Bank of Spain Warns of Mismatch Between Housing Supply and Demand

11 April 2019 – El Confidencial

According to the Bank of Spain, there is a mismatch between the homes that buyers are demanding and those that are available for sale. Indeed, that is one of the main conclusions of the latest report published by the supervisory body entitled the “Recent evolution of the housing market in Spain”.

According to the report, one of the key characteristics of the Spanish property market is its high degree of heterogeneity by region, type of home (new and second-hand) and buyer nationality. “The characteristics of the homes demanded do not necessarily match with the available supply, in certain places, and may differ in terms of size, quality and location”.

In addition, the Bank of Spain warns about the difficulties that young people are facing when it comes to affording a home, as a result of their precarious working conditions. Their situation is further compounded by changes made in recent years regarding tax breaks (the removal of them) for buying a home and the growth of the rental sector.

The Bank’s analysis focuses on Madrid and Barcelona, which are both very close to the peaks of the boom in terms of rental prices. Meanwhile, house prices are currently around their 2006 levels.

Nevertheless, according to the report, it does now seem easier to obtain a mortgage or at least one with more favourable terms for the borrower. Interest rates have decreased and lending periods (mortgage terms) have increased. Approval criteria and general financing conditions have also been relaxed.

Original story: El Confidencial (by E.S.)

Translation/Summary: Carmel Drake

A US Fund Wants to Invest €100M to Build 3,000 Homes for Young People

26 March 2019 – Idealista

An American fund is looking to buy public land in Spain on which to build homes in line with the salaries of young people. The under 35s are the forgotten cohort, with low salaries making it impossible for them to afford current house prices. As a result, 14 million young people still live with their parents.

The real estate firm Centro Comercial Inmobiliario (CCI) is holding negotiations with the fund to create a property developer that will build homes for young people. They are particularly interested in areas on the outskirts of major cities, such as Madrid, Barcelona, Málaga and Valencia, where young people are typically priced out of the local property market.

The aim of the fund and CCI is to invest around €100 million to build 3,000 social housing properties both for sale and rent over three years.

Original story: Idealista

Translation/Summary: Carmel Drake

INE: Mortgage Lending Rose by 16.5% YoY to €42.7bn in 2018

27 February 2019 – La Vanguardia

Last year, 345,186 mortgages to purchase homes were signed in Spain, up by 10.3% compared to 2017, but the banks again refrained from fully opening the financing tap: the average loan amount increased by just 5.6% to €123,727, according to data presented on Wednesday by Spain’s National Institute of Statistics (INE).

The growth in the average amount is only slightly higher than the increase in house prices (which rose by 3.9% on average last year, according to data from the Ministry of Development, albeit by much more in the large cities and their metropolitan areas, where the bulk of demand is concentrated). “The banks are adopting a conservative strategy, that’s for sure”, said Oscar Gorgues, Manager of the Chamber of Urban Property in Barcelona – “because they are still very mindful of the excesses of the boom years. For that reason too, we can say that the real estate market is healthy and there is no risk of a bubble”.

The data from INE shows that after five years of recovery in the real estate sector, the number of mortgages granted is still 71% lower than the 1.24 million mortgages granted by the banks in 2007, the last year before the burst of the real estate bubble.

According to real estate firms, the caution on the part of the banks means that the main factor causing families, and especially young people, to rent, is the fact that it is impossible for them to obtain a mortgage loan. By contrast, according to the real estate firm Forcadell, around one third of homes are now purchased without a mortgage, in operations undertaken by investors (…).

According to data from INE, the value of all of the new mortgages constituted to purchase homes last year amounted to €42.7 billion, up by 16.5% compared to 2017, due to the combined effect of increases in the number of operations and the average loan amount (…).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

Marco Aldany Founder Seeks Financial Partner for his Coliving Business

26 February 2019 – Idealista

(…). One of the founders of the chain of hairdressers Marco Aldany is strengthening his commitment to the real estate sector and, following the success of his student residence business, MiCasaInn, is raising the stakes with a search for financial partners to develop a coliving company in Madrid. According to explanations provided by Alejandro Fernández-Luengo to Idealista, the company already has three buildings in the centre of the capital that it could dedicate to this segment, although it wants a financial partner to help its growth across the rest of Spain.

This new venture into the coliving sector will arrive in the form of a spin-off. “After positioning ourselves as one of the main companies specialising in students housing in Spain through MiCasaInn, we believe that the natural step is to pilot a project for young people who have finished studying and who are joining the work place, so that they can continue with us”, said Fernández-Luengo.

Currently, the company has a portfolio of assets in which it has invested more than €50 million, in the hope of launching this project. It has one building in Plaza de Canalejas, measuring 4,500 m2, another in Puerta del Sol, spanning 7,000 m2 and a third in Chueca, which could become the group’s first coliving spaces once its new brand has been launched (…).

Original story: Idealista (by Custodio Pareja)

Translation: Carmel Drake

The PSOE Proposes that Town Halls Buy Homes to Rent Them Out

21 February 2019 – Eje Prime

The PSOE wants to create a public stock of rental homes, with reference prices, which will end up affecting market prices. To this end, in its framework program for the municipal elections to be held on 26 May, the party led by Pedro Sánchez is proposing that Town Halls purchase (already built) homes for rental, although without considering those that come from evictions executed by the banks.

The text reflects the “absolute priority” of creating a public rental stock that is “sufficiently large” with which to develop active policies that facilitate access to housing for citizens and which “affect the prices in the rental market”, according to reports from Europa Press (…).

In terms of public subsidies for the rental sector, the socialists propose taking into account the different life needs of each cohort, such as young people who want to buy their first home and older people who are looking for family consolidation projects. Similarly, they foresee the creation of a stock of rental homes for young people (…).

Original story: Eje Prime 

Translation: Carmel Drake

Galicia to Give €10,800 to Under-35s to Buy Homes in Small Municipalities

18 October 2018 – Inmodiario

The Xunta of Galicia is going to subsidise house purchases by young people under 35 by giving them up to €10,800 to buy homes in towns with fewer than 5,000 inhabitants. That is according to the resolution published by the Diario Oficial de Galicia, which establishes the regulatory bases for the measure and marks the opening of the period for aid requests to be submitted, in accordance with the Housing Plan for 2018-2021.

The objective of these subsidies is to encourage young people to settle in the least populated towns, favouring the establishment of new households in the most rural areas of Galicia.

The resolution establishes that the amount of each grant will equate to 20% of the acquisition cost of the home and only ever up a maximum limit of €10,800 per beneficiary. Requests must be presented by 16 November (…).

Original story: Inmodiario 

Translation: Carmel Drake

Spain’s New Government Proposes an Action Plan to Alleviate the Rental Market

18 June 2018 – El Confidencial

The rental market is, without doubt, the issue that Pedro Sánchez, the new President of Spain, and José Luis Ábanols, the new Minister for Development, will have to face in light of the price boom being experienced in certain areas of the country. According to sources close to the PSOE, the new Executive is going to focus its housing policy on: facilitating access to rental homes for young and older people; and curbing the rise in house prices, leaving to one side those measures destined to buying a home (…). For this, the new Executive is going to need support from other parliamentary groups, including Podemos, which is amongst its main allies, with very similar proposals to those put forward by the socialists to tackle the rental problem.

In terms of the State Housing Plan for 2018-2021 approved in March, when the Government was still under the mandate of the PP, the same sources confirm that the agreements with the autonomous regions have not yet been signed and, therefore, its execution is still pending (…).

Rental prices are the most pressing issue of the day. During Mariano Rajoy’s mandate, not only was it in the background, but also several draft bills presented to the Congress to tackle the boom in rental prices were defeated. The first one that failed to pass Congress’s filter was the Platform for those Affected by Mortgages (PAH), whilst proposals put forward by the PSOE were also initially vetoed by the PP, although the veto was not only not ratified, it was also lifted last Friday and so it will return to parliamentary debate, where a consensus with the other political parties will be needed to push it ahead.

The socialists propose restoring the duration of five-year rental contracts, limiting rental price rises – in the case of renewals – to the evolution of CPI, as well as introducing significant tax relief for those who decide to rent their homes below certain thresholds or by limiting the deposits required. All of these proposals are susceptible to being supported by the political parties that supported Pedro Sánchez’s no-confidence motion, in particular, Podemos (…).

Limiting rentals

(…). In its proposal, the PSOE is committed to offering tax incentives to those landlords who let out their flats on the basis of a public price reference system, depending on the area in which their property is located. Such a system would have to be fixed by the town halls. All landlords who respect those limits could benefit from a 60% deduction on their income tax returns (…).

