Author Archives: akinloch

New property market scenario in the Balearics

Home sales recorded during last March in the islands show an increase of 71% over the same period of 2013, a percentage no other Spanish region comes even remotely close to, since Catalonia, in second place, increased by 42.8%, and the national average is 22.8 %, according to data provided by the National Statistics Institute (INE).
The presidents of the associations of promoters and real estate agents, Mr José Luis Guillén and Mr José Mir respectively, interviewed today in the Diario de Mallorca, agree that this reactivation is based on two main factors: the good performance of the economy and labour market in the archipelago (thanks to an excellent tourist season), and the fact that it is becoming easier for buyers to access a mortgage.
This is reflected in the mortgage plans currently offered by some banks, with interest rates of Euribor plus 1.99 points. However, the conditions under which a mortgage is now offered are not as flexible as ten years ago. At present, banks’ valuations are much more adjusted to real market value and banks will finance up to 80% of this value, so that the buyer will have to come up with the remaining 20 % and about 10% on top to cover the operation costs.
On the other hand, Mr José Luis Guillen expressed his regret that finance is much harder to access for developers, although the stock of new homes is nearly exhausted in the islands, especially in some municipalities, such as Palma.
This revival of purchases and the shortage of new housing is having an effect on property prices, which are again recording increases of around 3%.
One year ago, Solvia, created by Banco Sabadell to sell its huge property stock, was selling with an average discount of 52% on the original prices. Now, at Sabadell-Solvia they have reduced their discounts. “We had a 52% discount and now only do 40%. The funny thing is that we are now selling more than last year. We think it’s the end of falling prices, except for the worst properties.”
Their analysis agrees with studies such as the last from the Instituto de Prácticas Empresariales (IPE), which showed that Balearics is among the three Spanish regions with a lower number of unsold homes, with a total of 7,965. It is also the first region in which prices have started to rise consistently. A new market scenario appears to be clearly opening.

Spanish property – Out of the woods?

Is it finally safe to talk about a new property market cycle in Spain?

The Spanish property market has suffered a deep adjustment since its peak in 2007, but signs of recovery are appearing with increasing frequency all around. Until now, only the most optimistic experts -or those with vested interests- have been talking of a turnaround. But it finally feels fairly safe to say that the worst is over and that a new expansive cycle is beginning.
The most recent data of property transactions and other data such as building activity cannot be seen as anything but good, after such as long period of bad news. The monthly statistic elaborated by notaries compiling property transactions (arguably the most trustworthy reflection of the market) has shown significant rises in recent months, with respect to the same month last year: in January, sales were up by 62.3%, in February, by 39.8%. At the same time, house prices were up by 9.4% and 0.6%, and mortgages by 58% and 35.9%. Simultaneously, the building sector has seen an increase of 23.9% – well above the European average of 5.5% , only surpassed by Slovenia (33.1 %) and Hungary (28.3 %) and light years ahead of Italy, bringing up the rear with -7.9 %.
According to El Pais newspaper, the notaries have interpreted these increases as a clear sign of a market recovery. It appears that investors now believe that the adjustment in prices has run its course, and banks are slowly starting to lend again. Other positive economic data are the decrease in unemployment figures, the growth in the number of tourists, and the general improvement of the Spanish economy.
However, it may well be the case that instead of the fast-paced price increases of past decades we now enter a period of slow growth or even stabilization of the market.

Property Works in the FT

Property Works in the FT. 14th March 2014

Planning approvals have collapsed by 95pc in Spain since their peak

According to official figures from Fomento (the Ministry of Public Works) there were just 33,869 residential planning approvals in Spain last year. This is an incredibly low figure. It is not only 23pc less than the 44,162 housing starts of 2012; in fact, it is the lowest figure since the current data series began. Compared to the 2006 peak of Spain’s building boom, when planning approvals for new homes hit 865,561 in one year alone, more than the UK, France, and Germany combined, planning approvals have collapsed by 95pc.

Due to the glut of new homes on the market, plus the lack of financing available to developers, it is difficult to imagine any significant recovery in home building in the near future. What is not difficult to imagine, however, is a shortage, in the next few years, of the kind of new homes that people do want, in the places they want them. So if you already own one of these, this is good news for your investment. On the other hand, if you are currently looking to buy a property in a sought-after location, I am afraid you will soon have to face tough competition as the market picks up speed again!

Uk divorce valuations and Spanish Property

We can help minimise difficulties following the breakup of a marriage or relationship by providing a market valuation of your Spanish property.
Although always a difficult situation, we can help identify the value of your asset, hopefully, before it goes to court. If this is not possible, we can act as an expert witness if required by providing a valid UK court valuation of your Spanish property.

We offer a competitive Nationwide service throughout Mallorca, Ibiza and mainland Spain.

Balearics could produce 100% of its energy needs with photovoltaics on 2% of non protected rustic land.

The Baleares could generate 100% of its electricity demand through renewable energy if it installs solar panels in 2% of non protected rural land . This is the main conclusion of the Renewable Energy Plan presented yesterday by the Ministry of Economy and Competitiveness . The aim is to encourage the installation of solar power plants,  an activity that generates economy, according to the Minister Joaquín García .

By 2020 , The Baleares hopes to have a 20 % renewable energy providing its power supply.

Currently it only produces approximately 2%. Furthermore, it is the community , along with the Canaries, who pays the most for electricity in Spain.

The energy plan also comments on the fact that by installing photovoltaic panels on the roofs of buildings in urban land , it could generate up to 57 % of the electricity demand required by islands.

The objective of the Government is to remove a number of barriers for investment;  technical, administrative and economic  including a special financial and tax status for investors  in this sector.

 

 

Only 28% of families have a mortgage on their Spanish property

If you live in Spain and you are paying a mortgage, you may believe that everybody else is doing the same. Think again. The Spanish National Institute of Statistics has published figures showing that more than half of Spanish households (namely 50.7%) own their property, which is free from any mortgages.

Only 28.5% of families do have a mortgage on their main residence, down from 31.9% in 2008. This decrease may be due to demographic change but also to the financial crisis which has restricted bank lending to families.

However, in 2001 only 22.8% of families lived in a mortgaged house. The increase between 2001 and 2008 was a reflection of the credit boom.

In any case, these data confirm that Spain remains one of the European countries with the highest percentage of households who choose to buy, instead of renting, a home: 79.2 %, compared to the EU average of 60%.

Therefore, only 14.5% of households pay rent on their mainb residence , of which 2.5% pay lower “social” rents.

Although the preference for buying property is widespread throughout the country, there are certain differences by regions. The two archipelagos and Catalonia are the territories with higher percentages of rented properties. In the Balearic Islands , “only” 65.9% of households own the house they live in – still higher than the European average.

 

Mallorca rated second best place to live in the World!

There is clearly more to Mallorca than Magaluf and this fact has been recognised by a highly respected  report published last week, the Knight Frank Lifestyle Report, which has ranked the island of Mallorca second to Dubai as one of the best places to live in the World.

The  survey ranks destinations  according to the quality of their international schools, weather, leisure pursuits and the availability of quality restaurants. Dubai came out on top, and Mallorca came joint second with Geneva and the Cayman Islands, followed by  Cyprus which came in third.

London, Hong Kong, Singapore, Auckland, Monaco, Madrid and Moscow rounded out the top 10, with the latter three in  joint position.

Hong Kong tops the list of best restaurants with 69 Michelin starred eateries, followed by London and Geneva.

For weather, Nassau in the Bahamas was top of the table with 365 days of sunshine a year, along with the British Virgin Islands.

Entrepreneurs need political stability, ease of travel and good restaurants to entertain clients in.  For these qualities Auckland was the top choice.  

For an expatriate family, schools, safety and leisure activities are crucial, with Geneva being the best option.

For a retired couple, quality of life, cost of living and personal security were key motivators. Auckland was the winner across these qualities.

But it appears that when all the factors are taken into account, Mallorca is one of the very best places in the World to live. This will no doubt provide a great boost to the island´s global image, and hopefully to the local economy too!

Barcelona’s 16th International Construction Fair opened with optimism for Spain’s economic recovery

The XVII Barcelona Meeting Point (BMP), an international construction fair held at the end of October in the Catalan capital, opened with widespread optimism for Spain’s economic recovery with eyes firmly set on the arrival of foreign capital, especially from China and Russia.

At the opening of the fair, the Secretary of State for Transport and Housing, Rafael Catala, said that in the second quarter, Catalonia had reported a 12% increase in real estate transactions, with a significant increase in foreign investment. “We begin to glimpse a new economic scenario” – he said, adding that he hoped that future editions of the fair would confirm this trend, making true the wish recently expressed by Prime Minister, Mariano Rajoy, that real estate and construction would “re- occupy an important place” in the Spanish economy .

The Secretary of State, who defended the government’s measures to stimulate the sector and facilitate access to housing, stressed the importance of activities associated with the rehabilitation of homes and improvements in energy efficiency, given that Spain has 6 , 5 million buildings that are over 50 years old.

BMP’s chairman, Enrique Lacalle, himself predicted that this year will be a good one for the “great influx of international funds , which timidly started to come last year and this year are coming in massive quantities” .

Nearly half a million homes could be incorporated into the Spanish rental market by 2016

Nearly half a million homes, mainly of new construction, could be incorporated into the rental market between now and 2016. This is the “prudent” calculation made by Arrenta, a large Spanish company especialised in rentals.

These 500,000 newly available homes would represent an increase of two points in the rental rate in Spain, which would increase from today’s 17% to 19% – still far from the average of 38% found in Europe’s richest countries.

The high number of empty homes left by the economic crisis in Spain is one of the biggest problems for its economy. Renting these out would be a great formula to start incorporating these vacant properties into the market.

This half a million homes could be further increased by a trend that has already begun in some coastal areas, of property investors buying newly built properties at very competitive prices in order to rent them out and thus obtain attractive returns on their investment.