Spain Real Estate News

Spanish property company Polaris World, the biggest holiday home developer in Spain, has reached an eleventh hour agreement with its creditors and is set to avoid bankruptcy proceedings.

 
It has reached an agreement to swap debt for assets after four months of protracted negotiations. Four of its main lenders, all Spanish banks, will buy finished properties, golf courses, land and hotels in return for €83 million, according to reports in the Spanish press.
 
This will give the struggling developer a cash injection that it hopes will enable the business to continue until the real estate markets picks up.
 
This is the second time in less than a year that Polaris World has avoided bankruptcy proceedings. Last autumn it negotiated a €900 million debt-for-land exchange with its banking creditors. As a result its creditors now have to work out what to do with 6 million square metres of land in Alhama, Murcia.
 
Polaris World was founded in 2001 by local builders Pedro García Meroño and Facundo Armero. Armero sold out to Credit Suisse in 2006 for €500 million and Meroño is now the largest shareholder.
 
The company has seven golf developments in Murcia: Mar Menor Golf Resort, La Torre Golf Resort, El Valle Golf Resort, Hacienda Riquelme, Condado de Alhama, La Loma Golf Resort and Las Terrazas. At the top of the boom its turnover was more than €800 million and it had more than 2,000 employees.
 
Recent marketing from Polaris World have included 90% mortgages for overseas buyers for some of its developments. The company is hopeful that the real estate market recovery is underway in Spain.
 
Indeed, the latest figures from the National Institute of Statistics indicate that the property market grew by 16% in February compared to the same month last year. According to analysts the market has touched bottom and is starting to recovery after two years of decline but the improvement is patchy and volumes are still 47% below what they were in 2007.
 
And the latest property price index from Tinsa shows that prices fell by 5.3% over the 12 months to the end of March, a slight improvement on the previous month. The figures from Tinsa, one of Spain’s leading appraisal companies, are however based on their own valuations not actual transaction prices.
 
But there are no signs of foreign property buyers returning to the Spanish market. The latest figures from the Bank of Spain shows that the amount of money invested by foreigners in Spanish propeerty has fallen to the lowest level in a decade.
 
Foreigners invested €3.7 billion in Spanish property last year, the lowest level since 1999, when it was €2.9 billion. Foreign investment in Spanish real estate was down 32% last year compared to 2008, and by 48% compared to 2003, when foreign investment in Spanish property peaked.
 
But the weak economy, high unemployment and enormous inventory of new houses will slowdown any recovery in the Spanish market, according to a report from PricewaterhouseCoopers and the Urban Land Institute into European property market trends.
 
And according to another recent report from Deutsche Bank, a recovery is unlikely before 2012 and it might even be 2015 before there is an upturn.

Source:  PropertyWire

According to house price statistics released today by the Ministry of Housing, in the first quarter of 2010 the average price of property in Spain was 1865.7 euros per square metre, representing a decrease of 1.4% in respect to the previous quarter and 4.7% when compared annually.

The annual drop of 4.7% represents a moderation of 1.6 percent compared to the decline of 6.3% recorded at the end of 2009. Furthermore, between January and March the price of property fell 1.4% compared with the last quarter of 2009. With these declines, the price of Spanish housing is now at the lowest levels experienced since 2005.

In the first three months of the year, the price of new houses (up to two years old) stood at 1869.9 euros per square meter, representing an annual fall of 4.6% and 1.6% quarterly over the same period of 2009. Meanwhile, the price of a resale property in Spain (more than two years old), was 1863.4 euros per square meter, a decrease of 4.8% year on year and 0.8% quarterly.

As a comparison, the square meter price of social housing (VPO) stood at 1133.4 euros in the first quarter, representing a 0.8% increase over the end of last year and an annual increase of 1.9%. Taking into account these VPO statistics, the overall house price in the first quarter of 2010 experienced a decrease of 4.5% in annual terms, while the quarterly rate index had a decrease of 1.3%.

The data also revealed the most expensive and the cheapest property in Spain: For towns with more than 25,000 inhabitants, the most expensive place to buy property in Spain was San Sebastian (3644.5 euros per square metre), followed by Barcelona (3441.6 euros), property in Sant Cugat del Vallés (3328.8 euros), Madrid (3296.3 euros) and Getxo (3267.7 euros). At the other end of the scale, the lowest prices were found in Hellin (772.7 euros), Tomelloso (797.8 euros), Elda (880.5 euros), Ontiyent (884.2 euros) and Villarrobledo (886 euros).

Source:  Kyero.com

The fall in Spanish house prices is easing, according to new figures.

The decline in values of Spanish property fell at a slower pace in the first quarter, dropping 4.5%.

But the market is still some way from turning positive, government data showed.

The year-on-year decline in the first three months of the year, according to data released by the Housing Ministry, was a small improvement from a 6.2% annual fall at the end of 2009.

Prices were falling by a record rate of 8.2% in the second quarter of last year.

The data was in line with a private report by surveyor Tinsa which said house prices fell at an annual rate of 5.5% in February, the same as in January.

The figures are thought to mask far greater declines in frothier parts of the Spanish property market, particularly in the Costas where as many as 600,000 Britons live. Many cashed in on property gains at home to buy in Spain, pushing up prices locally.

Spain saw one of the biggest booms in house prices, with values rising three-fold between 1995 and 2007, according to the Housing Ministry.

The average number of housing starts in Spain in the final stage of the boom years was 700,000 per year yet the population has only been rising by about 600,000 per year, according to ratings agency S&P. Britain's rate of building, in contrast peaked at 160,000 in 2007.

The credit crunch, sparked by bad mortgage lending, that began in 2007 and led to global recession has had a dramatic impact on Spain. The ending of the construction boom has sent the unemployment rate soaring to 20%.

Demand for property in areas dominated by Britons has also been further undermined by the falling value of the pound in the past 18 months, which has made life more expensive for expats and also made it more expensive for potential buyers.

Almost four million Brits living around the globe are planning a mass return to home shores, according to some estimates.

Last week a Reuters poll predicted Spanish house prices would fall by 8% this year and the slide would continue in 2011 before stabilising the year after.

Read more: http://www.thisismoney.co.uk/mortgages-and-homes/house-prices/article.html?in_article_id=503071&in_page_id=57#ixzz0lccVeZFb
 

The property sales statistics released today by the National Statistics Institute (INE) showed the highest increase of its history, whose first comparable data dates back to 2008 and has always reflected declines in the property market until this year. In total, 41,033 home sales were recorded in February, representing an increase of 18.7% over the same month in 2009 and consolidating the rebound experienced in January.

It is encouraging that this is the second consecutive monthly increase in property purchases and sales, rising 2.1% (year on year) in January, after two years of continuous decline. Last year ended with an overall fall in the sale of property of 24.9% over 2008, with a total of 414,811 transactions.

The month on month (January to February) figures for property sales also increased, by 7.1%, and the first two months of the year demonstrate an accumulated rise of 10.1% over the same period in 2009. The 18.7% year on year growth is represented by a 23.7% rise in resale property transactions (19,665), and an increase of 14.4% in new build property sales in Spain (21,368).

Of the 41,033 property sales transactions recorded in February, 87.1% were on general housing and 12.9% were social housing. This reflects a 16% rise in general housing sales compared to February 2009 and considerable 40.7% increase in social housing sales.

As is typical, there are substantial differences in property sales in different areas of Spain, with 60.6% of all home sales made in the second month of the year being recorded in only Andalusia, Catalonia, Valencia and Madrid.

In light of the positive results, the Minister of Housing, Beatriz Corredor, said today that 2010 “is one of the best years” to buy a house in Spain, but rejected calls to apply the super-reduced VAT (4%) rate to the entire Spanish housing market. The minister reaffirmed that only the VAT rate on social housing or from public promoters (municipalities and communities) will remain at the super-reduced rate (4%), while for the rest of the market the tax rate applicable is the reduced rate, which will soon increase from 7 to 8%.

Source:  Kyero.com

Time is running out for Spanish holiday-home developer Polaris World. It now has just 10 days to reach a deal with its creditors before it is forced to seek protection from them in court administration, reports the financial news site Eleconomista.es. Court administration is often the first step towards bankruptcy.

Polaris World has already managed to renegotiate 900 million Euros of its more than 1.2 billion Euros of debt. The sticking point is just 85 million Euros, a relatively small amount compared to the company’s overall debts.

Polaris World took the first step towards bankruptcy proceedings back in December last year, when it took advantage of a provision in the law giving companies in financial distress 3 months of breathing space to negotiate with creditors, in the hope of avoiding the more drastic step of court administration. The deadline passed on March 22, but PW announced would continue negotiating for another month, during which time it should have gone into administration, in theory.

Murcia-based Polaris World, Spain’s biggest holiday home and golf course developer, has now run out of room for manoeuvre. A deal must be reached in the next 10 days or the company, controlled for the time being by Pedro Maroño and Credit Suisse, has to file for court protection.

Slashing costs

Eleconomista reports that, in the meantime, the company is desperately trying to slash costs by shrinking its structure. It is reportedly liquidating 50 of the 70 companies in the group, selling all non-core businesses to raise money and focus on development.

What happens if PW go into administration? Well, for a start, there will be another wave of buyers trying to get out of their purchase contracts, which will just aggravate the company’s financial difficulties.
 

Source:  Spanish Property Insight

House sales in Spain were up by almost 19% in February compared with the same month last year, with 41,033 sale & purchase operations being recorded, consolidating the 2.1% increase recorded in January.

The latest figures, released today by the National Institute of Statistics (INE) show the biggest increase so far during the recession, with no increases at all having been recorded since 2008 until the beginning of this year.

