and a commercial occupancy rate of 100%”.

“We understand our business project as a very specialist business model, and for that reason, we are managing to add value to our shareholders and offer professionalised management to our clients. We have achieved great stability in terms of the generation of rents and security for investors”, he explained.

Original story: La Vanguardia

Translation: Carmel Drake

Fotocasa: 20% of Investors Rent Out Their Properties as Tourist Apartments

2 December 2017 – Expansión

In the last three years – which have seen the consolidation of the current upward trend in the housing market – an unusual situation has arisen: rental prices have risen by more than property (sales) prices; at the same time, demand for rental properties has soared and hundreds of thousands of homes have appeared on the market, which has resulted in an impasse of high yield and low risk. Given that the returns on traditional investments, such as debt and deposits, are at historical lows, property is shining once again. Without falling into the excesses of the bubble, housing is providing investors with shelter and revenues once more.

Not only that. The appearance of new real estate models has spurred on the financial potential of residential assets, in such a way that 20% of real estate investors are now using their properties as tourist apartments. In other words, one out of every five, according to a study by Fotocasa, to which Expansión has had access.

That high percentage – which is expected to continue growing – is due to the fact that new short-term leasing platforms, such as Airbnb, allow investors to obtain even higher returns than from traditional rental arrangements. In any case, 65% of investors still prefer the stability of having a long-term tenant. The remaining 15% buy homes but do not let them out, instead, they wait for them to appreciate in value before selling them for a profit.

“Now is a good time to buy to let, be it long-term or holiday rentals, given that both formulae are generating returns that, in the current context of low interest rates, cannot be found in any financial product or on the stock market”, explains Beatriz Toribio, Head of Research at Fotocasa (…).

11% of all house purchases are bought for investment purposes. In other words, around 50,000 homes this year. That means that around 10,000 dwellings (the aforementioned figure of 20%) will be used as tourist apartments (…).

More revenues

(…) According to data from Fotocasa, 74% of the owners that in the last year have put a tourist home up for rent through the online portals and platforms say that they obtain more revenues through their tourist rentals than from residential letting. 66% of those calculate that they obtain between 5% and 15% more; 16% say that they receive between 15% and 20% more; and 12% state that they can earn 20% more than from long-term rentals.

It is a buoyant time for savers and investors. Almost half of those who buy a home that is not going to be their primary residence, do so as an investment (45%), whilst 55% acquire, in theory, to have a second home. But, almost 40% of the latter group consider putting that home up for rent for short periods of time – for example, during the summer when they are not on holiday there – whilst 7% end up opting for long-term rentals (…).

Rental prices are currently increasing at a YoY rate of around 10% and second-hand house prices are rising by around 5% YoY, according to Fotocasa. Those figures increase to 10% and 20% in certain districts of Madrid and Barcelona, the two major investment centres (…).

The saturation of tourist apartments in Madrid and Barcelona is causing a great deal of political debate. The Town Hall of the Cataluñan capital, led by Ada Colau, first fined Airbnb for its 6,000-7,000 illegal tourist rental properties, and at the same time announced “more forceful legislation”. Then, in the summer, it reached an agreement to make a list of the apartments that were breaking the law. This week, the platform has withdrawn 2,500 advertisements in Barcelona, 1,200 thanks to that agreement with the Town Hall and 1,300 after a limit of one home per person was placed on the number of entire houses that a single owner may have in Ciutat Vella.

Controversy aside, which are the best homes for investing in a tourist apartment? The price and the number of rooms are the basic requirements that buyers look for, but “those who are looking to invest prioritise aspects relating to the area, such as transport links (44% vs 31% for the overall purchasing population), a nice neighbourhood (46% vs 38%) and the services in the area (37% vs 30%) (…).

Tourist rentals have one fundamental disadvantage: “They require more effort and time, due to the high turnover of tenants, especially if the owner manages that side of things him/herself, without the help of a professional”, says Toribio. “That is the main reason why two out of every 10 lessors abandon this type of rental arrangement after giving it a try”, she reveals.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Spain Is A Long Way Away From A New RE Bubble

21 April 2017 – Expansión

Spain’s large property developers consider that the (Government’s) policies in terms of housing are obsolete and so, they are requesting changes to the existing legislation to reflect the new habits and demands of Spanish society.

A more professionalised sector, with a greater industrial component, which is more disciplined in terms of debt, selective when buying land and prepared to adapt to the economic cycles. That is how Spain’s real estate developers see the future of the residential market in the country.

“I find it hard to believe that the market is not going to undergo a major transformation. The banks are not going to finance land and the radical fragmentation that we have seen until now is not going to continue”, said Juan Velayos, CEO of Neinor Homes, on Wednesday at the XXIV Meeting of the Financial Sector, organised by Deloitte, Sociedad de Tasación and ABC.

The CEO of Aedas Homes, David Martínez, said that between 130,000 and 150,000 new homes are going to be needed per annum over the next few years, so there is still a long way to go. For that Director, Spain has entered a new bonanza cycle following the crisis, which will probably last longer than the previous one.

The CEO of Sociedad de Tasación (ST), Juan Fernández-Aceytuno rejected the idea that there is currently a real estate bubble in Spain. “There is clearly stability in terms of prices, but it is still too soon to talk about a complete recovery in the market”. (…).

Thus, the President and CEO of Vía Célere, Juan Antonio Gómez-Pintado, said that the challenge for the sector in the future is to achieve greater industrialisation. “The situations that are being imposed on us by house and land prices are turning us into a speculative model. The sector was very badly affected during the crisis and there are only a handful of companies with their production capacity intact at the moment”.

For Gómez-Pintado, the sector is still very fragmented: “The large players will not account for more than 5% of the total market”.

Meanwhile, the CEO of Metrovacesa Suelo y Promoción, Jorge Pérez de Leza, highlighted the importance of recovering the reputation of brands.

In terms of his firm’s strategy for the future, Pérez de Leza explained that Metrovacesa Suelo y Promociones wants to become a “premium” channel for generating value from the land currently held by its shareholder banks (Santander, BBVA and Popular). “There has been a lot of speculation around whether we were going to end up as a dump. That is not the case. The strategy that we have chosen to adopt is for Metrovacesa to choose the land that will allow it to be a competitive property developer. The portfolio of land is very good and will be the envy of many of our competitors”.

Shortage of land

In terms of the lack of buildable land, Velayos acknowledged that, although Neinor currently has sufficient buildable land to carry out its strategic plan, which involves delivering between 3,500 and 4,000 homes per annum, the lack of supply may become a problem in the future. (…).

Moreover, the property developers are demanding a change in legislation in terms of housing in Spain so that it reflects the new needs of society. “I can’t think of any other sector that is worse in terms of regulatory matters than urban planning. It is absurd”, said Velayos. (…).

Meanwhile, the Managing Partner at Azora, Concha Osácar, pointed out that Spanish society is changing. “The rental market has been slow to reach Spain, due to a lack of investment and products, but it is now here to stay. (…). The stock of rental homes needs to be increased substantially”. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

ST: New Home Prices Rose In Every Regional Capital In 2016

4 January 2017 – Expansión

According to Sociedad de Tasación, the price of new homes rose by 3.3% in 2016. It is the largest increase recorded since 2007 when, at the height of the real estate bubble, they rose by 5.1%. The price of new homes rose in every provincial capital and, for the first time since the crisis, “the rising trend was completely generalised”. Nevertheless, the price rises were moderate in almost every city. They only really stood out in Barcelona, with an increase of 6% and in Madrid, with a rise of 4.9%. Both cities continue to be the engines of growth in the sector.

The average price of new homes in Spain’s provincial capitals amounted to €2,120/m2 in December 2016 (up by 1.9% compared to the previous half year). The value of a typical 90. m2 home in the provincial capitals rose to €190,800. In other cities that are not provincial capitals, the average price of new homes amounted to €1,555/m2 in December, down by 26.6%.

“We think that 2016 was the year during which prices bottomed out, the cycle changed and the sector moved from stability to recovery, supported by price increases, transactions, the reactivation of off-plan house sales, the granting of mortgages and a decrease in the default rate. That makes us think that 2017 could be a good year for the real estate sector”, said Juan Fernández Aceytuno, Director General at Sociedad de Tasación.

