Residential JLL Residential Snapshot Spain

Transcription

1 Residential JLL Residential Snapshot Spain 2Q 2015 jll.es

2 Residential Snapshot Spain 2Q 2015

3 3 Residential - Snapshot Spain 2Q 2015 JLL Residential Snapshot Spain Introduction As has been widely reported the residential and land market in Spain have begun to stabilize and to reactivate in some locations. All indicators point towards a recovery in the sector, however, the recovery is fragmented both on a macro regional level and even within specific metropolitan areas. homes on the market. Properties in prime locations in Spain's main cities, on the other hand, are in short supply; there is real, solvent demand which in the coming quarters will be covered through renovations and new developments. These new builds therefore tend to sell quickly. Clearly economic magnets such as Madrid, Barcelona, the Balearic Islands and the Costa del Sol tourist region are recovering at a greater rate, while other regions are lagging behind. Paradoxically even within some metropolitan areas we see the initiation of new developments while existing new stock in not takenup, due to it micro location. There are opportunities but careful and thorough analysis is required. Supply The available housing stock continued to be absorbed in 2014, dropping 5 percentage points versus This stock accumulated quickly between 2005 and 2008, increasing at a rate of 40-50%, then stabilised in 2009 and began to fall in Since it peaked in 2009, the stock of available new housing has fallen by 18.83% to a total of 535,734 homes. Of the current stock of 535,734 homes, around 30% are in difficult-to-sell, complex markets. The latest data published by the Ministry of Public Works and Transport show that this stock is still falling very slowly, due to sluggish sales of newly-built housing. The report shows that Castellón, Almería and Toledo are among the most difficult provinces in which to sell properties. Stock of new Homes Source: Ministerio de Fomento. Demand Transactions Stock / Total Stock % 1 > 1-3 > 3-5 > 5 Residential transactions in Spain increased by 9.72% year on year in the first half of Transactions were up 22.11% quarter-on-quarter, and the year-on-year increase for the Q2 period was 12.21%. The upward trend in the number of transactions observed in 2014 stayed its course in the first half of 2015, though it is worth noting that these increases are improvements on record lows. The largest increase was in the used-home segment rather than the new-build segment. Year to date, used homes account for 83.27% of all deals, versus 12.73% for new developments. Residential Transactions Source: The secondhand stock on the market is difficult to estimate. There could be approximately 1 million secondhand Source:

4 4 Residential - Snapshot Spain 2Q 2015 The factors underpinning demand continue to improve. Employment continues to rise, and the unemployment rate has fallen again. Both the number of people signed up to the Social Security system in March and the Active Population Survey for the first quarter confirmed that the labour market is picking up. Along with the further improvement in consumer confidence reported year to date, this puts the demand in a stronger position than it was a few months back. spreads on variable rate mortgages compared with a few years ago, and the Euribor is at record lows. Foreign Buyers There has been a slight increase in home purchases year to date, cementing the change of trend that began in Foreign buyers of holiday homes have become major players in Spain's residential market, currently accounting for 12.82%. These buyers are attracted by Spain's climate and by the drop in prices that has taken place over recent years. Foreign Buyers as a % of Market Evolution Transactions 2015 Increase > 20% Increase 10% to 20% Change <10% Source: : Ministerio de Fomento Source: Mortgages Since the beginning of the crisis the number of mortgages taken out to buy properties has fallen drastically, but the figures for 2014 increased slightly year on year, suggesting that the downward trend was reversing. Comparisons of the data from the first half of 2015 with the same period of previous years confirm that the trend has indeed reversed. It is therefore safe to say that there has been a slight improvement in access to funding, both in terms of the number of mortgages granted and the average amounts in question. It is also worth noting that financial institutions are currently offering very attractive Residential Mortgages Source: Many of these buyers currently live in Spain, having bought properties between 1999 and Foreign buyers come from a range of different countries. The main country of origin is still the UK, followed by France, Germany and Belgium. The number of Russian clients has fallen, mainly due to the weakness of the rouble and conflicts with the European Union. Underlying demand from domestic clients is expected to increase gradually. % of Foreing Purchasers 1 UK 19,85% 2 France 8,11% 3 Germany 7,65% 4 Belgium 6,49% 5 Sweden 5,59% 6 Italy 5,30% 7 Russia 3,94% 8 China 3,93% 9 Rumania 3,85% 10 Norway 3,01% Other 32,28% Source: Colegio de Registradores de la Propiedad de España. 2Q 2015

5 5 Residential - Snapshot Spain 2Q 2015 Prices Residential sales prices have increased provisionally in Prices have dropped substantially since the beginning of the crisis, by up to 50% in some areas. It is not yet safe to generalise, but for the time being it seems that there is a certain degree of price stability in some specific areas, and that prices are even rising tentatively in places like Madrid, Barcelona, the Balearic Islands and the Costa del Sol. Areas with a significant number of properties for sale and low demand, however, will continue to see falling prices. including Madrid, Barcelona, the Balearic Islands and the Costa del Sol. Residential Yields Super Prime 3,5 % Prime 4,00 % Secondary 4,50 % Periphery + 5,00 % Number of new homes approved for construction The number of homes under construction, taken as such from the moment building permits are granted, show that the substantial declines of previous years tapered off in 2014, although current levels still represent record lows versus the historical average. A comparison of the figures from H with those from the same period of previous years shows that the year-onyear trend has now reversed, with a slight increase in the number of new construction projects. Price variation (2Q) > 2% from 0% to 2% from -2% to 0% from -4% to -2% > -4% Number of Residencial New Building Notifications Investment in the Residential Market In 2015 residential investment has attracted interest, both in direct property acquisitions and in non-performing loan portfolios. This is a result of the substantial drop in prices, the positive macro-economic outlook and the current period of low interest rates. Source: Investors are showing a great deal of interest in acquiring large portfolios of assets for subsequent rental and management, as well as in value creation through property development and complete building renovations. Foreign investors are currently forming strategic alliances with local partners to undertake new residential projects. The investors put up the funds and the local partners provide their experience and market knowledge. Property market activity is picking up compared with recent years, but is still a long way from the 2007 peak. There are investment opportunities to be found in the residential market again, mainly focused around property assets in prime locations in large cities and tourism hubs,

6 JLL Spain - Residential coverage Head of Residential JLL Spain Enrique Losantos General Director Head of Investment enrique.losantos@eu.jll.com Residential JLL Spain Network 350 Residential Agents Ana Bouso Agency Director Residential ana.bouso@eu.jll.com Jorge Almagro Residential Investment Capital Markets jorge.almagro@eu.jll.com Research JLL Spain 7 researchers Elsa Galindo Head of Research Spain elsa.galindo@eu.jll.com Residential Management JLL Spain 35 Professionals Elisa Navarro Property Management elisa.navarro@eu.jll.com Valuations RICS JLL Spain 14 Valuers Evan Lester Valuations evan.lester@eu.jll.com Tasaciones JLL Spain 260 Valuers "Throughout Spain" Gustavo Saíz Tasaciones Hipotecarias gustavo.saiz@eu.jll.com Capital Markets JLL Spain 9 Consultants Maurice Kelly Head of Capital Markets maurice.kelly@eu.jll.com Emilio Portes Director Portfolio Advisory Corporate Finance emilio.portes@eu.jll.com Strategic Consulting JLL Spain 6 Consultants Rafael Powley Strategic Consulting Spain rafael.powley@eu.jll.com JLL Spain Offices JLL Madrid Pº de la Castellana, 79, 4ª. Pº de la Castellana 130, 1ª T+: JLL Barcelona Pº de Gracia, 11-4ª, esc A T+: JLL Sevilla S. Fco. Javier, 20-3ª T+: jll.es jllinmuebles.es jllestudiosmercado.es COPYRIGHT JONES LANG LASALLE IP, INC All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.