The 18.7% increase was made possible by the 23.7% rise in used home sales (19,665 operations), and the 14.4% increase in new construction transactions (21,368).
 
90% of the February sale and purchase agreements related to urban property and the rest to rural.  52.2% of the urban sale and purchase agreements related to homes and the rest to commercial property.

In the second month of this year an average of 109 properties were sold per 100,000 inhabitants in Spain, with the aunonomous community of Cantabria recording the highest number of transactions with a total of 145 operations per 100,000 inhabitants.

It was followed by Navarre (138), Madrid (137), Valencia (119), Andalucia (114), Castilla y León (114), La Rioja (113), Murcia (112) and the Basque Country (110).

Below the national average were Castilla-La Mancha (108), Extremadura (105), Aragon (103), Asturias (102), Balearic Islands (97), Catalunya (92), Canary Islands (78) and Galicia (75) while the autonomous cities of Ceuta and Melilla recorded a total of 49 and 219 operations per 100,000 population, respectively.

In absolute terms, Andalucia recorded the highest number of homes sold in February (7449), followed by Madrid (7018), Catalunya (5514) and Valencia (4896).
 

Source:  ThinkSpain

They became a symbol of the global housing market crash, unsold, half-built, lining the Mediterranean like skeletal relics of a bygone, more prosperous age.

But villas and apartments on the Spanish Costas are suddenly hot property again as Britain’s second-home buyers rediscover the attractions of life in southern Spain.

Fresh from a chilly, dismal winter, drawn by falling prices and apparently undaunted by the low sterling-euro exchange rate, a new generation of would-be buyers has descended on Spain, according to the Spanish division of Taylor Wimpey.

Typical holiday home buyers are no longer “stereotype retirees”, the UK’s biggest housebuilder said. Instead, executives with families who spend an average of 60 days a year in Spain have emerged as the dominant British buyers in a region that enjoyed huge popularity during the credit-fuelled boom years.

Since then, the most oversupplied holiday apartments in Spain have suffered price falls of about 50 per cent. Properties in Palma and Mallorca were among the world’s biggest fallers last year, sliding by 22 per cent and 17 per cent, respectively, according to Knight Frank, the estate agent.

Perhaps in search of a bargain, Rightmove Overseas, the website, said that the number of searches had risen by 60 per cent compared with March last year. Portugal was its most popular search among buyers of holiday homes, it said.

Primelocation.com reported a rise in searches for international property of 72 per cent between February 2009 and 2010, with France recording the biggest annual rise of 113 per cent. Spain remained the most popular country, accounting for 32 per cent of all searches, compared with 29 per cent for France.

Savills’ office in Sotogrande, Andalucia, also said there had been a rise in inquiries from British buyers, even if many were still reluctant to commit to a purchase. James Stewart, head of the division, said: “Prices are coming back for traditional-quality properties but not in the more credit-squeezed areas. Trading is still slow but people are once again having a good look.”

Taylor Wimpey, which has offered discounts of about 30 per cent on some properties, said that 75 per cent of buyers of its apartments, which cost about €200,000 for a two-bedroom flat, were executives aged between 35 and 50 with children. Interest had been strongest in the Costa del Sol, particularly in and around Marbella, as well as the Balearic islands. The group sold one third of its newest development, just outside Marbella, offplan within a month of launching the scheme, a performance that it said was “significantly ahead of expectations”.

A spokesman for Taylor Wimpey, which began developing in Marbella for the first time in three years last month, said: “Marbella is like the South East of England rather than Salford. It was not a volume market and didn’t suffer the same over-development as other areas. Prices, therefore, did not fall as much as in other parts of Spain.” Interest in apartments in the Costa Brava in towns such as Alicante, where oversupply is a bigger problem, had been slower to pick-up.

Revenue at Taylor Wimpey España was largely flat between 2008 and 2009, at £59.8 million and £61 million, respectively, but the division made a narrower operating loss last year, at £1.4 million, compared with £2.4 million in 2008.

‘I LIKE THE WEATHER AND THE LIFESTYLE’

Derek Parrott bought his holiday home in Marbella last July as the pound slumped towards parity with the euro and Britain was in the thick of recession.

But the 61-year-old managing director of a construction company knew that with prices down by 30 or 40 per cent in Spain, there was a deal to be done — and besides, he said, he bought his three-bedroom, €270,000 apartment for the lifestyle, not as an investment.

“I just wanted to spend time there,” he said. “I like the weather and I like the lifestyle. The exchange rate did make me think twice and I went in knowing that prices will now at best remain flat for a while.”

Mr Parrott and his wife have already visited their new holiday home in Los Robles de Los Arqueros half a dozen times and plan to go six or seven times a year. “I particularly like this area. We watched the development go up and I know it has been done properly and is managed properly.

“It is not a development from hell, like you see on the television programmes.”

(Rebecca O’Connor)

Source:  Times Online