RESIDENTIAL MARKET IN SPAIN EXECUTIVE SUMMARY Third quarter 2016
The main indicators of the residential market in Spain confirm the consolidation of the sector's growth in 2016, along the same lines as at the end of 2015. However, the evolution is taking place at three different speeds: regions with significant growth in activity, that are expected to continue recovering in 2016 and 2017; locations that still have stock levels to be absorbed due to their recovery is slower; and areas with limited prospects of activity upturn for the medium term. 2
1/ PRODUCTION 62,000 74,400 HOMES STARTED COMPLETED HOMES +31.4% 56,550 +20% 68,000 GALICIA 37.2% COMMUNITY OF MADRID 23.1% HOUSING STARTS 2015-2016E variation rate ASTURIAS 30.1% EXTREMADURA 19.0% CANTABRIA 73.9% CASTILLA Y LEÓN 70.5% CASTILLA-LA MANCHA 12.7% BASQUE COUNTRY 73.5% ARAGON 49.4% LA RIOJA 51.5% NAVARRE 14.4% CATALONIA 12.5% BALEARIC ISLANDS 52.7% COMMUNITY OF VALENCIA 42.5% +25.2% +20% ANDALUSIA 20.0% REGION OF MURCIA 11.2% CANARY ISLANDS 57.8% CEUTA AND MELILLA No data available Communities with a higher variation rate than the Spanish average Source: Servihabitat and Real Estate Chair of the IPE Note: E (estimate) 3
2/ STOCK 2016E 2017F NEW CONSTRUCTION STOCK Housing stock in 2016 per 10,000 inhabitants ASTURIAS CANTABRIA 130.3 147.8 BASQUE COUNTRY 53.3 LA RIOJA 278.5 NAVARRE 25.6 388,000-18.8% 315,000 New construction stock levels are not decreasing in a uniform manner. The increasingly selective demand is not helping with this reduction in many secondary locations. In addition, the maintenance issues of some (the completed that are unable to draw buyers or those housing developments that remain under construction) are becoming increasingly serious. GALICIA 114.4 COMMUNITY OF MADRID 10.6 CASTILLA Y LEÓN 121.6 CASTILLA-LA MANCHA 269.7 EXTREMADURA 21.2 ARAGON 117.9 CATALONIA 20.6 BALEARIC ISLANDS 17.9 ANDALUSIA 54.1 COMMUNITY OF VALENCIA 228.8 REGION OF MURCIA 160.8 CANARY ISLANDS 19.1 CEUTA AND MELILLA No data available Communities with an stock per 10,000 inhabitants higher than the Spanish inhabitants Source: Spanish National Institute of Statistics, Servihabitat and Real Estate Chair of the IPE Note: E (estimate) 4
3/ RESIDENTIAL TRANSACTIONS AND OPERATIONS RESIDENTIAL TRANSACTIONS 2015-2016E variation rate ASTURIAS 27.6% CANTABRIA 20.2% BASQUE COUNTRY 30.1% LA RIOJA 17.9% NAVARRE 19.6% +26% 445,000 * GALICIA 17.5% COMMUNITY OF MADRID 29.9% CASTILLA Y LEÓN 58.9% ARAGON 26.7% CATALONIA 20.5% BALEARIC ISLANDS 40.9% +12% 500,000 EXTREMADURA 18.9% CASTILLA-LA MANCHA 27.2% COMMUNITY OF VALENCIA 23.2% The drivers of this growth are: ANDALUSIA 23.3% REGION OF MURCIA 21.8% > More mortgage credits granted. > Higher number of investors who find refuge in housing instead of other types of assets, as proven by the significant number of cash transactions. > Lower unemployment rates and increased job stability. > Stabilized prices. CANARY ISLANDS 24.5% CEUTA AND MELILLA 15.2% Communities with a higher variation rate than the Spanish average *According to data from the Professional Association of Registrars Source: Servihabitat and Real Estate Chair of the IPE Note: E (estimate) 5
4/ PRICES 2016 2017 EVOLUTION OF PRICE BY COMMUNITIES 2015-2016E variation rate 4.6% 4.3% The average effort that a Spanish household must make to acquire a home, in terms of the number of years of gross income that should be employed to pay for it, has continued the upward trend that began in early 2015. This figure was approximately six years in March 2016, far from the nine years that were reached in 2007. GALICIA 4.3% COMMUNITY OF MADRID 7.2% ASTURIAS 4.8% EXTREMADURA 7.6% CANTABRIA 3.3% CASTILLA Y LEÓN 4.4% CASTILLA-LA MANCHA 8.8% BASQUE COUNTRY 6.0% ARAGON 8.4% LA RIOJA 9.5% NAVARRE 7.0% CATALONIA 7.3% BALEARIC ISLANDS 5.7% COMMUNITY OF VALENCIA 9.6% ANDALUSIA 1.7% REGION OF MURCIA 5.9% 9 YEARS GROSS ANNUAL INCOME 6 YEARS CANARY ISLANDS 5.7% CEUTA AND MELILLA No data available Communities with a lower variation rate than the Spanish average 2007 2016 Source: Servihabitat and Real Estate Chair of the IPE Note: E (estimate) 6
5/ RENTAL MARKET 22.7% of first in Spain are rented: nearly 4.2 million The average rental price for an 80-90 sqm home in Spain is 540 60% 50% EVOLUTION OF THE RENTAL MARKET WITH RESPECT TO RESIDENTIAL TRANSACTIONS. The average gross profitability for a rental home in Spain is 5.4%, according to calculations made on current average prices of housing offer in Spain 40% 30% 20% 37% of rental are settled by single-parent households 10% 0% SEPT 2015 MARCH 2016 SEPT 2016 73.5% of rental have less than 90 sqm THE NUMBER OF TRANSACTIONS WILL SIGNIFICANTLY INCREASE THE NUMBER OF TRANSACTIONS WILL SLIGHTLY INCREASE THE NUMBER OF TRANSACTIONS WILL SLIGHTLY DECREASE THE NUMBER OF TRANSACTIONS WILL SIGNIFICANTLY DECREASE IT WILL REMAIN STABLE WITH RESPECT TO RESIDENTIAL TRANSACTIONS Source: Servihabitat 57.7% of rented primary residences were built before 1981 7
6/ FOREIGN BUYERS NATIONALITY OF FOREIGN BUYERS ACCORDING TO THE NETWORK OF PARTNER AGENTS (APIS). 76,212 purchased by foreigners between January and June 2016 (+18.4) 71,112 residents 5,100 non-residents UNITED KINGDOM FRANCE GERMANY SCANDINAVIAN COUNTRIES BELGIUM THE NETHERLANDS Source: Ministry of Public Works and own sources ITALY RUSSIA MOROCCO 17.5% of home sales involve foreign buyers LATIN AMERICA ROMANIA OTHERS 0% 5% 10% 15% 20% 25% Source: Servihabitat and Network of partner agents (APIs) 85.7% of purchases made by non-resident foreigners are concentrated in six provinces: Alicante, Málaga, Almeria, Balearic Islands, Murcia, and Las Palmas. Buyers from United Kingdom are the leaders in the market, followed by French, German and the ones from Scandinavian Countries. 8
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