Investment In Land Soars In Alicante & Valencia

18 October 2017 – El Mundo

It is nothing like the madness of the boom years, but the sale of land is resurging in Valencia and Alicante, in line with the recovery of the real estate sector. The prices being paid are still well below those of the boom years, but the market is shaking itself up nonetheless. There is still a lot of raw material on the balance sheets of the banks, which were forced to take on these illiquid assets from property developers following the outbreak of the crisis.

And it is those products that are gradually coming onto the market. Property is being reactivated and land is now needed again for construction, especially in the coastal areas, where it is starting to become scarce. The situation inland is another story, where there are enormous portfolios of land, waiting for projects that will take a long time to materialise, if they ever happen at all. There, demand for housing is much more limited than it is along the coast (…).

The latest figures from the Ministry of Development reflect this upturn in land transactions in the two provinces. During the first half of this year (the latest period for which data is available), 763 land operations were closed in Alicante and Valencia. During the same period in 2016, 634 sales were completed. In Valencia, for example, the number of transactions involving companies doubled during that period, from 80 operations to 158.

Meanwhile, in Alicante, where 375 land transactions were closed, activity returned to its level in 2008, just before the bubble burst. During the first half of that year, there were 340 operations involving the sale of land. During the second quarter of this year, 226 operations were closed in Alicante, a similar level to those seen during the era of the housing boom.

The surface area acquired through these operations also increased, up from 880,000 m2 of land purchased in Valencia and Alicante during the first half of 2016 to 1.6 million m2 during the same period this year. In other words, the volume of land bought and sold almost doubled.

The amount of money invested also soared during the first half of this year. In this way, investors injected €158 million into land in Valencia and Alicante during the six months to June 2017, up by 91% compared to the same period in 2016. If we look at the figures for the last twelve months, we see the spectacular growth of the market. Between July 2016 and June 2017, investment in land in the two provinces amounted to €277 million; whilst, during the 12 months immediately preceding that period, funds invested €173 million in land. In this way, investment rose by 60% between the two periods.

One of the factors that has allowed these investment levels to recover gradually is the decrease in the price of land, which seems to have bottomed out now, especially in the smallest municipalities where urban development pressure and demand for housing is lower (…).

The collapse of land prices, in general, catapulted operations, and the banks and Sareb were the star players, placing their best plots of land with local property developers that survived the crisis, as well as with large, new operators in the sector, which have now arrived in Alicante and Valencia, attracted by the pull of overseas demand and second homes for the domestic market (…).

According to the statistical series published by the Ministry of Development, urban land prices in Alicante peaked during the fourth quarter of 2006, at €528/m2, before dipping to their minimum level in the second quarter of 2014 (€100/m2). Now, land is being sold at around €134/m2 on average (19% cheaper than it was in June 2016). In Valencia, the current price is €145/m2 (down by 2.5% in YoY terms and compared to a peak of €391/m2 during the first quarter of 2007) (…).

One of the areas with the greatest real estate activity is the south of Alicante, specifically, the area around Orihuela Costa and Torrevieja, where almost all of the available urban land has now been sold, according to the latest report from Solvia Market View.

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

Strong Recovery In Madrid’s Market For New Homes

14 July 2015 – Cinco Días

The lack of new housing developments in Madrid in recent years means that the few blocks that have been built are being sold quickly, as the economic environment improves. So much so that the marketing company Foro Consultores has conducted the first comprehensive study of the new build segment, which not only estimates the size of the stock of new homes in the capital, it also calculates when that stock may be depleted if the current strong rate of sales continues.

The study, based on visits to all of the developments currently for sale and simulations of purchases or direct surveys at the sites, has focused on analysing the existing supply in new urban developments (Arroyo del Fresno, Montecarmelo, Las Tablas, Sanchinarro, Valdebebas, El Cañaveral, El Ensanche de Vallecas and Carabanchel), since those are the areas where the new builds are concentrated. Whole new buildings are the exception rather than the rule in the city centre and in the city’s more established neighbourhoods.

Foro Consultores begins its report by highlighting the number of new homes: currently the stock of new homes available for sale in Madrid amounts to 1,770, of which 781 are “free” and 989 are social housing (VPO) homes. That figure represents just 20% of the total number of buildings that have started to be built since 2010. Moreover, we are talking about very small numbers if we take into account that the study has analysed 102 developments in total, containing 4,001 “free” homes and 3,861 social housing homes, almost 8,000 homes, which came onto the market in recent years as turnkey properties or homes sold off-plan.

4.1 homes sold per development per month

The uptake of homes by region is not uniform. More than half of the new homes built in El Cañaveral, in the south of the city – the last development to get underway – have not yet been sold. Meanwhile, in other new neighbourhoods, such as Montecarmelo, less than 5% of the new homes or those under construction remain unsold. Furthermore, in Ensanche de Vallecas in 2007, there were almost 3,000 unsubsidised new homes for sale, but now there are just 166 left.

As well as the scarcity of supply due to the construction paralysis in recent years, one of the keys that explains the fast absorption of the stock is the acceleration in the rate of sales in recent months. Foro Consultores estimates that if no new developments come onto the market, then the excess would be depleted in just six months, at the current sales rate of 4.1 homes per development per month.

The study highlights that these 4.1 homes sold (per development per month) represents the sale of 5.3% of developments every 30 days, an average rhythm that has not been seen since 2003, and for unsubsidised housing, that figure is almost 5 homes per development per month, whereas during the crisis, it never exceeded one unit per month.

The study also shows that 79% of the developments on the market were started between 2010 and 2015, and of those 77% have already been sold.

In terms of prices, the report also highlights that in certain developments in El Cañaveral, the price of unsubsidised homes is lower than the price of VPO homes, which is not very typical in Madrid. “This shows that the social housing pricing model is out of synch with the market and that the promoters of unsubsidised homes have adapted better to the changes in conditions”, explained Foro Consultores.

In the areas analysed, the absolute prices of unsubsidised homes ranges between €77,000 and €657,000, with an average price of €273,021. Meanwhile, the prices of VPO homes range between €38,474 and €382,652, with an average price of €150,721.

Finally, the study concludes that by type of home, three-bedroom houses are in most demand. Meanwhile, the construction of studios and small flats, which were so fashionable during the boom, is now reducing.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake