Residential. A market on the rise - June 2018 - JLL
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Residential. A market on the rise June 2018
2 Residential Report Spain | 2018
Contents 1. Macroeconomic and socio-demographic landscape 2. Financing 3. House purchase market 4. Developer market 5. Rental market 6. Solutions and disposal of non-performing assets 7. Case Studies 8. Residential clock 9. Zoom cities Appendix
01. Macroeconomic and socio-demographic
landscape
4 Residential Report Spain | 2018
report Spain
Economic context
The Spanish economy grew at a healthy Thanks to the creation of almost half Statistics Institute, the average salary
pace in 2017. GDP was up 3.1% YoY, a million jobs in 2017, Spain proved to has grown 0,2% to reach €23,156.34
which is 60 basis points higher than the be one of the most dynamic Eurozone
EU average of 2.5% YoY. countries in terms of job creation. Disposable income has already grown
to reach €651,023 million, a rise of 10%
This pace of economic expansion Salaries have been on a path of versus the low reached in 2013. According
drove net job creation last year. The incipient recovery since 2013 following to Oxford Economics, this upward trend
unemployment rate at the end of the a year-on-year decline of 0.8% in 2012 is set to continue over the next three
last quarter of 2017 stood at 16.55%, during the economic crisis. According years. Disposable income is set to grow
the lowest figure for eight years. to the latest data issued by the National at an average pace of 1.3% YoY.
Residential Report Spain | 2018 5
GDP growth in Spain
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Oxford Economics
Average annual salary
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
2009 2010 2011 2012 2013 2014 2015
Source: INE (National Statistics
Institute)
Household disposable income in Spain
700,000
Millions of euros: 2010 prices
650,000
600,000
550,000
500,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Source: Oxford Economics
6 Residential Report Spain | 2018
The uptick in employment, Spanish net
improvement in lending terms and
higher household disposable income, household wealth
as well as an expansive monetary
policy and low oil prices, have all
bolstered economic activity in Spain.
In 2017, domestic demand was up
2.8% year-on-year, thanks to the rise in
household spending, the primary driver
of economic activity.
Households have also deleveraged €1,373,412M
2017
4Q
since mid-2008, reducing debt levels
from some €900 billion to €704 billion 3.8% YoY
in February 2018. This reduction of
around €200 billion since December
2008 (20%) is further explained by
interest rate cuts and the consequently
cheaper financing
€1,322,863M
2016
4Q
Household wealth has therefore
returned to pre-crisis levels. According 3.3% YoY
to the Bank of Spain, net household
wealth in the fourth quarter of 2017
stood at €1,373,412 million, a rise of
3.8% on the same period in 2016.
Source: Bank of Spain
Residential Report Spain | 2018 7
The reduction in household debt and In addition to the uptick in domestic The economic fundamentals are
resulting rise in net wealth has come demand, Spain also benefited from an positive and are driving the recovery
against a backdrop of moderate extremely buoyant tourism sector, which of the residential property sector.
average inflation of 2% per annum, is still booming after marking its fifth
thanks primarily to low energy prices. record year in 2017 with 80 million foreign Investment in construction (in
In the first quarter of 2018, inflation visitors. Tourist visitor numbers are up 6% terms of gross capital formation)
ran out of steam and rose by just to March, versus the same period last year. continued to grow in 2017, rising 2.8%.
1%, according to preliminary data All these factors are leading to higher- The construction sector currently
released by the INE. than-expected economic growth. represents 5% of GDP, in line with the
Unemployment rate in Spain
30%
25%
20%
15%
10%
5%
0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: INE and Oxford Economics
8 Residential Report Spain | 2018
European average (versus 12% in 2006- pace of growth will be slower at an monetary policy factors and the gradual
2007). Its contribution to GDP growth average of 2.9% per annum, according monetary normalisation process.
was positive, adding 0.34 percentage to Oxford Economics, due to a number
points to the growth of 3.1% posted of factors, such as weaker household The European Central Bank has
last year. spending as unfulfilled demand that decided to scale back its bond
had accumulated during the crisis purchase programme from 60 billion
The positive macroeconomic begins to tail off. per month to 30 billion as of January
indicators and the healthy outlook 2018. This measure will remain in
for 2018 make Spain an ideal location The pace of job creation is expected to place until September 2018 or until
to attract both international and remain constant at around 2.4% in 2018 the Governing Counsel observes a
domestic capital. and 2019, which will translate into almost sustained shift in the path of inflation
850,000 new jobs and an unemployment that is compatible with the 2.0%
The outlook for Spain in 2018 is positive rate of close to 10% by 2022. target. The interest rates applicable to
and the country is set to remain one major financing transactions remain
of the fastest-growing economies, The performance of the economy over unchanged at 0%, a situation that will
not only in Europe, but globally. The the medium term will be determined by likely be extended until 2020.
GDP growth in Europe
1.0% - 2.0%
2.0% - 3.0% 2.8%
>3.0%
2.8% 1.8%
2.2%
Eurozone
3.3%
5.2%
4.7% 1.9%
3.4%
1.7%
2.5%
4.2%
1.6%
2.7%
2.3%
3.6% 3.7%
3.3%
2.5% 4.1%
2.1% 2.4%
4.9%
4.4%
2.8%
3.4%
4.2%
2.2%
2.9%
1.5%
1.6%
Source: in-house preparation based on Oxford Economics data
Residential Report Spain | 2018 9
Socio-demographic
backdrop
After several years in negative territory, INE figures also show that the number those with five people or over – will
the Spanish population is growing of homes in Spain will actually increase continue to recede, as they have done
once more. According to the latest data by 902,663 (4.9%) from 2016 to 2031. in recent years.
available (July 2017), the population This means an average of 60,000 homes
now stands at 46,549,045, an increase will be built per annum to reach a total Meanwhile, the ageing population will
of 0.2% on last year. figure of 19,281,354 by 2031. continue to be the norm in Spain. The
percentage of the population aged 65
The Spanish Autonomous Communities The average household size will fall or over will rise from the current level
to see the biggest population rises in 2017 from 2.50 people currently to 2.35 by of 18.7% to 25.6% in 2031 and 34.6%
are the Balearic Islands (1.5%), Canary 2031. The smallest households (those in 2066. These socio-demographic
Islands (1.0%) and Madrid (0.9%), while the made up of 1 or 2 people) will continue changes will impact the types of
population fell in Extremadura, Castilla & to grow in the period 2016-2031, while homes that will be needed to meet
Leon (-0.8% in both) and Asturias (-0.7%). the largest households – especially future requirements.
10 Residential Report Spain | 2018Resident population in Spain
48,000,000 2.5%
47,000,000
Resident population of Spain
46,000,000 2.0%
45.000.000
44,000,000 1.5%
% change
43,000,000
42,000,000 0.5%
41,000,000
40,000,000 0.0%
39,000,000
38,000,000 -0.5%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Change YoY Resident population of Spain
Source: INE (National Statistics Institute). Resident population as at 1 January 2017
Change in the breakdown of homes by size (2016-2031)
35% 32.10
30.60
30% 28.60
25.10
25%
21
19.80
20% 5.70
4.10
15%
10%
5.70
4.10
5%
0%
1 occupant 2 occupants 3 occupants 4 occupants 5 occupants or more
2016 2031
Source: INE (National Statistics Institute)
Residential Report Spain | 2018 1102. Financing
12 Residential Report Spain | 2018
report SpainFinancing The number of new mortgages The amount of the average home
granted continues to grow mortgage loan grew 5.9% in 2017
to reach €116.679.
Although total debt continues to The number of mortgages taken out to
buy a home in 2017 grew by 9.7% versus Mortgage lending continued to
shrink, households and companies
the year before to 310,096, according to INE grow in the first quarter of 2018 at
are taking advantage of increased
data. This is the fourth consecutive year-on- a rate of 5.6% YoY to total 84,073
liquidity levels and are once again
year rise and the highest figure since 2011. new loans. The average loan
taking out loans.
In monetary terms, these loans totalled amount also increased by 5.3%
36,199,371 million, up 16.6% versus 2016. to €120,527.
Informe Logística
Residential Spain || 2018
ReportEspaña 2017 13Number of mortgages and average amount in Spain
Number of mortgages granted
1,400,000 175,000
1,200,000 150,000
Average amount (€)
1,000,000 125,000
800,000 100,000
600,000 75,000
400,000 50,000
200,000 25,000
0 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Number of mortgages granted Average amount
Source: INE (National Statistics Institute)
The pick-up in financing is now a reality,
although we are still considerably below
the 1.2 million mortgages signed in 2007.
Mortgages taken out in 2017 are barely a
third of those signed at the height of the
property boom, when more mortgages
were granted than houses sold.
The increase in new mortgage
transactions is compatible with the
gradual settlement of outstanding
mortgage balances, thanks to an
improvement in financing conditions:
the average term of new mortgages is
up in 2017, as is the loan-to-value ratio.
However, both indicators are still some
distance behind the all-time highs
reached a number of years ago
14 Residential Report Spain | 2018Average
mortgage term
(years):
2007 28.3
max
2003 21.2
min
2015 22.8
anual
2016 23.1
anual
2017 23.3
anual
LTV ratio:
2004 65%
max
2009 55.4%
min
2015 62%
anual
2016 63.9%
anual
2017 65.1%
anual
Source: Bank of Spain
Residential Report Spain | 2018 1516 Residential Report Spain | 2018
The effort made by households to average mortgage rate to buy a home forecasted to remain at current levels
repay their mortgages has registered a in 2017 was 2.2%, according to lender for the rest of the year, albeit with small
substantial downward shift since 2012. data submitted to the Bank of Spain. rises as 31 December approaches,
The mortgage affordability rate (the ratio all of which will depend on how the
between the mortgage instalment before The 12-month Euribor rate – to which European Central Bank handles its
deductions and gross household income) most Spanish mortgages are indexed expansive monetary policies.
standed at 34.1% in 2017, versus the – has been in negative territory for two
figure of over 50% during 2006 and 2007. years, specifically from 15 February Fixed-rate mortgages gain weight
2016 when it fell below 0% on a ahead of possible interest rate hikes.
Lending rates climbed to over 6% in monthly basis for the first time. The
2008, over 3 percentage points higher benchmark index closed the month of According to the latest INE data (March
than now. Lending rates have gradually April 2018 at -0.190%, an all-time low. 2018), fixed-rate mortgages represent
come down since 2010 in line with All indicators suggest it will remain at 37.8% of all mortgages granted,
cuts to the ECB benchmark rate. The under 0% for the rest of the year. It is compared to just 1% in 2007.
Average mortgage affordability rate
80%
70%
60%
50%
40%
30%
20%
10%
0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Bank of Spain
Interest rates for new mortgage loans:
7%
6%
5%
4%
3%
2%
1%
0%
Sep-17
Jan-18
May-18
Jan-15
Sep-15
Jan-16
May-16
Sep-16
Jan-17
May-17
May-13
May-14
Sep-14
May-15
Jan-09
May-09
Sep-09
Jan-10
Mayn-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
Sep-13
Jan-14
Jan-08
May-08
Sep-08
Source: Bank of Spain
Residential Report Spain | 2018 17Percentage of mortgages taken out by interest rate
100% Fixed
90% Variable
80%
70%
60%
50%
40%
30%
20%
10%
0%
2015M01
2015M03
2015M05
2015 M07
2015M09
2015M11
2016M01
2016M03
2016M07
2916M09
2016M11
2017M01
2017M03
2017M05
2017M07
2017M09
2017M11
2018M01
2016 2017
Fixed 25.1% 38.1%
Variable 74.9% 61.9%
Source: INE (National Statistics Institute)
Although the financing scenario A salient factor in the Spanish is set to impact the sales activity of
has changed radically since the regulatory horizon is the entry into financial institutions (cross-selling will
property crash, the number of force of the new Mortgage Law, which be restricted, as will other incentives
house purchases going through is currently going through parliament to attract clientele). Revenue streams
without any sort of financing has and is expected to be approved in will also be hit (fees and commissions)
risen by 30% since 2007, when the second half of 2018. Once again, and banks will be forced to make their
the mortgages granted actually this legislative initiative is aimed at mortgage clauses uniform. The new
exceeded the number of real estate protecting consumers – in fact it only law also contains two provisions which
transactions. The ratio of mortgages affects retail mortgage loans – and will have a major impact on the risk
to real estate transactions has enhancing financial institutions' shouldered by the lender: the ease with
stabilised somewhat. transparency. The new legislation which borrowers can switch to fixed-
WIN-WIN FOR DEVELOPERS AND the return of some of those small and that we have witnessed it over recent
FUNDS medium-sized developers with vast months with major developers debuting
knowledge of their local market. However, on the stock market. The new element lies
One of the direct consequences of the a shortage of the raw material – land within making the most of this win-win
real estate and financial crisis in Spain with planning permission –, the reduced relationship – knowledge of the real estate
between 2008 and 2014 was the almost financial muscle of these developers in and construction sectors on the one
entire disappearance of the residential terms of making acquisitions and the hand, and the provision of finance on the
development sector as it was known difficulties in securing bank financing to other – with smaller developers, whose
at that time. This led to the decline leverage the acquisition of land to push sphere of influence and business is based
and extinction of – whether through through residential projects is driving on a more local scale, by establishing
bankruptcy or subsequent liquidation – of partnerships between “industrial” specific corporate investment vehicles
the major listed developers, as well as the (residential developers) and “financial” created for a specific term. This enables
lion’s share of residential developers with (investment funds) partners to jointly them to execute ongoing real estate
a more local core. carry out real estate projects. projects with greater guarantees through
the acquisition of land and subsequent
The improvement in the residential This relationship is nothing new, given development of the project (leaning
market across certain areas has sparked on bank loans during the construction
18 Residential Report Spain | 2018rate or foreign currency mortgages and more stringent conditions for banks on foreclosure in the event of a default (see Appendix). Bank financing to developers is also recovering, although loans are only granted to the most solvent borrowers. With the exception of prime products, developer loans may not be used to finance the acquisition of land, but rather only to fund construction costs. Residential projects therefore require a level of shareholder equity that covers the purchase of the land, at the very least. Although there is no common framework and it largely depends on the characteristics of each project, it is still necessary to secure a certain level of off-plan sales before the banks will consider lending – somewhere in the region of 30% – to ensure the viability and success of the development. As regards loan-to-value ratios, developer loans are somewhere in the region of 70%, safely below pre-crisis levels. phase). This is a natural association that benefits both parties, thanks to the sharing of risk and which, little by little, is driving the recovery of the local development industry. Alberto Segurado Head of Debt Advisory JLL Spain Residential Report Spain | 2018 19
03. House purchase market
20 ResidentialReport
Residential Spain | 2018
ReportSpainTransactions
The uptick in employment, increased on 2016. In line with the three previous total of 22,415 units sold across Spain.
consumer confidence – which years, pre-owned sales have grown at
surpassed 100 points in 2017 – and the figures in excess of 10%. The recovery of house sales is not
improvement in financing conditions confined to large cities and coastal
with all-time low mortgage rates However, 2017 also marked a turning areas popular with tourists. The
continue to underpin house purchases. point for the sales of new-build recovery of the real estate market that
properties, which were up 7.0% on the got underway in 2016 has continued
House sales continue to grow. previous year. We are seeing positive into 2017 and spread to every corner of
new-build sales figures for the the Iberian Peninsula.
House sales soared 16.3% in 2017 first time in 10 years. New off-plan
versus the previous year, registering sales are on the rise, which is driving With the exception of Ceuta and
the largest year-on-year rise since 2014. new residential developments. The Melilla, all of Spain’s Autonomous
Total house sales – both pre-owned take-up of existing stock has been Communities have registered year-
and new-build – reached 532,367 uneven across the country. There is on-year rises in excess of 10%. The
transactions, with the last quarter of now a lack of new, available stock in highest rises are to be found in Castilla
the year the busiest. In fact, 2017 was Madrid and Barcelona, for instance, La Mancha (27.0%), Cantabria (26.5%)
the best year since the property crash meaning both cities are now the focus and Navarra 22.2%). The smallest rises
of 2007. for new developments. Sales of new were recorded in the Basque Country
properties are therefore expected to (11.5%), Castilla & Leon (11.6%) and
The house sales indicator has posted register an uptick in 2018. Extremadura (12.4%). As regards
four years of consecutive growth. provincial capitals and municipalities
Although accounting for a small slice with over 100,000 inhabitants, the
Pre-owned homes were once again of the market (just over 4%), the highest growth could be found in
the driving force behind this growth, purchase of subsidised housing also Albacete (43.7%), Parla (40%) and
coming in at 481,969, a rise of 17.4% grew 5.9% last year versus 2016, with a Barakaldo (38.3%).
Residential Report Spain | 2018 21Forecasts point to the number of Household real-estate wealth rose GDP in the third quarter, according
transactions continuing to rise to 12% in Q4 2017 to reach 425.56% to the last available data released
reach an average of 600,000 homes of GDP, versus net financial wealth by the Bank of Spain. The numbers
per annum over the next three years. which represented just 115.5% of reflect Spanish households' strong
Evolution of the number of housing transactions
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
New-build Pre-owned
Source: Ministry of Public Works and Transport
22 Residential Report Spain | 2018preference for putting their money according to a living conditions survey is still higher than the European
into property rather than financial conducted by the INE. Despite the average of 69.2%, according to the
products. The home ownership ratio increase in the rental market, the latest Eurostat data (2016).
is Spain currently stands at 77.1%, percentage of homeowners in Spain
Percentage of housing transactions over the country total
House purchases
(% of total)
< 1.0%
1.0 - 2.0%
2.0 - 4.0%
4.0 - 6.0%
> 6.0%
Source: Ministry of Public Works and Transport
Residential Report Spain | 2018 23Foreign demand
Foreigners accounted for 13.11% of total
house buyers in Spain in 2017, according
to data from the Association of Property
Registrars. This percentage held steady Ranking
in 2017, which translates into a significant of foreign
increase in absolute terms.
buyers 2016
Foreign demand for housing in recent
years reflects a recurring trend in terms
of nationalities.
1. United Kingdom: 19.00% 6. Italy: 5.41%
The British lead the ranking of foreign 2. France: 8.05% 7. Romania: 4.53%
buyers, representing 15.01% of all 3. Germany: 7.69% 8. China: 4.53%
purchases by non-Spanish nationals.
However, the numbers have fallen 4. Sweden: 6.72% 9. Morocco: 3.00%
slightly, most likely as a consequence 5. Belgium: 6.03% 10. Russia: 2.71%
of Brexit and, more importantly, the Other: 32.3%
performance of the pound sterling. If
it were not for Brexit, foreign demand
would likely have been higher still.
The British are followed by French
nationals, who registered an increase
from the 8.05% in 2016 to 8.64% last
year. In fact, this is the fastest growing
nationality in absolute terms. They
are followed by Germans (7.77%) and
Belgians (6.39%).
Prices are still extremely attractive
for many foreign buyers, especially in
certain coastal areas. We are therefore
likely to see a constant arrival of foreign
residents from a whole host of countries,
especially other Europeans, looking to buy
property in Spain, taking advantage of the
favourable economic circumstances in a
country that is a tourist hotspot.
24 Residential Report Spain | 2018Foreign buyers as a % of market total
14%
12%
10%
8%
6%
4%
2%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Association of Spanish Registrars
1. United Kingdom: 15.01% 6. Italy: 5.77%
2. France: 8.64% 7. Romania: 5.34%
3. Germany: 7.77% 8. China: 4.38%
9. Morocco: 3.86%
4. Belgium: 6.39%
5. Sweden: 6.38% 10. Russia: 2.85% Ranking
Other: 33.61% of foreign
buyers 2017
Residential Report Spain | 2018 25Prices
Thanks to an improvement in the
macroeconomic landscape and easier
access to credit, the increased demand
has not only triggered an increase in
transactions, but also a boost to house
prices in Spain, especially in large
urban centres.
According to the INE’s House Price
Index, homes were 7.2% more expensive
in 2017 versus the previous year. New-
build prices were up 7.4%, while pre-
owned house prices rose 7.2%, marking
the fourth consecutive year of rising
prices. This increase in house prices is
much higher than the average increase
in inflation, which is 2%.
House prices were up across all of
Spain’s Autonomous Communities.
In just one year, house prices rose
by over 10% in the regions of Madrid
We expect house prices to rise
and Catalonia. Castilla la Mancha and
at an average rate of 3.80%
Extremadura saw the lowest price YoY over the next three years.
rises, registering an increase in prices of These rises will be higher
under 0.5% YoY. in cities such as Madrid and
Barcelona.
House Price Index in Spain (% YoY)
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10% 2013 2014 2015 2016 2017
General New-build Pre-owned
Source: INE (National Statistics Institute)
26 Residential Report Spain | 2018Increase in house price index by Autonomous Community
in 2017 (%)
Madrid 11.9%
Catalonia 10.2%
Balearic Islands 9.8%
Ceuta 8.0%
Melilla 7.7%
Spain 7.2%
Basque Country 7.1%
Canary Islands 6.0%
Andalusia 4.5%
Cantabria 4.4%
Community of Valencia 4.1%
La Rioja 3.6%
Aragón 3.1%
Galicia 2.9%
Asturias 2,4%
Castilla y León 2.3%
Navarra 2.1%
Murcia 1.9%
Castilla - La Mancha 0.4%
Extremadura 0.2%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Source: INE (National Statistics Institute)
The price per square metre average of €1,804.2/sqm, whereas they At the other end of the spectrum,
for non-regulated housing stood at an average of €1,550.7/sqm for the lowest prices were in the
stood at €1,558.7/sqm in properties over five years old. province of Alicante, specifically
the fourth quarter of 2017, the towns of Elda, Alcoy, Ontinyent
according to data from the In municipalities of more than 25,000 and Crevillent, where prices failed
Ministry of Public Works. inhabitants, the highest prices to exceed €600/sqm in the last
were to be found in San Sebastian quarter of the year.
However, the appraised value is still (€3,437.3/sqm), Sant Cugat del Vallés in
€542.7/sqm lower than the all-time Barcelona (€3,060.5/sqm), Barcelona The average price for subsidised
highs reached in the first quarter of (€3,053.6/sqm), Santa Eulalia del Río housing in Spain in the last quarter
2008. As regards properties under five on Ibiza (€3,004.9/sqm), Ibiza (€2,939/ of 2017 stood at €1,128.3 per
years old, appraised values reached an sqm) and Madrid (€2,861.5/sqm). square metre.
Residential Report Spain | 2018 27Unit price (€/sqm)
Unit price
< 1,000 €/m2
1,000 - 1,250 €/m2
1,250 - 1,500 €/m2
1,500- 1,750 €/m2
> 1,750 €/m2
Source: own information based on Ministry of Public Works
data. Includes both new and pre-owned homes.
The affordability index, expressed as
the number of years of the buyer’s
full annual income to pay the median
house price, stood at an average of 7
years in 2017, down from 9 between
2006 and 2008.
Housing affordability index in Spain
9.5
9.0
8.5
Year´s salary
8.0
7.5
7.0
6.5
6.0
5.5
5.0
Nov-15
Apr-16
Sep-17
Feb-17
Jul-17
Dec-17
Sep-06
Feb-07
Jul-07
Dec-07
May-08
Oct-08
Mar-09
Aug-09
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
House price/gross rental level of dwelling
Source: Bank of Spain
28 Residential Report Spain | 2018Residential Report Spain | 2018 29
04. Developer market
30 Residential Report Spain | 2018
InfResidentialDeveloper activity
Following the market downturn in recent Of the total permits issued in incipient recovery in 2014 (an
years, the pick-up in demand is leading to a 2017, 61,337 were for flats (up increase of 42.5%)
selective reactivation in the house building 30.8% year-on-year) and 19,411
sector. In certain locations, the demand were for single-family homes, a With respect to this year (January
is having trouble finding new product or year-on-year rise of 13.2%. and February 2018), construction
properties that meet their requirements. permits have grown 17.4% to
Permits authorised for 15,000 on the same period last
New residential construction permits the construction of new year, taking house building figures
issued in 2017 amounted to 80,786, up homes have been rising for 4 back to 2011 levels.
26.2% in YoY terms. consecutive years following an
New-build construction
permits in Spain in 2017 Total Single-family residences Flats or apartments
No. of permits 80,786 19,411 61,337
YoY change 26.2% 13.2% 30.8%
Residential Report Spain | 2018 31Number of new-build permits (housing)
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Ministry of Public Works
However, the level of construction activity remains very low if compared to other countries, such as France and the
Netherlands
.
Housing units under construction per 1,000 inhabitants
20
18
16
14
12
10
8
6
4
2
0
UK France Italy Netherlands Spain
2006 2008 2010 2012 2014 2016 2017
Source: Oxford Economics
Housing units under construction per 1,000 inhabitants in Spain and France
20
15
10
5
0
2008
2009
2010
2011
2012
2013
2014
1990
2015
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2016
2017
France Spain
Source: Oxford Economics
32 Residential Report Spain | 2018New-build construction permits in 2017 and YoY change
56.1%
28.4% 29.4% 1.9% 4.4%
New-build permits -15.6%
53.8% 96.3% -5.0%
< 500 9.5% 97.7%
-59.8% -24.2% -17.6%
500 - 1,000 68.5% -17.4%
41.4%
1,000 - 2,500 7.0% 48.6%
15.6% -24.3% 22.8%
2,500- 5,000
> 5,000 27.6% -7.6%
23.3% -16.6%
-4.9% 66.8%
15.7%
Annual growth (2016-2017)])
-13.3%
15.7% Annual growth 3.4% -14.6%
-26.6% 41.4%
61.9%
-10.5% 67.5%
-7.6%
22.7%
41.9% 22.5% 11.2%
115.6% 69.2%
87.0% -1.1%
50.5% 58.7%
81.2%
27.5%
Source: JLL based on Ministry of Public Works data
Developer activity is still insufficient factor into account, located in low is now forming, akin to what can be
to meet structural demand, which is populated towns where there are found in France.
estimated at around 150,000 new homes houses that are hard to be sell.
under, according to Bank of Spain data. The need for new supply is leading to
These homes will have to be built in Although the estimated market is fresh developer activity outside the
areas where there is actually demand, smaller than during the boom years, mainstays of Madrid and Barcelona,
unlike the pre-crisis years when homes when 800,000 homes were built per such as in Valencia, the Basque Country
were built without taking that crucial year, a more mature and stable market and Andalusia.
Residential Report Spain | 2018 33Land market
This upturn in developer activity well-established areas is driving land and another, and even between
is being felt in the land market. prices upwards. two municipalities within the same
In 2017, 20,789 urban land Autonomous Community.
transactions were carried out, up The average land price per square metre
19.5% on 2016, and with a value in 2017 grew 0.8% on 2016 to stand The highest average land prices over
of €3.503 billion, up 17.7% on the at an average of €162.2. The average the course of the year – in municipalities
previous year. The land transacted transaction volume has also grown for with over 50,000 inhabitants – were
represented a surface area of 27.41 the past four years (since 2013). registered in the province of Madrid
million square metres, a year-on- (€290.3/sqm), the Balearic Islands
year increase of 18%. Construction is picking up, but growth (€265.7/sqm) and Barcelona (€242.4/
is not uniform across the country. sqm). The lowest average prices were
The greater activity and lack of There is a great deal of disparity registered in León (€46.5/sqm), Zamora
land in large urban centres and in land prices between one region (€46.8/sqm) and Ávila (€53.7/sqm).
Number and value of urban land transactions in Spain
Number of transactions
50,000 25,000
45,000
40,000 20,000
Transaction value (M.€.)
35,000
30,000 15,000
25,000
20,000 10,000
15,000
10,000 5,000
5,000
0 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Transaction value (right axis) Numer of transactions (left axis)
Source: Ministry of Public Works
34 Residential Report Spain | 2018The areas with
most acute scarcity of land are
Madrid, Barcelona, Valencia and Alicante, the Costa
del Sol, Basque Country and Balearics.
The residential land market is anything However, it is a different story in other These real estate developers require
but uniform, which requires a micro-level parts of the country like in Castilla & a portfolio that is sufficiently scaled
analysis that encompasses demand, León and Castilla La Mancha where to meet their 5-10 year business
house prices and town planning issues. land prices are only seeing marginal plans. They therefore need to make
Demand at the moment stems mainly increases or even shrinking. significant purchases of land, which is
from those moving house or those beginning to run out in large cities, a
buying homes as an investment. It We are therefore faced with a two- factor that leads them to take on land
is concentrated in well-established speed market in which competition without planning permission.
or tourist areas, which is translating is ever greater, leading many to focus
into demand for land with planning much more closely on land under In the current year, developers are
permission and a hike in prices in the management. expected to acquire land held by large
aforementioned areas where available investment funds, which snapped
land is in short supply. Due to this lack Leading property developers made up the banking sector’s toxic asset
of land with planning permission in the various land purchases in 2017 for a portfolios. However, those funds and
main urban and coastal areas, prices are total amount in excess of €600 million, the Sareb have already put their best
expected to jump even higher in prime mainly in Madrid, Barcelona and assets on the market.
and sought-after areas. coastal areas.
Residential Report Spain | 2018 35Leading players
Funds
International investment funds, which “Large listed companies have
have led the acquisition of banks’ expressed considerable interest in
asset portfolios since the onset of assets held by investment funds, so
the crisis, have become the leading it is likely that they’ll put together
owners of land, a scarce resource large portfolios valued somewhere
now in Spain. They are estimated to in the region of between 200 and
hold land valued at over €15 billion 500 million euros. However, we’ll
and are expected to gradually begin also see one-off deals taking place.
putting products on the market We could also see the emergence of
during the second half of 2018. wholesale buyers of land, who would
sell to smaller or local companies
The large funds that acquired assets any assets deemed non-strategic,
from the banking sector in 2017 those located in unfamiliar areas or
are therefore expected to become products in less mature phases of
leading players in the land market, development”.
through sales of either individual
assets or portfolios to developers. Enrique Losantos
The plots set to come on the market CEO JLL España
are in prime locations such as Madrid,
Catalonia and the coast, but also in
other parts of the country, like Galicia,
Seville and Zaragoza, that are also
beginning to see activity and which
are of interest of property companies.
36
Funds Residential Report Spain | 2018Developers
The recovery of the residential Metrovacesa
market has spurred on the creation The company is owned by Santander and BBVA and was relisted on the stock
of new players, thanks to strategic market in February 2018. It is the developer with the largest land portfolio.
agreements, joint ventures or The company has six million square metres of land and the ability to develop
corporate deals between international 37,500 homes, expecting to hand over between 4,500 and 5,000 units by
funds and local developers. 2021. The developer plans to hand over 520 units this year compared to 110
last year.
The latest examples in 2017 include
the acquisition of 75% of Inmoglaciar
by Cerberus, the purchase of Habitat
Neinor
by Bain Capital and Värde’s acquisition
of Vía Célere. This was the first developer to list on the stock market in March 2017. It
holds 1.3 million sqm to build 12,000 homes and plans to hand over 2,500
However, following this early phase of during the course of 2018.
intense investor activity, we are now
seeing IPOs and a consolidation of
the developer market. Following its Aedas
acquisition of Vía Célere, Värde carried An investee of US fund Castlelake, Aedas has 1.5 million square metres of
out the first major consolidation deal, land to build 13,270 homes. The company plans to hit its cruising speed of
approving the merger of its acquired 3,000 homes per annum in 2022.
asset with DosPuntos, which was spun
off from the now defunct Parquesol.
The new holding company is now Vía Célere
lining up its stock market debut.
The company controlled by Värde has 1.43 million square metres for some
12,200 homes.
The 20 most important companies in
the sector, which include the recently
listed Neinor, Aedas and Metrovacesa, Aelca
together with Aelca, Vía Célere, ASG
The other company controlled by Värde has 1.28 million square metres for
and Amenabar, have sufficient land to
some 13,000 homes. It plans to launch 49 new developments in 2018 with
develop 80,000 homes over the next
around 3,700 homes.
few years.
Amenabar
A survivor of the financial crisis, the company registered the
highest amount of new homes in 2017: 700 units. It is also the
company that plans to begin construction on the largest
number of new homes this year: 3,000 units.
The market remains highly fragmented and M&A activity
is expected in the coming years in a bid to consolidate.
Developers
Residential Report Spain | 2018 37Leading developers
and work in the pipeline
2018-2020
38 Residential Report Spain | 2018Ranking Developer Units
1 Metrovacesa 12,600
2 Neinor Homes 10,250
3 Aedas Homes 9,850
4 Via Célere 6,200
5 Aelca 5,750
6 Activum SG Iberia 5,000
7 Acciona Inmobiliaria 4,500
8 Amenábar 3,750
9 KRONOS 3,750
10 CORP 3,000
11 Pryconsa 2,850
12 Q21 Real Estate 2,550
13 Quabit 2,250
14 Ibosa 2,200
15 Inbisa 2,100
16 ACR 1,800
17 Realia 1,650
18 Momentum RE 1,500
19 Inmobiliaria del Sur 1,175
20 Grupo Lar 780
Total 83,505
Source: Coordinated Institute of Governance and Applied Economics – July 2017
The present and future of residential land
Investment in land during 2017 reached Pamplona, Zaragoza, Bilbao, San be able to meet their own demand
3.5 billion euros, up 18% versus the Sebastian and Alicante, will benefit and that of others. Both options
previous year, across almost 21,000 from the shortage of land in major are appealing as the risk is more
transactions. This is a clear reflection of cities and current investor appetite. manageable than in the traditional
the growing interest. acquisition of land without planning
The direct acquisition of land with permission, where the local authorities
Given the lack of supply in other planning permission is complicated. called the shots.
markets, which have become drained, Price increases, competition among
investors have turned their attention to investors, the emergence of new types The “living” sector is expected to be
residential land. This asset represented of players and other factors such as the main attraction over the coming
42% of total investment in 2017, up from rising construction costs are some of years. We will continue to see deals
the 32% witnessed in 2016. the main reasons for this. As a result, for residential land and student
the market is seeking alternative accommodation, both of which are
The demand for residential land goes avenues when it comes to investing: established markets. From this point
hand-in-hand with an improvement in acquisitions of companies, stock on, Spain will follow in the footsteps
the Spanish economy, as well as buyers’ market debuts, the acquisition of land of other countries in terms of deals
capacity to purchase a home. In 2017, without planning permission and last which provide “alternative living
the number of approved projects in year’s favourite, the acquisition of large, solutions” such as co-living and
Spain reached the 80,000 home mark. debt-laden asset portfolios. build-to-rent.
This leads us to expect that key interest In order to unearth new products in
will continue to be concentrated in the short term, the major funds which
cities such as Madrid, Barcelona, Seville, acquire these portfolios will first seek Maria de la Puerta
Valencia and Malaga. Nevertheless, to clear up the assets' legal status and Head of Residential
other cities with less activity in this then divest. In addition, the companies Land, JLL Spain
regard, such as Santander, Burgos, investing in land-use management will
Residential Report Spain | 2018 3905. Rental market
40 Residential Report Spain | 2018
InfResidentialA market snapshot
Although property ownership In fact, 13.8% of Spanish homes are years), while in 2007 only 28.4% of
reigns supreme in Spain, the rental rented at market price (16.3% if all young people lived in rented homes,
market has been gaining ground types of renting are taken into account a hike of 19.4% over the last decade.
in recent years, driven primarily by and 22.8% if the free transfers are In terms of the 30-44 year-old group,
younger people. included too). This figure increases to 15.8% lived in rented homes in 2007,
50% among the youngest group (16-29 versus 24.2% in 2017, a rise of 8.4%.
Rented homes at market price by age group
50%
40%
30%
20%
10%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
16-19 years 30-44 years 45-64 years Total
Source: Living conditions survey, Spanish National Statistics Institute
Residential Report Spain | 2018 41Many Spanish nationals do not have In fact, the weighting of rented homes rental or co-op amount for a
sufficient savings to pay a deposit or is lower than the European average minimum 25-year period.
face difficulties in accessing financing, (19.2%, and a far cry from countries
which coupled with a shift in mentality such as Switzerland (50.2%), Germany ıı Pave the way for the young
and socio-demographic changes, (39.9%) and Denmark (37.9%)) population to access adequate
means that the rental market will and respectable rented housing.
continue to thrive. The 2018-2021 State Housing Plan
comprises nine programmes, of ıı Ensure that the elderly
The State Housing Plan (see table) sets which four are geared towards population are able to enjoy
out a series of subsidies for young, low promoting the idea of renting with the adequate and respectable
income tenants and developers looking following objectives: rented or co-operative
to grow the rental market in Spain, housing at capped prices via
which remains less mature than in ıı Contribute to an increase in the the promotion of residential
neighbouring countries. amount of public and private complexes with specially-
rented or co-operative homes adapted facilities and
available, setting out a maximum communal services.
Rented homes at market price by European countries
60
50
% of rented homes
40
30
20
10
0
Switzerland
Germany
Spain
Denmark
Sweden
Luxembourg
Greece
EU 28
UK
Italy
Czech Republic
Cyprus
Netherlands
Austria
Belgium
France
Ireland
Finland
Portugal
Norway
Slovakia
Latvia
Slovenia
Poland
Hungary
Estonia
Malta
Croatia
Romania
Lithuania
Source: Eurostat
42 Residential Report Spain | 2018Residential Report Spain | 2018 43
State Housing Plan
In order to meet its objectives, the specifically programmes 2, 4, 8 and and grants for developers, young
State Housing Plan 2018-2021 – 91 – envisage a series of subsidies tenants and those on low incomes.
Programme 2:
Subsidies to rent a home
Facilitate access to and long-term occupancy of rental accommodation for
low-income segments of the population
Scope of the subsidies
ıı In general cases: up to 40% of the monthly rent
Eligible persons
ıı Those over 65: up to 50% of monthly rent
Tenants
ıı Subsidy of up to 30% in the tranche spanning €601 to
€900 in certain circumstances determined by Spain’s
Autonomous Communities
Requirements
Primary and permanent residence
Income threshold:
ıı 3x IPREM (Benchmark index for the calculation of subsidies)
ıı 4x IPREM: general large family category and people with disabilities
ıı 5x IPREM: special large family category and people with a certain degree of disability.
Rental ceiling:
ıı Generally €600 per month
ıı €900 per month in certain circumstances that are determined by Spain’s Autonomous
Communities.
1
See
https://www.fomento.gob.es/MFOM/LANG_CASTELLANO/DIRECCIONES_GENERALES/ARQ_VIVIENDA/APOYO_EMANCIPACION/
POLITICAVIV/ for further details
44 Residential Report Spain | 2018Programme 4:
Foster creation of rental stock
Foster the creation of publicly or privately-owned homes (new or following
refurbishment) to be allocated to the rental or co-operative markets for a
minimum term of 25 years.
Eligible persons
Natural persons of legal age. Scope of the subsidies
Public authorities, public and private bodies and entities, ıı Option 1: up to
public, private or semi-private companies and other €36,750 per residence
companies in which the Public Authorities hold a stake. capped at 50% of the
investment
Foundations, social enterprises and their associations, housing ıı Option 2: up to
cooperatives, NGOs and public interest associations and €31,550 per residence
those referred to in the fifth additional provision of the Local capped at 40% of the
Authorities Act 7/1985 of 2 April. investment
Rental contract requirements
Primary and permanent residence
Income threshold of the tenants:
ıı Option 1: up to 3x IPREM
ıı Option 2: up to 4.5x IPREM
Rental price:
ıı Option 1: up to €5.5 per square metre
ıı Option 2: up to €7 per square metre
Residential Report Spain | 2018 45Programme 8:
Subsidy programme for the young
Afford access to decent and suitable housing for those aged under 35, be it for rental
properties or through direct subsidies to buy a home in municipalities of less than
5,000 inhabitants.
Scope of the subsidies
• Rental subsidies
Eligible persons ıı Up to 50% of monthly rent
ıı Up to 30% on the tranche between €601 and €900
Those aged under
35 • Help-to buy-scheme
ıı Up to €10,800 capped at 20% of the purchase price (less
than €100,000)..
Requirements
Rental subsidies:
Primary and permanent residence
Total household income must be less than:
ıı 3x IPREM in the general category
ıı 4x IPREM general large family category and people with disabilities
ıı 5x IPREM special large family category and people with a certain degree of disability
ıı Maximum monthly rent of €600
ıı Maximum monthly rent of €900 in certain circumstances determined by Spain’s Autonomous Communities
Help-to-buy scheme:
ıı Primary and permanent residence
ıı Total household income must be less than:
•3x IPREM in the general category
•4x IPREM general large family category and people with disabilities
• 5x IPREM special large family category and people with a certain degree of disability
ıı Purchase price of under €100,000
46 Residential Report Spain | 2018Programme 9:
Programme to foster the creation of homes for the
elderly and those with disabilities
Foster the creation or refurbishment of homes to be allocated for a minimum term of 40
years to the rental or co-operative markets for elderly or disabled tenants, providing them
with adapted facilities and communal services.
Eligible persons
Scope of the subsidies
Public authorities, public and private bodies and entities,
public, private or semi-private companies and other ıı Up to €400 per square
companies in which the Public Authorities hold a stake. metre of usable living
space capped at 40%
Foundations, social enterprises and their associations, of the investment
housing cooperatives, NGOs and public interest
associations.
Requirements
Primary and permanent residence
ıı Those aged over 65 or with a disability
ıı Income of less than 5x IPREM (total household income))
ıı Not property owners
ıı Net worth or assets of under €200,000
ıı Rental price/assignment per month: up to €9.5 / sqm of usable living space
Residential Report Spain | 2018 47Rental levels
Demand for rented housing continues recommended by the Bank
to rise in a market where supply has of Spain.
traditionally been held by private
individuals and where the existence Increases in rental levels
of large rented housing portfolios and the price per square
managed by companies is still at a metre are somewhat varied
premium. There is not enough supply according to location, as
(or quality is low) to satisfy the demand, double-digit growth figures
which is driving rental prices upwards. in cities contrast with those in
medium-sized centres, which
As with purchase prices, rental prices are considerably lower or where
have been rising sharply over the prices are still actually falling.
last two to three years. According to
data published by Idealista, prices Prices will continue to rise
in Spain rose by 8.8% in Q1 2018 to throughout 2018 in the country’s
€10.60 per square metre per month. major urban hubs, thanks to
This represents an 18.3% hike YoY. high demand and a scarce
According to our forecasts, the supply of quality products. In
average price is set to increase by Madrid for example, rental levels
6.1% over the next three years. have grown by 11% versus 2016,
while Barcelona prices are up by
Despite the increases of prices, the 8%. The price per square in these
housing affordability rate stands at cities is significantly higher than the
18%, still well below the 30% maximum nationwide average.
Price per square metre, rented housing
20.0 €
19.0 €
18.0 €
17.0 €
16.0 €
15.0 €
14.0 €
13.0 €
12.0 €
11.0 €
10.0 €
2010 2011 2012 2013 2014 2015 2016 2017
Madrid Barcelona
Source: Idealista
48 Residential Report Spain | 2018Price per square metre, rented housing
Unit price, rented housing (€/sqm)
< 6.0 €/sqm
6.0 - 8.0 €/sqm
8.0 - 10.0 €/sqm
10.0- 12.0 €/sqm
> 12.0 €/sqm
Source: JLL based on Idealista data
Residential Report Spain | 2018 49Yields on buy-to-let homes
In a landscape of low interest rates, Occupancy in the assets of major professionalism within the sector.
the yields offered on buy-to-let portfolios is in the region of 85-90%,
homes are high in comparison to with tenant turnover equalling 35% Investment in rented housing is
those generated by other financial and OPEX amounting to approximately witnessing a radical transformation
products. 15 to 20% of rental levels. The average with the creation of Socimis [Reits]
period of a property lying empty and entry of institutional investors
According to Bank of Spain figures, before a new rental contract is signed into what until now has been an
investment in residential property fluctuates between six weeks and three underdeveloped sector in Spain.
offered a gross rental yield of 4.2% in months, depending on location.
Q4 2017. This figure jumps to 11.4% Several residential Socimis specialising
if the rise in property prices over the The growth of the rental market, in rentals have entered into the market.
last 12 months is taken into account. increase in rental levels and yields
These yields are in stark contrast to on offer are sparking investor One of the major players is Testa
the 1.5% earned on 10-year bonds. interest and triggering greater Residencial, the biggest residential
Listed (REIT - LISTED MAB) Mkt Cap (€M) 2017 Housing units
FIDERE 255.5 2,001
Albirana 168 5,000
ELAIA 119 41
Entrecampos cuatro 98.4 215
Grupo Ortiz 75.3 352
VITRUVIO 68.2 n.d.
OPTIMUM 59.9 n.d
Hadley 56 355
OPTIMUM III 54.5 121
QUONIA 44.2 n.d.
VBARE 28.9 131
AL BRECK SOCIMI (RREF II) 27 639
Colon Viviendas 19.6 298
Domo Activos 7.7 80
PROMORENT 3.7 11
Total 1,085,9 9,244
Unlisted (REIT - NOT LISTED MAB) Housing units
Testa Residencial 9,041
Tempore Properties 1,500
Rembrandt Activos Residenciales 491
Quid Pro Quo 158
Elix n.d.
Total 11,190
50 Residential Report Spain | 2018Socimi in Spain with 9,000 rented Testa Residencial, Albirana in the management of these
homes and a portfolio valued at 2.2 Properties, Fidere (the latter two assets.
billion euros, which is planning to are both owned by Blackstone) and
debut on the stock market in mid-2018. Témpore are the leading Socimis in Major institutional investors require
terms of rented homes owned. sizeable batches of assets in order to
The Socimi, conceived in 2016 as a joint optimise operating costs.
venture between Merlin and the banks Nevertheless, the market remains
with shares in Metrovacesa, reached an fragmented and the banks continue Socimis such as Testa or servicer
agreement in 2017 with Acciona to add to hoard large portfolios of homes. Azora are seeking to swell their
1,058 new homes to its portfolio, on asset portfolios by creating rented
top of the 1,500 homes to be included One of the main obstacles faced homes through joint projects with
on the back of a recent agreement by the sector is a lack of entire developers and construction firms.
signed by BuildingCenter, the real buildings of rented homes which
estate arm of CaixaBank. would facilitate increased efficiency
Residential Report Spain | 2018 5106. Solutions and divestment of
non performing assets
52 Residential Report Spain | 2018Backdrop to the solutions - financial systems. Some of the association with international funds
major milestones in this process have to create professional servicers to
developed to reduce the included: maximise retail disposals.
non-performing assets
in the financial system ıı The need for bailouts or resolution ıı The start of an institutional market
of many entities, creating new for divestment of assets through
entities to achieve this (FROB, portfolios of non-performing loans
In the earlier sections of this report, JUR) under various memoranda of (NPLs) and real estate assets (REOs)
we have detailed the weaknesses in understanding in the sector.
risk management in financial entities These milestones have been
and the collapse in the real-estate ıı The creation of a Spanish Bad Bank developing since 2011-2012, with 2017
market since its 2007 peak, and how (SAREB) to manage non-performing seeing the largest volume or non-
these have resulted in a massive stock assets in the real estate sector performing assets traded in the market
of non-performing assets - mostly originated by entities reporting to from the balance sheets of financial
secured against real estate - in Spain's the FROB. entities and SAREB.
financial entities.
ıı Segregation of duties in banks The pro forma situation of non-
Managing these non-performing assets that were not bailed out, for the performing assets in the Spanish
has been an enormous challenge for management and divestment of non- system at year-end 2017 is shown
the Spanish - and indeed European performing assets, including cases of below.
Distressed assets (%) - December 2017
2,8 2,2 1,5
4,0
4,1 30,1
4,7
Santander ES (+Popular) Liberbank
4,9 Caixabank Unicaja
Bankia (+BMN) Kutxabank
11,4 Sabadell Ibercaja
BBVA ES Abanca
28,5 Cajamar Bankinter
16,3
19,7
35
REOs
30 NPLs
25
20
15
10
5
0
Caixabank
Bankia (+BMN)
Sabadell
BBVA ES
Cajamar
Liberbank
Unicaja
Kutxabank
Ibercaja
Abanca
Bankinter
Santander ES
(+ Popular)
*Figures in billion €
Source: own elaboration based on the data of each financial institution
Residential Report Spain | 2018 53Disposal of non-performing assets in 2017
The disposal of assets in 2017 included a number of flagship international transactions, resulting in a new focus for both sellers
and investors:
Project
Horizon
BBVA, Santander and Banco Popular Promoción), and seeking liquidity for relationship and the advice when the
contributed land to Metrovacesa Suelo these through the capital markets. new company was floated.
y Promoción to maximise the value
of its assets, through development of The total value of land in this deal In line with this deal, both SAREB and
thousands of homes over the coming was around €1.25 billion. JLL was Solvia/Sabadell have announced
years, thus transforming a real estate the main advisor for both the sellers similar strategies, based on land
asset into a holding in a property (financial entities) and the buyer banks and how they can be turned
developer (Metrovacesa Suelo y (Metrovacesa), continuing the into vehicles.
Project
Quásar
Following the resolution and sale of retain 49% of the capital, and which after completion of the Santander
Banco Popular, the purchaser (the includes both foreclosed assets and deal. JLL was also part of the pool of
Santander Group) disposed of all of NPLs in its scope. advisors for the buyer (Cerberus).
the bank's non-performing real estate
exposure, in a process organised by With an approach similar to Quasar, Similarly, although on a smaller scale,
Morgan Stanley. This deal - which was
although in a bilateral format with Liberbank disposed of a large chunk of
worth over €10 billion at market value
(with a gross value of more than €30 no need for an organised process, its non-performing real estate assets in
billion) - was agreed with Blackstone, BBVA disposed of €5 billion (at market a vehicle acquired by Bain Capital, with
with JLL as the lead advisor, in the form value, €17.8 billion gross value) of non- the participation of the bank and one
of a vehicle in which Santander will performing real estate assets, shortly of its benchmark shares (OceanWood).
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