Although all of the capital cities have left their losses behind, we are still seeing a two speed recovery in the residential sector. On the one hand, we have the large centres of demand and the tourist areas. On the other hand, we have the areas with the highest volumes of surplus new homes for sale, which still have several years of property digestion activity ahead of them. (…).

More confidence

The index of confidence in the evolution of the real estate sector that Sociedad de Tasación compiles stands at 54.5 points and is continuing to rise from its neutral position of 50. This means that the indicator has grown by 10 points in two years, from 44.5 at the end of 2014. La Rioja (57.9), the Balearic Islands (57.9) and Madrid (56.9) have the highest confidence indices. Castilla-La Mancha (50.9), Castilla y León (50.8) and País Vasco (49.3) have the lowest.

Meanwhile, the appraisal company’s real estate effort index amounts to 7.4 years salary for the acquisition of an average home. The Balearic Islands is once again the autonomous region where buyers need the longest time to acquire a home – 15.8 years – and La Rioja the region where buyers take the least time – 4.6 years.

Most buyers are not new households, but demand is being nourished, above all, “from investors, in particular from people looking to buy to rent or reposition themselves”, according to the Director General of the appraisal company. As such, “the challenge is to analyse in detail the demand and understand why the cohort that makes up the sociodemographic profile aged between 25 and 35 years are not buying homes at the moment”, says Fernández Aceytuno. “It may be due to job instability, wages, geographic mobility, sociodemographic changes…but really, it is more important that we analyse who are not buying homes than who is”, he added.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

The RE Sector & Its Challenges For The Future

14 April 2016 – Cinco Días

“Few countries in the world have as much regulatory complexity as Spain”, said Alfonso Benavides, Chairman of the Urban Land Institute in Spain yesterday, at the Sustainable Urban Development Forum organised by the newspaper El País and sponsored by Distrito Castellana Norte. According to experts, the diversity of legislation hampers growth in a sector that has great potential for expansion. The politicisation and lack of a roadmap for management plans represent another obstacle”. “There is no strategic vision”, said Eduardo Fernández-Cuesta, Chairman of RICS in Spain.

The system is so complex (and hard to interpret) that it generates more questions than it answers. The continuous updates to the regulatory framework resolve one set of problems and create another. “The private sector can work with complexity, but not with uncertainty over timings”, warned Benavides, who pointed out that the first draft of an urban planning request alone can be up to 2,500 pages. The proposed extension of the Castellana being managed by Distrito Castellana Norte has been in the pipeline for more than 20 years, awaiting the various approvals.

“The fundamental concept is legal security, something which we currently lack”, said Ricardo Martí-Fluxa, Chairman of the Spanish Association of Real Estate Consultancy Companies. It is estimated that for every €1 million of real estate investment, between 18 and 20 jobs are created. In his opinion, we should stop demonising the economic gains of projects because the private sector, which has to drive these processes, must be able to generate a return from its investments and he noted that Town Halls in other European capital cities, such as London, are determined to give companies facilities so that they can execute such investments.

Juan Antonio Gómez-Pintado, Chairman of the Association of Real Estate Developers in Madrid, expressed the same views. He noted that the first people who are interested in putting an end to speculation are property developers. “It is absolutely essential that land is available, when it is restricted, a natural speculative process occurs. By the law of supply and demand, when land is restricted, its price increases”, he complained. (…).

The big question is, following the burst of the real estate bubble, whether Spain needs to continue building homes. The Ministry of Development, which prepares an annual report, estimates that there are 43,000 empty new homes in Madrid alone. Sources in the sector dispute those figures. “The report is prepared using a valid methodology, but it does not reflect the reality because, for example, it does not take account of the fact that the owner of a new home may not want to sell it”, said Juan Fernández-Aceytuno, CEO of Sociedad de Tasación. The actual number, if we look on a promotion by promotion basis, does not exceed 8,000 homes in Madrid. “One of the major problems is that we have run out of stock”, said Gómez-Pintado.

Nevertheless, the experts agree that, a new bubble is unlikely, especially due to the lack of available mortgage financing. In 2006, around 1.3 million loans were granted. In 2014, that figure barely reached 350,000. “There is no risk of a bubble”, said Fernández-Aceyuno. “We expect a period of stability in terms of house prices across the country”.

Original story: Cinco Días (by Carlos Santana)

Translation: Carmel Drake