High end Spanish property performing well

January 31, 2012 – 9:45 am

High end property in Tenerife and Spain performing well

Despite tough market conditions for property in Spain, one company has posted its most successful operational year to date in 2011, showing the appetite for high-end Spanish real estate has not waned.

2011 saw Lucas Fox doubling its staff, opening new offices and posting record-breaking third quarter profits of 19.5 Million euros, proof of the continued appeal of Spain among the cash rich. Among the most popular areas for investment were Barcelona, the Costa Brava and Mallorca where investors snapped up boutique and luxury pads.

Aimar Valls, Head of Commercial & Investment Property commented, “In the last year we have received a dramatic rise in both the quantity and quality of enquiries for commercial and investment property. Central Barcelona is a hot-spot for hotels, hotel projects and buildings with potential for tourist apartment rentals.

And the company is also optimistic about their fortunes in 2012. Director Alex Vaughan explains, “Our transaction pipeline is already looking strong and the outlook for the year is very encouraging. We start 2012 with over 5,000 active property buyers registered from Northern and Eastern Europe, Russia, Scandinavia, the Middle East, the U.S and China.”

Source: APlaceintheSun.com

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Investor expectations are improving according to survey

November 22, 2011 – 10:05 am

Investors expecting improvement in property market in Tenerife and Spain

The Spanish real estate sector is still in the doldrums, but investor expectations are improving, according to the latest survey by international consultants CB Richard Ellis. 73% of real estate investors in Spain expect the sector to turn the corner in the next year and a half, reveals the latest property investment barometer from CB Richard Ellis.

57% of those surveyed said they planed to invest in Spanish property in the next 6 months. That said, most of the interest is in commercial rather than residential property. Only 7% plan to invest in residential property, compared to 50pc in offices and 40pc in prime shopping centres.

80% say that financing will continue to be a big problem for investors, which is why 60% think that foreign investors with better financing will drive the market as it turns around. Outside of Spain, London and Paris still dominate, with 50% of the total investment.

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Spanish property bargains

November 11, 2011 – 10:52 am

Property bargains in Spain and Tenerife

Despite dramatic property price reductions by many vendors across Spain, bargain hunters are taking advantage of the weak Spanish property market and are offering considerably below asking prices, fresh research shows.

 The latest figures provided by Idealista reveals that in September, the average offer made online through the Spanish property portal was 21.7% below the asking price. Having analysed over 500,000 offers since January 2011, Idealista’s research found that January, March and September are the months with the greatest volume of offers made by purchasers, whilst June was the weakest month in terms of demand. Spanish property investment opportunities The majority of Spanish property investors – 73% – believe that the Spanish property market will improve within the next 18 months, according to a new survey.

The latest study by international property consultants CB Richard Ellis found that three in four Spanish property investors expect market conditions to improve, despite the fact that prices are still falling across many parts of the country. The latest property investment barometer from CB Richard Ellis showed that Spain is expected to improve in early 2013, while 57% of those surveyed said they planned to invest in the Spanish property market within the next 6 months. The majority of investors are interested in buying commercial properties, rather than residential, with half of investors looking to buy offices, while 40% are interested in prime shopping centres. Just 7% of investors said that they plan to buy residential property.

A lack of mortgage liquidity remains a major stumbling block in Spain, which is why three in five investors believe that foreign investors with greater access to financing will drive the market recovery. Take advantage of the weak Spanish property market Domestic investors are taking centre stage in Spain’s investment market making up 66.2% of investors in Q1-Q3 2011, up from 33.3% in the same period in 2010 according to international real estate advisor Savills. Total volume in Spain’s investment market totalled almost €1.25bn (£1.07bn) in the first three quarters of 2011. The firm notes that as well as ongoing sales of large mixed use portfolios which banks are attempting to remove from their balance sheets, local authorities are also selling assets to gain liquidity.

Both the Andalusian and Catalan Regional Governments have portfolios on the market, including well-located office assets, which Savills observes are attracting interest from both opportunistic and core investors. Danny Kinnoch, international investment director Savills Spain, says: “In recent times there has been a two tier market with opportunistic investors focused on portfolio and large scale individual deals while the more traditional core investors remain focused on well-located, high-quality assets with high occupancy rates and solvent tenants on long-term lease contracts. Domestic investors continue to dominate the core market but international players remain on the lookout for opportune deals.” According to Savills major international players including Orion, RREEF, Generali Lend Lease, Doughty Hanson, AXA, Perella Weinberg and Rockspring have all been active this year. Savills has observed increased investor interest in Spain’s hotels market, a shift from the historically dominant retail and office markets and a reflection of the strength of tourism in a challenging economic climate. Key deals in the first three quarters of 2011 include Grupo Millenium’s purchase of two hotel assets, Hesperia Madrid from Hesperia for €80m (£69m) and Tryp Centro Norte from Colonial for €30m (£27m), both in Madrid as well as Mansion Services’ acquisition of Intercontinental Madrid from Morgan Stanley for approximately €68m (£58m). The total investment volume Q1-Q3 represents a fall of 52% compared to the same period in 2010, but with more realistic pricing and improved market sentiment Savills expects 2012 investment volumes to improve on 2011. Kinnoch says: “With an improvement in market sentiment in relation to other Euro countries combined with more realistic pricing taking into account the macro-economic situation in Spain, we expect 2012 investment volumes to exceed those of 2011.”

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Spanish commercial sector taking longer to recover

November 4, 2011 – 3:13 pm

Commercial property in Tenerife and Spain taking longer to recover

The Spanish commercial property sector is likely to take longer than 12 months to recover, new research has suggested.

Bloomberg Businessweek reported on data published by Savills, which stressed that a lack of finance coupled with the wider European debt issues will slow the market’s recovery.

According to the firm’s figures, investment in Spanish commercial real estate is now at its lowest level since 2001, with just €1.25 billion (£1.1 billion) in deals concluded in the first nine months of this year.

This represents a 52 per cent drop over the same period in 2010, with the news provider noting that a lack of funding from Spanish banks is deterring investors.

Source: PropertyShowrooms.com

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Shop around for your foreign currency when buying property abroad

August 11, 2011 – 5:29 pm

Take care when exchanging currency to purchase property in Tenerife and overseas

Independent analysis on the European property market found that average foreign property buyer spending £125,000 on their overseas home would receive €131,547 from a high street bank. However using a specialist foreign currency provider could result in an improved rate of €139,033 – a massive €7,486 difference equivalent to around £6,600, according to GSA.

The highest return on a £125,000 transfer was €139,650 offered by Currencies.co.uk, while the lowest was €131,062.50 offered by HSBC.

Just 10% of foreign currency transactions are made using a foreign currency provider, who can offer around 5.6% more than the High Street as they use commercial exchange rates to determine the value.

Savills International Research on second homes found that around 130,000 overseas properties were purchased by Britons between 2005 and 2009, potentially wasting millions as a result of poor exchange rates.

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Spain still top for clean beaches

June 9, 2011 – 11:10 am

Spain and Tenerife's blue flag beaches entice tourists

Despite considerable commercial development along its coastline, it appears that Spain has managed to keep its waters amazingly pristine – 511 of its beaches have been awarded the prestigious Blue Flag eco label this year, proving the nation is still a prized tourist destination for natural attractions.

For the second year running, the country attained the largest number of the prestigious environmental certifications out of any country in Europe, with 104 of Valencia’s beaches, 66 in Andalucia and 63 of the Balearic Islands’ idyllic coves being awarded.

Local authorities can nominate their own beaches for the Blue Flag certification, but it must adhere to strict environmental standards, which have led to a number of previously awarded beaches being struck off the list in recent years, including some in Britain and Israel. Spain’s continuing vigilance when it comes to the environmental quality of its waterways will ensure it remains the ‘beach capital’ of the Continent this summer, a fact which is sure to please estate agents and property owners looking for a happy high season. 

“It is hard to find a better beach haven than Spain and we are lucky that many of our residential developments reside where Blue Flags fly high”, said Ignacio Osle, sales director at locally-based housebuilder Taylor WImpey de Espana. “Beaches across Spain have been vastly improving year on year and along with the relatively short flight times from anywhere in Europe combined with declining holiday costs, visitors will no doubt continue to flock to Spain to sample its glorious beaches.”

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Investors chasing cut price prime property in Spain

April 14, 2011 – 1:00 pm

Investors keen to purchase Spain's cut price commercial property.

Opportunistic investors chasing cut-price prime commercial property in recession-hit Spain have helped push the sector’s total returns into positive territory for the first time in two years, a survey has found.

Investment Property Databank research showed commercial real estate total returns for 2010 hit 4.9 percent, from 2009′s negative return of 9.3 percent. It comprised a 1.2 percent fall in capital values and a 6.2 percent gain in income returns, IPD said late on Monday.

Retail property was the strongest performer, producing total returns of 7.7 percent in 2010, from minus 7.2 percent in 2009, with gains in both capital values and income returns. It was followed by offices at 1.9 percent and industrial at minus 0.6 percent.

In February, Reuters reported retail property investors were scouting around for distressed assets, betting that rising Spanish GDP would boost total returns by 2013.

Source: Reuters/London South East

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Commercial property sales upturn in Spain and Tenerife

April 7, 2011 – 11:01 am

Commercial property sales improve in Tenerife and Spain

Opportunistic investors chasing cut-price prime commercial property in recession-hit Spain have helped push the sector’s total returns into positive territory for the first time in two years, a survey has found.

Investment Property Databank research showed commercial real estate total returns for 2010 hit 4.9 percent, from 2009′s negative return of 9.3 percent. It comprised a 1.2 percent fall in capital values and a 6.2 percent gain in income returns, IPD said late on Monday.

Retail property was the strongest performer, producing total returns of 7.7 percent in 2010, from minus 7.2 percent in 2009, with gains in both capital values and income returns. It was followed by offices at 1.9 percent and industrial at minus 0.6 percent.

In February, Reuters reported retail property investors were scouting around for distressed assets, betting that rising Spanish GDP would boost total returns by 2013.  

Source: Reuters/

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European real estate transactions on the rise

April 6, 2010 – 3:52 pm
Commercial real estate on the rise throughout Europe

Commercial real estate on the rise throughout Europe

European real estate transaction volumes could rise as much as 30 percent to around 90 billion euros ($124 billion) this year as credit markets thaw and prices stabilise, according to a report by broker Jones Lang LaSalle.

Appetite for commercial property is returning, with 24.6 billion euros of deals done in the last quarter of 2009, more than double the 11.6 billion euros in the first three months of the year, the report said. “The growth we are expecting to see this year will be fuelled by an improvement in the availability of debt, the recognition that pricing has probably hit or even passed its floor, slightly more appetite for risk-taking, and more assets coming to the market,” Jones Lang director Chris Staveley said.

The data, published on the eve of MIPIM, Europe’s largest property trade fair, highlighted a revival in confidence among key real estate players after a two-year decline.

However, even if the total volume of deals hits 90 billion euros, Staveley said Europe’s commercial real estate investment market would still be modest in size in historical terms, roughly in line with 2002 levels.

“A weak economic outlook sets the backdrop for difficult occupier markets almost everywhere, and despite some markets seeing some recovery in prime rents, caution and risk aversion will remain key themes in the market in 2010 for investors and occupiers alike,” he said.

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Opportunities available in Spanish real estate

January 7, 2010 – 5:03 pm
The latest news from Spain and Tenerife's Euribor and mortgage situation

The latest news from Spain and Tenerife's Euribor,mortgage and property situation

Mikel Echavarren, an experienced professional in touch with many different companies in the property sector  is worth listening to. Here is a selection of his recent comments

Do you think there are any good investment opportunities in Spanish real estate today?

I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.

So you think there are opportunities in a residential sector because the adjustment has already taken place?

There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.

Has the price of housing and land touched bottom?

House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%.

What’s wrong with the official statistics?

They are based on valuations. One has to look at real property transactions and a survey of developers to see not only their asking prices but how far they are prepared to drop prices to sell.

Do you think there is any residential property that will never sell?

What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrialsOn the other hand, the stock of finished property will be absorbed sooner.

Is there any real demand for housing at the moment?

Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.

How does one get the Spanish property sector to recover?

The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.

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