RESIDENTIAL MARKET REPORT 2016 - · PDF fileRESIDENTIAL MARKET REPORT 2016 ... Turkey and North Africa and back to former favorites in ... end with the start of 44,600 homes. 71,145

SPAIN RESIDENTIAL MARKET REPORT

2016

www.maxxima.es

[1]

Content

01. Economic Context ....................................................................................................................... 2

02. Good Results ............................................................................................................................... 4

03. Housing Market Trends ............................................................................................................... 6

04. Focus I: MADRID ....................................................................................................................... 9

05. Focus II: BARCELONA ............................................................................................................. 14

06. Focus III: SECONDARY LOCATIONS ..................................................................................... 19

07. Appendixes ................................................................................................................................ 22

Appendix I: 2016 Transactions Detail ............................................................................................................................... 23

Appendix II: Most Relevant Servicers ................................................................................................................................ 24

Appendix IV: Joint Ventures to Development .................................................................................................................. 25

[2]

Economic Context The global economy is slowing, emerging markets remain fragile and Britain's EU membership referendum on June 23 is on a knife-edge, but a Fed rate hike could send shockwaves across the world at a time.

The U.S. economy expanded at a slightly faster pace in the first quarter than previously estimated, reflecting less damage from trade and inventories. While, in the UK activity slowed in the first quarter and a further deceleration is expected in the second quarter.

Europe remains a mixed picture. The real GDP (Gross Domestic Product) data growth accelerated faster than initially estimated in the first quarter in Germany, France and Ireland. By contrast, news in the periphery were more negative, with Italy and Portugal still leaving growth well below the euro-area average.

Spain's economy expanded 0.8% in the first quarter from the previous three months and grew 3.4% year-over-year. Those figures are in line with an earlier estimate and confirm that Spain's growth rate remains robust despite political uncertainty. The country is headed for a second round of elections at the end of June, after politicians failed to cobble together a coalition government in the wake of inconclusive December parliamentary elections. Despite this political situation, the IFM (International Monetary Fund) has decided to raise its forecast for Spain.

The bad figure is Spanish public debt that has passed a record €1.095 million, up from €1.070 million by the end of 2015 in words of the Central Bank of Spain. This low growth estimate evidences that public debt is now in excess of 100% of GDP.

In terms of labor market, it has entered the high season. Registered unemployment in Spain fell by 83,599 people in April, in words of the Employment Ministry, a 2.04% drop compared to March. The fall was smaller than in April last year. April 2016 is the third best April result in the past 13 years.

In the construction sector, although job market rebounded in 2014 and 2015, its effect has started to run out in the last months, in each of it activity branches mainly due to the lack of investment and public works. In fact, Seopan (Spanish Association of Construction Companies) predicts construction decreasing a 15% in 2016.

The contribution of external demand to annual GDP increase stands -0.4% in the first quarter of 2016, two tenth less than the previous quarter. However, due to economic turmoil, exports decreased 0.5% in the first quarter of this year.

On the other hand, Spain is enjoying a surge in tourism as fears over terrorism drive wary travellers away from destinations in Turkey and North Africa and back to former favorites in southern Europe. The number of foreign tourist arrivals in Spain in April rose 11.3% to 6.1 million compared with the same month in 2015. Mainland Spain and the Balearic and Canary Islands have been among the main beneficiaries, especially by visitors from the UK with some 4 million visiting in the first four months of this year.

Spanish economic activity indicators posted a mixed performance. While a gauge for the services industry beat expectations, manufacturing slipped. However, the composite index, which combines the two, was at 54.8, below last month’s reading but still higher than the estimate calling for a decline to 54.2.

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Spanish GDP: Annual Rate

01

Source: INE

+3.40

Source: Ministry of Public Works

16.000.000

16.500.000

17.000.000

17.500.000

Employment: Affiliated to Social Security

17,463,835

http://www.ft.com/intl/topics/places/Spain

[3]

In terms of real estate sector, for the first time since 2008, all of the major indicators in the real estate market, including house prices, ended last year on a positive note. The improvement in employment was, undoubtedly, the factor that contributed the most to the increase in the sales volume and prices of homes. The second was credit. Not only did the number of operations continue to increase, also the INE even highlighted that there had been a certain “relaxation” in the criteria for granting some kinds of loans.

During the month of March 2016, the average amount of mortgage constitutions recorded in the land registries (from previous public deeds) stood at 129,202€, 1.7% more than that of the same month of 2015. The number of mortgages constituted on dwellings was 22,983, that is, 14.5% higher than that registered in March 2015. The average value was 107,861 euros, showing an annual increase of 4.8%. For the entire quarter, the number of mortgages on dwellings was 71,145.

In terms of foreclosures on dwellings, 11,278 were ordered, amounting 58.3% of the total foreclosures. 31.6% of the total foreclosures were regular dwellings of individuals, 17.7% corresponded to dwellings of legal entities and 9.0% to other dwellings of individuals. On the other hand, the foreclosures of other urban properties (premises, garages, offices, warehouses, buildings intended for dwellings and other buildings and urban exploitations) involved 29.5% of the total.

More signs of acceleration in the construction sector. The number of permits to construct new homes have recorded their highest figure since 2011, although they are still a long way below the figures seen in 2006.

The number of housing permits granted by the college of architects to construct homes soared by 57% during the first quarter of the year to 16,782 (6,176 in March), the best figure recorded during the first three months of a year since 2011, according to the latest statistics from the Ministry of Development.

Various indicators show that the recovery displayed by the market since the middle of 2015 with respect to the start of new developments seems to have stabilished last year, and remained at a positive year-on- year rate throughout the first quarter of 2016. It is estimated that 2015 ended with a 23.3% increase with respect to the previous year, with slightly more than 40,500 homes started. Sector sources estimate for 2016 envisage a 10% increase with respect to this figure, so that the year would end with the start of 44,600 homes.

71,145

11,278

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

Evolution of Foreclosures and Mortgaged Dwellings

Mortgages

Foreclosures

Source: INE

6,176

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000Visas for New Construction

Source: Ministry of Public Works

http://www.auraree.com/real-estate-news/ministry-of-development-housing-permits-grew-by-39-in-2015/

http://www.auraree.com/real-estate-news/ministry-of-development-house-sales-rose-by-9-8-in-2015/

[4]

€5.830M €10.100M €10.562M

€3.534M

€3.009M

€14.176M €17.857M

€803M

0

5.000

10.000

15.000

20.000

25.000

30.000

2013 2014 2015 2016

Investment Volume (M€) 2013 - 2016 *

Good Results Spain has won back the interest of investors. Investment is up by five times what it was at its lowest point in 2012 and hit a new record in 2015 surpassing even the figures registered in 2006, with a total of €10,562M.

Forecasts for this year suggest that investment levels will remain slightly lower than in 2015, although a greater number of transactions are expected. Essentially, we are facing a lack of product, not investor demand.

Until 31 of May of 2016, the total volume investment in real estate sector -including debt, banking platforms (servicers) and companies’ shares rose to €4,336M. Only property assets reached €3,534M.

In terms of sectors, retail and offices remain the most popular segments for investors. Shopping centres and High Street recorded €1,232M, accounting for 28,42% of investment. Offices accounted for €566M, representing more than 13% of investment. The logistics sector has grown exponentially during the last years, mainly due to the higher yields, reaching record levels of more than €300 million during the five first months of 2016. This is the amount that corresponds with all transactions registered by Maxxima based on public information until the 31th of May of 2016.

Nevertheless, hotels are in the third position of real estate assets. This is for the strong recovery of the tourist sector - both national and international.

Also, RE Platforms are between the top three in terms of investment. Only two transactions have positioned them there, the sold of Aktua that was acquired by the Norwegian fund Lindorff by €300M and Tinsa, the company that Cinven bought by almost €300M.

28.42%

13.84% 12.56% 11.39%

7.64% 5.36%

3.07% 1.70%

€1,232 M

€600 M €544 M €494 M

€331 M €232 M

€133 M €74 M

Investment Allocation (M€) by Sectors in 2016

02

2M

2.7%

4M

4.8%

€503 M

€2,152 M

(1)

(2)

(1)

(2)

(1)

(2) (2)

13.06%

€566 M

2.97%

€129 M

€24,276 M

€8,839 M

€28,419 M

€4,336 M (1)

Source: Cohispania

RETAIL HOSPITALITY INDUSTRIAL RESIDENTIAL CORPORATE DEBT

OFFICE LAND RE

PLATFORM

ALTERNATIVE

Source: Maxxima REA

(1) Debt+Corporate+RE Bank Platforms ; (2) RE Assets

* Until 31th of May of 2016

[5]

Regarding to real estate investment allocation, relocated portfolios took the highest share reaching €1,327.65M but followed very closed by Madrid´s investment where €1,154.78M were invested.

Land investment allocation was different. Secondary location took more than half of investment allocation by €119,11M followed by Madrid and Barcelona, reaching €49.78M and €38M respectively.

Barcelona was the main important location in terms of residential allocation, rising €64.93M and almost 50% of this investment. Madrid and secondary locations took the other half of the residential investment.

In the real estate market, Málaga generates higher returns than the national average and the highest returns of any city. This has been reflected on land investment allocation that Málaga reached 11%.

The new-build market is now clearly on the up. Future supply has increased considerably, but is still not high enough to meet current demand in specific locations. This has helped to finally absorb the new-build supply that had been dragging its heels and had been on the market for some years.

This change in trend has also affected developer activity. 2015 saw an 8% fall in owner and co-operative development, in favour of more traditional development. Despite the fact that this is still a somewhat subdued figure, the outlook is that this figure will continue to recover going forward, as and when financing for developers becomes more flexible.

Regarding investment market in residential sector, plots represented a 5.36% over the total and housing buildings meant a 3.07%, that is: an investment volume of €232.39M and €132.93M, respectively.

33%

9%

2% 18%

38%

Total Investment Allocation (M€) by Location

Madrid

Barcelona

Málaga

Secondary Location

Relocated Portfolio

Source: Cohispania

29%

49%

23%

RESIDENTIAL

21%

16%

11%

51% LAND

[6]

Housing Market Trends

01. Residential Market Europe Key Facts

Although the optimism is definitely there, it is not uniformly spread across Europe. While some European economies have emerged from recession, others are still struggling to achieve meaningful levels of growth.

The European real estate market has basically been quite different from one country to another and also by sector. Investors have been adjusting, almost on a quarterly basis, their strategy based on their research on each of these markets and the opportunities that arose from the variation in each market.

The sentiment is that it is easier to get capital than it is to find good deals. Capital remains selective, both about the kind of assets it wants and where it will go.

Housing is an increasingly important part of the mix of the mainstream sectors in Europe, after logistics and city center offices. It is evident that shortages and affordability issues in many European cities are influencing a longer term move into housing by some investors.

In many European cities, there is a shortage of suitable housing with different formats, but residential, in all its variations, is on the rise. Investors that do not have the expertise are looking for a partner who does.

London (UK)

The United Kingdom’s impending European Union referendum is causing London’s housing market to falter. But, despite the anxieties of a potential withdrawal, signs of pent-up demand and a new mayor cast a more hopeful outlook on the market.

The growing interest in the private rented sector is particularly marked in the UK. There, institutional appetite for residential investment has been stimulated by widespread affordability problems alongside housing shortages in London.

The house price is approaching unsustainable levels in Central London for the first time on record. However, residential development land values fell slightly in the centre in the last months leaving values above 2007 and 2008 peak. Whilst land buying activity is increasing in the outer boroughs.

Nonetheless, London remains the first port of call for many international players. Demographic trends are attractive for many investors who believe that London attracts people and therefore there is a need for housing.

Berlin (GERMANY)

The residential property segment continued to be a very popular investment objective in Germany, being Berlin the focus of domestic and international investors.

The demand for suitable investments by clients and investors in the capital persists yet again. A steadily growing population, rising household figures and increasing economic growth are factors supporting this trend.

However, all these factors increase the pressure to invest and therefore prices, while at the same time they diminish the owners’ willingness to sell.

Paris (FRANCE)

A big switch in sentiment has occurred in France. Though Paris remains a go-to destination for many investors, France’s stuttering economy and government have clearly darkened the mood.

As regards the activity in the market, the number of sales is accelerating. Buyers who were deferring their plans due to a lack of confidence in the economy, are now reacting to the more favourable buying conditions.

In terms of housing process, the most expensive areas not surprisingly are Paris and the Cote d'Azur, including Monaco. Paris shows rents of up to €13,500sqm for a top city centre address but average values today are back at their 2008 levels.

03

[7]

02. Residential Market Spain

Key Facts

The number of sales completed, affordable prices appearing, and mortgage opportunities are spelling positive news for Spain’s property market.

The development land market is inherently linked to the availability of finance. As a result, the development land market has suffered as a result of lack of funding combined with increased scrutiny from the BdE and financial institutions.

However, Spanish banks maintain their commitment to credit for the purchase of housing, despite the reduction process of mortgage debt held by families. In the last twelve months, financial institutions had borrowed 36,234 million for the acquisition of flats, according to the Bank of Spain in February. This amount is 32.5% higher than that recorded in the twelve months ended in February 2014. However, housing loans have been halved at the beginning of the decade.

Visas for new housing projects and final permits for major works show a 57% improvement on 2015.

Another factor to consider according this positive sentiment is that yield for investors in rented housing maintains a positive sign, being around an average of 8.8% nationwide at the end of 2015. Moreover, if it is taken into account that prices are being readjusted in practically the entire territory and interests obtained by saving deposits continue to fall, logic dictates that these factors will help to stimulate the housing market.

Supply

The trend of the residential market in 2015 has continued so far, with a more active market in which the pressure of demand is higher than housing production, so that the residential transaction volume in the market means that stock is decreasing.

The most recent and reliable data about housing stock is of performance registered by the Ministry of Public Works. It informs that housing stock grew by 0.20% equal to 25.49 million dwellings throughout 2014. 2015 2015 is estimated to has finished with approx. 490,000 units of new dwellings on sale and 2016 is estimated that will finish with 25% less.

This stock decrease is not taking place in a uniform manner across the market for in all the product segments. As regards first homes, the main cities, particularly those with more than 100,000 inhabitants, have experienced a gradual decrease in stock over the last 6-8 years that puts them in a technical stock situation, that is, a normalised market. This is not the case in the metropolitan areas, where the potential solvent demand does not seek new homes at the periphery, so there is still a considerable stock in these municipalities that will be harder to drain.

Regions as La Rioja, Castilla-La Mancha, the Community of Valencia, Cantabria, Castilla y León or Aragon, in which, despite the existence of a stock per inhabitant significantly above the Spanish average, production of housing per inhabitant is also growing at an above-average rate.

Other regions like Murcia, Asturias and Galicia still have high stock levels, but a gradual adjustment is expected as production activity is not recovering in line with the average.

Demand

Recent data of the first quarter of 2016 released by Property Registrars Association indicates that a very positive perception of the Spanish real estate among foreign investors that progressively arouses in a terrific demand from their part. In the first quarter of this year, buyers from outside of Spain accounted for 12.93% of the total home purchases in the country, 1.45% less than the previous quarter but still investing in the Spanish market. British bought most, accounting for 22.35% of all sales to foreigners, followed by the French (8.18%), Germans (7.14%), Swedish (6.09%) and Belgians (5.95%).

Specifically in the Costa del Sol is where foreigners are focusing their investments. In this area, new developments -not seen for a long time- have been reactivated. Until December of 2015, financial institutions are the main developers and SAREB as a principal one which owns almost 600 unfinished property developments in Spain, 28 located in Andalusia.

In terms of the multi-family housing most in demand corresponds to a 3 bedroom flat and the surface area of these homes ranges between 70 and 90 square meters.

Preferences in demand for terraced single-family houses are distributed between 3 and 4 bedroom flats; the average surface area of one third of these ranged between 100 and 140 square meters, and that of another third ranged between 141 and 180 square meters.

[8]

In the case of detached single family houses, 60.6% of potential buyers opt for a 4-bedroom house; in this case, more than 26% range between 141 and 180 square meters and almost 25% range between 181 and 220 square meters.

Housing Transaction market

According to the INE (National Statistic Office), house sales increased in March of 2016 a 16.8% compared with the same month of the previous year. In terms of monthly rate, it was -8.2%, that is, 0.8 points more than that of the previous year.

Between January and March, there were 99,113 closed transactions, according to the Spanish Property Registrars Association, a 9.2% increase compared with the same period in 2015. Likewise, the number of granted mortgages also presents an increase of 14.5% in March compared to the same month of the previous year.

The main driver behind this resurgence in sales is the market for existing homes, which accounted for 80.7% (25,765) of all transactions in March, representing a significant annual increase of 24.2%. In turn, The number of transactions on new dwellings decreased by 6.6% as compared to March 2015, according to the INE.

By regions, Andalusia was the autonomous community with the largest number of sales in last quarter (6,299), following by Catalonian Community (5,123) and Madrid Community (4,878), according to the recent report released by the Spanish Property Registrars Association.

Housing values creeped up by 1.5% in the first five months of 2016. These figures show an slowing scenery in housing values.

Despite these data, it should not be forgotten that the current market situation is due to the transactions between financial institutions or Sareb and investors. Another element to keep in mind when regarding this data is that homes which were built 8 or 9 years ago and were not sold and occupied so far, compute as existing homes, so that homes are now being occupied for the first time.

Land & New Developments Investment focus

In the field of new real estate developments, especially residential ones, Spain is living a situation of forced change. New business structures are needed within companies that lack of sufficient capacity to meet new market challenges.

This refers to the need for significant levels of equity and banking support to address housing development under the new funding rules set by financial entities. These rules make difficult to get financing for the acquisition of land for future residential projects. Buying land for speculation or for creating portfolios will cost so much capital for the developer that will be only possible for a very few and such investments will not be allowed to small companies.

The need for enough financial strength to deal with the purchase of land with equity and therefore the development of projects, the cost of licenses, the start of construction and marketing to a minimum level of sales for obtaining financing, means that few developers could develop this activity.

Anyone who does not have land portfolio on its balance, free of mortgage charges, will not have the financial capacity to create it from scratch even though land prices collapsed.

Inevitably, new players are integrated into the development business such as international investment funds as equity partners that join with local developers with extensive experience and tracking in the sector.

Also, it is noteworthy not forget the figure of managing residential cooperatives. They played a great role bidding for central and vey demanded plots in city centers but its presence has been reduced in favor of traditional property developers and the banks that play an important role in the phenomenon as they have started to finance the most solvent developers with the most robust projects once again.

The real estate servicers that emerged from these financial institutions are driving housing developments, taking advantage of the recovery in the sector in areas with demand, and also the growth in rents. Such is the case of Servihabitat -in hands of Caixabank and TPG- that has 59 developments under assessment and under construction, containing more than 2,500 homes.

Currently, only absolutely secure projects -with customers who have paid a fee of homeownership representing between 50% and 60% of the total costs of promotion- may pass financing exam for the construction (not for the land) as banks give credits solely to solvent managers and under strict conditions. This scenario predicts a drastic reduction in the production of new developments but with more activity than previous years.

[9]

Focus I: MADRID

[10]

Madrid

Big Numbers

52,297 house sales have being closed within the province of Madrid in 2015. 58% of them were located in the capital increasing 2% from 2013, and 42% in the periphery, according with Ministry of Public Works. Of the total transacted volume, 88% corresponds to second-hand dwellings and 12% with new ones.

The average price for new dwellings in Madrid province was at 2,827 €/sqm compared to the national average that was at 2,052 €/sqm at the end of 2015.

Regarding the average price for second hand housing, in March of 2016, it is situated at 2,346 €/sqm compared to the national that is at 1,552 €/sqm.

Average Transaction Price (2nd Hand Dwellings)

18 of the 21 districts surveyed in central Madrid exceed the average price of housing nationwide, established at the end of year at 1,552 €/sqm. The difference between this average price and the most expensive in the capital occurs in the district of Salamanca which is well above the national average and stood at 4,415 €/sqm.

With regard to the annual price variation, it can be seen that Chamberí and Centro have increased their prices more than others. Districts that show fewer falls are Barajas followed by Villa de Vallecas and Ciudad Lineal.

As for prices, Salamanca district continues to be at the top list of the most expensive district in the capital to buy a home, the average price stood in December at 4,415 €/sqm after increasing annually by around 4.6%. It is followed by Chamberí district as the second most expensive and whose average price was in March at 3,946 €/sqm. In third place, there is Chamartín district (3,892 €/sqm) followed by Centro (3,599 €/sqm).

At the opposite position, Villaverde is the cheapest neighborhood with an average price of 1,308 €/sqm, registering an important price decline of around 20% compared to the beginning of 2013. It follows the district of Puente Vallecas and Usera, which stands at 1,378 €/sqm and 1,501 €/sqm, respectively. These three districts are the only ones in Madrid that do not exceed the average national price. In fact, Villaverde is 18% lower than the Spanish average, Puente de Vallecas it is 11% lower and Usera 3%.

As for the municipalities in the periphery, the most expensive is Pozuelo de Alarcón with 2,932 €/sqm and it is among the 10 national municipalities with higher price. The cheapest is Parla with € 1,114 €/sqm.

Average Rental Price (2nd Hand Dwellings)

Centro district tops the list of the capital as the most expensive district to rent a home, the average price stood in March at 15.9 €/sqm and it was very closely followed by the district of Salamanca with 15.6 €/sqm. Just the opposite, and following the same pattern that happens for sale, Villaverde is the cheapest neighborhood with an average rental price of 8.2 €/sqm.

Source: Cohispania

Source: Cohispania

22.657

30.206 33.272

17.523

22.491 24.025

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

2013 2014 2015

Transactions Allocation in Madrid Province

City Center

Periphery

33.659

46.175 50.475

6.521 6.522 6.822

0

10.000

20.000

30.000

40.000

50.000

60.000

2013 2014 2015

Transactions Allocation in Madrid Province by Type of Dwelling

Second Hand Dwelling

New Dwelling

[11]

*Note: These figures are referred to 2nd Hand Dwelling

€/sqm

Madrid Boroughs Residential Market

1,501€/sqm 9.7€/sqm Usera

Fuencarral

Chamartín

4,415€/sqm 15.6€/sqm 2,758€/sqm

10.7€/sqm

3,892€/sqm 13.6€/sqm

3,291€/sqm 12.8€/sqm

3,946€/sqm 14.8€/sqm

3,599€/sqm 15.9€/sqm

2,835€/sqm 12.2€/sqm

1,698€/sqm 9.4€/sqm

1,631€/sqm 8.9€/sqm

3,489€/sqm 13.5€/sqm

2,848€/sqm 10.9€/sqm

2,656€/sqm 12.9€/sqm

1,308€/sqm 8.2€/sqm Villaverde

Salamanca

Chamberí

Moncloa

Tetuán

Centro

Arganzuela

Latina

Villa de Vallecas

Retiro

Barajas

Ciudad Lineal

Hortaleza

Puente de Vallecas

Vicálvaro

Moratalaz

San Blas

Sale Rent

Source: Maxxima REA

2,489€/sqm 11.3€/sqm

1,973€/sqm 8.9€/sqm

2,010€/sqm 9.6€/sqm

1,925€/sqm 9.2€/sqm

1,707€/sqm 8.4€/sqm

1,378€/sqm 9.0€/sqm

2,585€/sqm 10.2€/sqm

0500

1.0001.5002.0002.5003.0003.5004.0004.5005.000

Transaction Price 2nd Hand Dwelling (€/sqm) in Madrid by Districts 2015-2016

2015

2016

2016 Average 2nd HandDwelling Price (2,882)

Carabanchel

[12]

€/sqm

Madrid Periphery Residential Market

Escorial

S.Sebastián de los Reyes

Torrejón de Ardoz

Colmenar Viejo

1,440€/sqm 6.5€/sqm

1,597€/sqm 7.3€/sqm

1,613€/sqm 6.9€/sqm

1,368€/sqm 6.3€/sqm

2,562€/sqm 10.8€/sqm

2,432€/sqm 10.0€/sqm

1,442€/sqm 6.4€/sqm

2,087€/sqm 10.3€/sqm

3,157€/sqm 10.5€/sqm

2,412€/sqm 10.0€/sqm

2,182€/sqm 9.4€/sqm

1,960€/sqm 10.0€/sqm

1,765€/sqm 7.2€/sqm

2,390€/sqm 8.5€/sqm

1,406€/sqm 7.3€/sqm

1,751€/sqm 8.6€/sqm

1,736€/sqm 7.8€/sqm

1,404€/sqm 7.6€/sqm

1,313€/sqm 7.1€/sqm

1,622€/sqm 8.0€/sqm

1,347€/sqm 7.0€/sqm

1,520€/sqm 7.4€/sqm

1,573€/sqm 7.9€/sqm

1,708€/sqm 8.0€/sqm

1,296€/sqm 6.3€/sqm

1,114€/sqm 6.2€/sqm

Boadilla del Monte

S. Lorenzo del Escorial

Galapagar

Majadahonda

Pozuelo de Alarcón

Las Rozas

Villaviciosa de Odón

Alcorcón

Collado - Villalba

Torrelodones

Tres Cantos

Alcobendas

A. de Henares

Coslada

Rivas-Vaciamadrid

Getafe

Pinto

Valdemoro

Ciempozuelos

Móstoles

Leganés

Fuenlabrada

Parla

2,294€/sqm 9.7€/sqm


Sale Rent

0

500

1.000

1.500

2.000

2.500

3.000

3.500

Transaction Price 2nd Hand Dwelling (€/sqm) in Madrid by Main Villages 2015-2016

2015

2016


Source: Maxxima REA

[13]

Madrid New Relevant Residential Projects

4

9

Developer: Amenabar

Units: N.D.

Location: Arroyo del Fresno

Status: On construction

1 Developer: Ebrosa

Units: 140

Location: Vallecas


Developer: Arjusa

Units: 17

Location: Carabanchel


General Ricardos 111

2 3

Developer: Ferrocarril

Units: 111

Location: San S. de los Reyes


Developer: Inmoglaciar

Units: N.D.

Location: Valdebebas

Status: N.D.

Developer: ACR Grupo

Units: 96

Location: Plaza Castilla


Nature Plaza Castilla

5

Developer: Gestilar

Units: N.D.

Location: Valdebebas


Isla Alborán

Developer: Aelca

Units: 32

Location: Aravaca

Status: N.D.

Valdemarín

Developer: Via Célere

Units: N.D.

Location: Retiro

Status: Finished

Puerta del Retiro

8 7

Aires del Fresno

1 Evolución 2

2 3

Los Tempranales

Developer:

5 Mirador del Encinar

9

8 7

6

1

2

3

4

5

6

7

8

9

[14]

Focus II:

BARCELONA

[15]

Barcelona

Big Numbers

41,344 house sales have being closed within the province of Barcelona in 2015. 33% of them were located in the capital and 67% in the periphery, according with the trend registered until the fourth quarter of 2015 by Ministry of Public Works.

Despite the increase of number of transactions, both in city center and periphery, the percentage of city center transactions has decreased. Of the total transacted volume, 92% (37,873 transactions) corresponds to second-hand dwellings and 8% (3,471 transactions) with new ones.

The average price for new dwellings in Barcelona province (center and periphery) was at 2,999 €/sqm compared to the national average that was at 2,052 €/sqm at the end of 2015.

Regarding the average price for second hand housing in March of 2016, it is situated at 2,154 €/sqm compared to the national that is at 1,552 €/sqm.

Average Transaction Price (2nd Hand Dwellings)

All of the 10 districts studied in Barcelona city center excess the average price nationwide, established at the end of year at 1,552 €/sqm. The difference between this average price and the most expensive in Barcelona occurs in the district of Sarrià-Sant Gervasi -very followed by Les Corts- which is higher than the national average by 196% and stands at 4,598 €/sqm.

With regard to the annual price variation, it can be seen that in Barcelona the price increased in all of the 10 districts. Note that in late 2013 in Barcelona, the price only increased in one district (Ciutat Vella).

As for prices, the districts of Sarrià-Sant Gervasi and Les Corts top the list as the most expensive in the city to buy a home and they are also the most expensive in Spain along with the city of Zarautz (Guipuzcoa) whose average price stands at 4,345 €/sqm. In third place, there is the district of Eixample (4,050 €/sqm) followed by Ciutat Vella (3,765 €/sqm).

Just the opposite, Nou Barris is the cheapest neighborhood with an average price of 1,775 €/sqm shadowed by Sant Andreu district, which stands at 2,172 €/sqm and Horta Guinardó with 2,302 €/sqm.

Average Rental Price (2nd Hand Dwellings)

Ciutat Vella tops the list of the capital as the most expensive district to rent a home, the average price stood in March at 17.7 €/sqm followed by the districts of Eixample with 16.0 €/sqm.

Just the opposite, and following the same pattern that happens for sale, Nou Barris and Sant Andreu are the most economical neighborhoods with an average rental price of 10.4 €/sqm and 10.1 €/sqm respectively.

Source: Cohispania

Source: Cohispania

24.437

32.663

37.873

3.154 3.733 3.471

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

2013 2014 2015

Transactions Allocation in Barcelona Province by Type of Dwelling

Second Hand Dwelling

New Dwelling9.471

12.782 13.554

18.120

23.614

27.790

0

5.000

10.000

15.000

20.000

25.000

30.000

2013 2014 2015

Transactions Allocation Barcelona Province

City Center

Periphery

[16]

Barcelona Boroughs Residential Market

0

1.000

2.000

3.000

4.000

5.000

Transaction Price 2nd Hand Dwelling (€/sqm) in Barcelona by Districts 2015-2016

2015

2016


4,598€/sqm 15.3€/sqm

2,302€/sqm 11.6€/sqm

3,163€/sqm 14.9€/sqm

1,775€/sqm 10.4€/sqm

4,486€/sqm 13.6€/sqm

2,652€/sqm 13.2€/sqm

4,050€/sqm 16.0€/sqm

3,765€/sqm 17.7€/sqm

3,382€/sqm 14.2€/sqm

2,172€/sqm 10.1€/sqm

Les Corts Sants-Montjuic Ciutat Vella Sant Martí

Sarriá - Gervasi

Horta Guinardo

Gracia Nou Barris Sant Andreu


Sale Rent

€/sqm

Source: Cohispania

Eixample

[17]

Barcelona Periphery Residential Market

0

1.000

2.000

3.000

4.000

Transaction Price 2nd Hand Dwelling (€/sqm) in Barcelona by Main Villages 2015-2016

2015

2016



1,293€/sqm 7.7€/sqm Terrassa

1,502€/sqm 8.2€/sqm

1,433€/sqm 8.1€/sqm Sabadell

Rubí

1,831€/sqm 10.0€/sqm

3,090€/sqm 12.3€/sqm

1,683€/sqm 11.1€/sqm

1,954€/sqm 10.0€/sqm

San Cugat de Vallés

Badalona

Hospitalet de Llobregat

Cornellá de LLobregat

1,857€/sqm 8.1€/sqm

1,289€/sqm 6.2€/sqm

2,455€/sqm 12.1€/sqm

Viladecans

Vilafranca del Penedés

Gavá

3,613€/sqm 12.4€/sqm

2,708€/sqm 13.0€/sqm

1,681€/sqm 7.8€/sqm

Sitges

Castelldefels

Vilanova i la Geltrú

Sale Rent

€/sqm

Source: Cohispania

[18]

Barcelona New Relevant Residential Projects

9

Developer: ACR Grupo

Units: 20

Location: San Cugat del Vallés


Green Park Sant Cugat

1

1 Developer: Aelca

Units: N.D.

Location: Hospitalet de Llob.


Nou Europa

2


Units: 80

Location: Badalona

Status: N.D.

Lloreda y Sistrels

3

2 3


Units: 39


Status: Selling


Units: 12

Location: Viladecans

Status: Selling

Developer: Neinor Homes

Units: 45



Can Trabal Golf

5

4

Cal Rei

Can Mates Homes

6

5

6


Units:


Status: Selling

Célere Magòria


Units: 67

Location: L´Eixemple.

Status: Selling

Célere Aragó 499

Developer: Premier

Units: 80

Location: Sants

Status: Selling

Gran Via Terraces

8 7

7

8

9

5

[19]

Focus III:

SECONDARY LOCATIONS

[20]

01. PRINCIPAL CITIES IN SPAIN

Number of Transactions

Following have been chosen four cities of Spain that are considered as “main” due to its size and its incidence in the Spanish economy.

According to Ministry of Public Works, the number of total transactions in 2015 (new dwelling and second hand dwelling) increased in Bilbao, Valencia, Zaragoza and Sevilla in comparison to 2014. Bilbao is the city that shows a bigger growth (45%).

The city that registered more transactions was Valencia (with approx. 7,400 transactions), followed by Sevilla (approx. 5,300), Zaragoza (approx. 5,000) and Bilbao (approx. 2,500).

As for the rental market, this is gaining way to the property ownership, mainly due to low and precarious wages and difficulties to obtain a mortgage. But it is also important to consider the increased profitability that rented housing is offering comparing to the reduced yields got in alternative investments in recent years.

The gross yield for a rented house reached a 8% in cities such as Lleida, 6.5% in Palma de Mallorca and 6.2% in Las Palmas, compared to the 5.5% in Madrid and 5.2% of Barcelona. These amounts are between 2.5 and 5 times more profitable than putting money into long-term debt. And it is 5 to 10 times more advantageous than doing it in bank deposits.

Average Transaction Price (Second Hand Dwelling)

In terms of average price for new dwellings, Bilbao remains as the most expensive city (2,776 €/sqm), followed by Zaragoza (1,384 €/sqm), Sevilla (1,793 €/sqm) and Valencia (1,471 €/sqm). Bilbao and Sevilla are the only cities (among cities mentioned) that are over the average in Spain, that is 1,552 €/sqm, exceeding 79% and 15% respectively. Regarding all Spain, the most expensive city is Zarautz (4,345 €/sqm), with a price 56% higher than Bilbao and 180% higher than the Spanish average.

In relation to 2015, Bilbao and Zaragoza had a drop in their transaction prices. Zaragoza had the most pronounced drop (4.2%).

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

No Transactions in Secondary locations

2014

2015

Source: Cohispania

Sevilla

Bilbao

Barcelona

Madrid

Zaragoza

Valencia

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

Transaction Price Second Hand Dwellings (€/sqm)

2015

2016

Source: Cohispania

[21]

02. PRIME RESIDENTIAL AREAS IN SPAIN

Key Facts

Spain’s mainstream market remains at a slower pace as credit conditions remain tight but Spain’s prime market has seen stronger activity since 2013. At present foreign buyers have the competitive edge given they are able to access international mortgages with more favorable loan-to-value terms.

Spain’s prime markets are on a firmer footing with some of its more affluent second home hotspots reporting price growth for the first time since the onset of the global financial crisis.

These prime residential markets are recovering with Barcelona, Madrid, Ibiza, Marbella and Mallorca leading the way.

The outlook for Spain’s luxury housing market is improving. Both the volume of enquiries and agreed sales have increased since 2013. These markets are attracting a broader range of international buyers who have the confidence and finance in place to purchase. Buyers previously looking in neighboring European countries are seeing value in Spain and the Canary and Balearic Islands once more.

In 2013, Prime Minister Rajoy recognized the housing market’s importance to Spain’s economic recovery by announcing the introduction of a new ‘golden visa’. The new law allows non EU buyers purchasing properties above €500,000 to become Spanish residents and one of the 26 European members of the Schengen accord. It is hoped that investors from Asia and the Middle East in particular will shore up some of Spain’s more oversupplied markets. It is true that in other countries like Portugal 'golden visa' had a major effect, but lately a corruption scandal -linked with these visas- was discovered.

Prime Locations

Among the areas that stand out as locations for prime residential assets, apart from targeted areas in Madrid and Barcelona, are: Ibiza, Marbella and Mallorca.

Ibiza: The island remains firmly on the radar of wealthy second home buyers and demand has strengthened since 2013. Prime prices have remained relatively firm compared to parts of mainland Spain. In 2015, prices risen 10%, on top of similar rises the year before and the number of sales transactions also increased by almost a third. Apartments of around 100 sqm at prime addresses are currently selling from €800,000 and entry prices for villas of around 350 sqm in very good locations are around €3.5 million.

In general, the property market in this region has settled down at a stable level.

Mallorca: Good news for property owners in Mallorca as an upturn is happening in both sales and rentals in 2016. However, promoters are warning that finding somewhere to live, be it rental or purchase, will worsen for many due to house prices being high on the island and earnings below the average for many. Another problem is the availability of reasonably priced land on which to build.

Last year there was a significant increase in residential building in 2015, with some €583 million being invested, mainly in the building of chalets for foreigners. There is a lot of interest shown in properties valued at €200,000, but more expensive ones are not within reach of many permanent island residents. On the west coast of Mallorca maximum prices reach 17,000 euros per square meter and only in the city of Calviá 1,286 transactions were closed in 2015, 24% more than in 2014.

Marbella: The town is settling into its fifth consecutive year of recovery after a successful 2015 when house sales increased almost 10% on the previous year. In fact, the sales numbers are almost on a par with those in 2006, the year preceding the crisis when Spain’s market was at its strongest.

In another sign that the market is gathering pace, 492 building licences were issued in Marbella during 2015 compared to 143 in 2014 and just 80 in 2013, according to the College of Architects in Malaga. Sales prices averaged at €3.5 million during 2015.

While prices in the most exclusive areas of Marbella are ‘on the rise’, affordable prices appearing, and mortgage opportunities are spelling positive news for Spain’s property market.

[22]

Appendixes

[23]

Appendix I: 2016 Residential Transactions Detail

R: Residential L: Land

Source: Cohispania

14

20

1

2

5

2

1

3

4 5

6

7

8

9 10

11

12

13

14

18

19

15 16

[24]

Appendix II: Most Relevant Servicers

Managed Assets

55.000 M€

85%

15%

51%

49%

100%

100%

Managed Assets

51.000 M€

Managed Assets

45.000 M€

Managed Assets

28.000 M€

44.000

Real Estate and Financial Assets

30.300


52.000

Financial Assets

42.900


25

8

1

[25]

Appendix III: Joint Ventures. Funds & Developers

Source: Cohispania

[26]

About Cohispania Cohispania takes part of the company Grupo Financiero Empredia A26. Grupo Financiero Empredia A26 is a group with interests in various sectors: Valuation of properties, companies and industrial assets, inventories, formation and Real Estate Advisory. Cohispania provides Consultancy in Real Estate Valuation. Cohispania value all types of properties using different criteria depending on the purpose of the report:

Regulatory purposes. Reception to the current regulations (Ministerial Order ECO/805/2003):

Mortgage credit.

Value studies for Real Estate Investment Funds (REITs).

Value of the real estate assets of Pension Funds.

Administrative and financial purposes. All those need to know the market value of the property:

Coverage of Technical Provisions of Insurance Companies.

Massive Portfolio Evaluations- Automated Valuation Model (AVM).

Balances Sheets.

Advice on processes for buying and selling.

Valuations following IVS, EVS and RICS regulations.

Maxxima Maxxima is a Madrid based Real Estate Advisory firm that manages singular Real Estate assets and portfolios. Moreover, we are specialized in providing integrated and tailored services in Real Estate Market and Transaction Advisory. Our services frame includes: Strategy and Transaction Advisory, Corporate Finance services, Property Valuation, Technical Management, Asset Management and Advisory in Real Estate Operations.

Disclaimer © Cohispania S.A. 2016

The publication of this report only provides general information. High standards have been used to prepare the information, analysis and projections exposed. This report does not necessarily represent the views of Cohispania S.A. and Maxxima REA and no responsibility for loss associated to any person acting or refraining from acting as a result of any material in this publication can be accepted by the authors or publishers. Reproduction of this report in whole part or in part is allowed with proper reference to Cohispania. All diagrams, charts and comments have been prepared by Cohispania in collaboration with Maxxima REA on the basis of public and open market data compiled until the 31th of May of 2016.

Cohispania has worked in collaboration with Maxxima

Head Office

Avda.Europa 34. Building B 28023

Madrid · Spain

(+34) 91 307 00 35

www.cohispania.com

Documents

RESIDENTIAL MARKET REPORT 2016 - · PDF fileRESIDENTIAL MARKET REPORT 2016 ... Turkey and North Africa and back to former favorites in ... end with the start of 44,600 homes. 71,145