To facilitate access to rental housing for young people, the PSOE proposes that if a home is let to a young person aged between 18 and 30 on a low income, then the tax treatment available to the landlord would be even more favourable, with deductions of 100% (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Spain No Longer Features in EU’s Top 10 Home Ownership Ranking

23 March 2018 – El País

77.8% of citizens resident in Spain own their own homes. In this way, the country was placed in 13th position in the ranking of European Union (EU) countries in terms of this parameter in 2016, one place below its position the previous year – after being overtaken by the Czech Republic – according to data from the European statistics institute Eurostat, and well outside of the Top 10. Compared to the European average (69.2%), the Spanish figures are still high, although each year, the percentage of homeowners is decreasing slightly to the benefit of the rental market. Ownership fever dominates in Eastern Europe, in particular, where the percentage exceeds 90% in many countries.

In 2007, the first year for which Eurostat compiled data for Spain, the country was ranked in 9th place in terms of the number of citizens owning their own home, with a percentage of 80.6%. Thus, between then and 2016, the rate has been decreasing slightly at the same time as the rates in other countries have been increasing, relegating Spain to lower positions in the ranking.

“In Spain, home ownership is decreasing slightly each year due to the economic conditions and the difficulty in accessing a mortgage”, explains José García Montalvo, Professor at the Universidad Pompeu Fabra, who points out that nowadays you need to have a permanent (employment) contract to be granted a mortgage, whereas, in 2007, you could have been a temporary worker. García Montalvo also argues that society has changed and young people – who are finding it harder to access real estate loans due to their employment conditions – regard the purchase of a home as a “problem” (…).

The professor says that the price of rental homes is rising due to greater demand, and he does not think that the decrease in home ownership is a phenomenon that is going to reverse despite the rent increases. In 2017, the price of rental homes in Spain recorded its third annual rise. The average price grew by 8.9% in 2017, the highest ever increase in the historical series of the real estate portal Fotocasa’s index, which has been compiling data since January 2006.

Eastern European countries lead the home-ownership statistics

In 2016, Romania was the country where the highest percentage of citizens owned their own home, with 96%. It was followed by Lithuania, with 90.3%; Croatia and Macedonia, with 90%; Slovakia (89.5%); Hungary with 86.3%; Poland, with 83.4%; Bulgaria (82.3%); Estonia and Malta, with 81.4%; Latvia with 80.9% and the Czech Republic with 78.2%. “The countries where citizens are most committed to buying their own home are primarily those in Eastern Europe. This is partly a result of the fact that many of those regions were communist countries and that when the market was opened up, it was shared out and everyone got involved”, says García Montalvo.

By contrast, the data from Eurostat shows that the citizens of countries with more consolidated economies back the rental market to a greater extent over the acquisition of home. Thus, Germany leads this category with 51.7% of its citizens owning their own home, followed by Austria, with 55%; and Denmark with 62%. Nevertheless, none of these countries fall below 50%, although the percentages are decreasing every year, opting for a rental model. The EU average stands at 69.2%, more than 8 percentage points below the figure in Spain.

“Rental is favoured in countries where labour mobility is higher such as in Germany and Austria. In Spain, it would be great if that was the case to boost labour mobility because ownership ties people down a lot (…).

Original story: El País (by Nahiara S. Alonso)

Translation: Carmel Drake

Madrid’s Town Hall is Blocking 105,000 New Homes in SE of the Capital

11 December 2017 – Idealista

Madrid has the potential for a large urban development at its disposal in the form of the PAUs located in the southeast of the city, covering a surface area of almost 37 million m2 and with the capacity for the construction of up to 105,000 new homes over the next 15 years. The plans have already been sketched out, and they have been approved by the Supreme Court, but clashes between property developers/landowners and the Town Hall led by Manuela Carmena have frozen the permits and licences for completing the development of the area and, therefore, the construction of affordable new homes, which are so necessary and so sought-after in the city.

The most worrying thing is not that the future of so many thousands of homes is up in the air, but rather that they are homes that would go to middle-class families and vulnerable groups: primarily young people and people with limited purchasing power, through social housing schemes, and with prices ranging between €160,000 and €240,000. Los Berrocales, Los Ahijones, Valdecarros and Los Cerros, known in the real estate sector as land destined for the construction of the most affordable housing in Madrid, are PAUs that find themselves on this journey through a desert. And the impasse has already lasted for more than a decade.

The strategy for the southeast started to take shape with the PGOU of 1997, under the PP Government when José María Álvarez del Manzano was the mayor, with the intention of joining together all of the potential in the towns to the south of Madrid, such as Getafe, Leganés, Alcorcón and Móstoles, with the Corredor del Henares.

After completing the PAUs policy in the north of Madrid, with Sanchinarro, Montecarmelo and Las Tablas, and also the PAU of Carabanchel in the 1990s, the municipal border of Madrid was reaching its limit in terms of developable land capacity. To the north, expansion had already reached Alcobendas and San Sebastián de los Reyes; to the west, the buildable land in Madrid was already bordering on Pozuelo and Majadahonda; and in the south, the PAU of Carabanchel already reached Alcorcón and Getafe. The only free area left in the capital was to the east.

And so the initiative to develop the southeast of the capital was launched, although it has been suspended for years by the courts and has been held back by the economic crisis. But now, when the economy has started to recover and the Supreme Court has approved the project, the building work has come up against a new problem: the position of the Municipal Government.

What is the problem?

(…) The Town Hall believes that the urban development proposal for the southeast does not meet the current needs of the city. The first main stumbling block is over the number of homes to be built.

Although the Supreme Court gave the green light in September last year to the plans that involve the construction of 104,737 homes, of which approximately 53% would have some degree of protection (subsidy), as well as to the building of offices and industrial warehouses (35% of the surface area will be destined to those developments), Manuela Carmena’s team considers that the capital will not have sufficient demand to justify the construction of so many homes (…).

Specifically, the Town Hall calculates that the city will have demand for approximately 6,000 homes per year over the next few years – that figure is well below those forecast by other researchers in the market. The IESE business school, for example, estimates that the Community of Madrid will need more than 25,000 homes per year until 2025, at least (…), a figure that falls to 12,000-13,000 in the case of the capital itself (…).

Another reason that the municipal government cites against the progress of these urban developments is that the city still has a significant stock of empty homes. But, again, research and official figures exist that call into question its claims (…).

The discussions are set for the long-haul.

A 10-year paralysis that could go on for another 10 years

(…) “Regardless, if we suppose that we obtain the necessary licences and that construction starts immediately, the first homes would not be ready to be handed over until 2022-2023. If to that timeframe, we add the years needed to change the General Plan (PGOU), in the end, we are going to be talking about another decade gone to waste”, said Javier López Linares, Manager of the PAU for Los Cerros (…).

Original story: Idealista (by Ana P. Alarcos, David Marrero and Alejandro Soto)

Translation: Carmel Drake

Excem Launches 2nd Socimi & Spends €22M On 1st Asset In Madrid

31 July 2017 – Eje Prime

Excem is on a roll. The company has just launched its second Socimi, Sociedad de Inversión Turística (Situr), dedicated to hostels and tourist apartments. The group, led by the Hatchwell family, will invest €250 million on the launch of this new investment vehicle, which will be led by Amir Yerushalmi, former director of the US fund Gaia. Moreover, the new entity has just acquired its first asset in Madrid for €22 million.

In March, as Eje Prime announced, the company activated its second company specialising in hostels for young people, whereby following the roadmap drawn by the group when it proposed the project, which also includes the creation of a third Socimi specialising in assets destined for use as co-working spaces.

The company constituted the hostel business, which operates under the name Excem Capital Partners Hospitality, and which at the time had just one administrator, Philip Hatchwell Altarar.

The investment to be undertaken by this second Socimi will amount to €250 million between now and 2018, approximately. The company has set itself the objective of owning 3,500 beds in a dozen buildings, primarily in Madrid and Barcelona, as well as in other tourist cities around the country.

Excem’s second project responds to a “latent demand”, according to the company, which maintains that each year young people from all over the world spend more than $230,000 million travelling and that there are only six companies in the world specialising in offering them high-quality accommodation at competitive prices.

With the company structure already in place, Excem has acquired its first asset through Situr. The company has purchased an asset located at number 3 on Calle Postigo de San Martín, in Madrid. That property, which is located opposite the Monasterio de Las Descalzas and Puerta del Sol, has a surface area of 4,000 m2 and 400 beds. Excem has spent €22 million on this purchase.

Excem’s second Socimi has been created with the aim of acquiring between ten and fifteen buildings, during the first phase and starting in Madrid, to build up a portfolio of 3,500 beds in the historical centres of the main cities in Spain, Europe and the USA, which will be managed as hostels.

In addition to this first asset in Madrid and a second committed property in Málaga, Situr has already chosen more than 30 buildings in main cities across Spain to continue its acquisition plan. According to the company, “we expect to undertake a capital increase for Excem Socimi Situr between September and December 2017 and start to debut on the MAB in 2019” (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake