New homes on the up as Spanish construction rebounds

Spain’s construction seector continues to enjoy a rebound, with the industry forecast to grow over the coming four years.

Following six years of contraction, the Spanish construction industry recovered in 2015, registering growth of 0.2 per cent in real terms. This recovery continued in 2016, in line with improvements in the country’s economic growth.

A new report from Timetric expects the industry to expand in real terms between now and 2021, driven by the government’s focus on the development of transport infrastructure, energy and utilities facilities and affordable housing.

Under the National Rural Development Program for 2014–2020, the government plans to spend EUR435.0 million (US$482.9 million) to develop efficient irrigation systems and other agricultural infrastructure by 2020.

In March 2017, the government announced its plan to spend EUR4.2 billion (US$4.8 billion) on the development of transport infrastructure, housing units and other infrastructure during 2017–2020. This is expected to drive the industry’s growth, with construction output in real terms forecast to record a compound annual growth rate (CAGR) of 2.84 per cent through to 2021.

According to Timetric, residential construction is expected to be the largest market in the industry over the forecast period, constituting 38.4 per cent of the industry’s total value in 2021.

The report arrives as the mood is positive among Spain’s housebuilders. Taylor Wimpey España saw its completions surge by 21 per cent in 2016 from the previous year.

According to Eurostat data, Spain is now enjoying one of the biggest improvements in construction in the Eurozone, with output climbing 2.2 per cent in Q2 2017, the same as Slovakia and second only to Slovenia, where construction output rose 12.1 per cent.

Data from Tinsa also highlights the ongoing decline in the unsold new-built homes from the country’s boom years, with 340,000 homes now available on the market, 21 per cent from the number of unsold homes sitting on the market in 2008.

Building land across the country is enough to provide 1.6 million new homes, but it is primarily in areas where there is little demand, as the market recovery centres on popular coastal hotspots and major cities. Indeed, land is in short supply in Madrid, Barcelona, Malaga, Ibiza, Palma, Marbella, Teenrife and Alicate, notes Spanish Property Insight. New home construction, meanwhile, is being led by Madrid (15,900), Alicante (5,500) and Barcelona (4,500).

Demand from investors shows no sign of slowing in these areas, however.

“We’ve had an extremely successful first half to 2017, particularly in Spain’s top three cities, Madrid, Barcelona and Valencia as well as along the Barcelona coast,” comments Lucas Fox co-founder Alexander Vaughan. “Spain’s economy is the fastest growing in the Eurozone, bringing greater confidence back the property market. We have seen growing interest from property investors, who now regard Spanish real estate as offering excellent potential for capital gains and profitability through short and long term rentals. We expect that the price recovery now taking place in the cities will extend to the suburbs and other parts of the country in the forthcoming months.”


Spain’s building business comes back to life

7th November 2017

Spain’s house-building business continues to come back to life, with new figures showing that planning approvals have surged in 2016.

Data from the Ministry of Public Works shows that planning approvals jumped 36 per cent in the first eight months of the year, compared to the same period of 2015.

The rebound in Spain’s construction industry has been notable throughout 2016, as the sector slowly begins to return to growth after home-building volumes plunged 95 per cent from the market’s building boom peak to its post-recession trough.

Indeed, residential building activity has now risen for two years on the trot, with a seven-year decline ending in 2014. Activity leapt 42.5 per cent in 2015, before construction continued to climb in 2016 – a promising sign of returning momentum, even though activity remains significantly lower than its years of roaring success.

Flats are driving the slow but steady recovery, making up 31,751 of the approvals granted between January and August 2016, while single-family homes made up 11,109 approvals.


New home launches in Barcelona continue to boom

3rd November 2016

Barcelona’s home-building sector continues to boom, with the number of new developments launched in Barcelona overtaking the number of completions for the first time in 10 years.

Barcelona issued 639 permissions to build new homes, according to the latest data from the Ministry of Public Works, up 40 per cent year-on-year. The city new makes up more than half of the building permits granted in the Catalonia region.

Engel & Völker has seen its new home-related activity rise 27 per cent in the last year, with 25 new develompents or restoration projects on its Barcelona books – a figure that the company expects will double in 2017.

The agency reports that Barcelona’s building boom has now led to a lack of plots in the centre of the city, pushing activity to the outer areas of Les Corts, Sants, Gracia Nova and Guinardó. Where construction is not permitted, restoration projects are also underway in places such as Gracia, Ciutat Vella and Eixample.

The latter two make up three-quarters of purchases by foreign buyers, and 15 per cent of those by domestic buyers, says Jorge Campreciós, Director of Property Development of Engel & Völkers.

“Clients are increasingly asking for financing to acquire this type of housing (even if they can afford to buy outright) to take advantage of the low interest rates,” he tells OPP.Today. “This is one of the major differences from the pre-crisis years when conditions within the banking community were not so favourable. This factor is underlined by the latest figures released by the General Council of Notaries which indicates that mortgage loans have increased in August by 21.3 per cent over the previous year.”


Barcelona leads Spain’s new home boom

19th September 2016

Barcelona is leading a mini-boom in Spain’s construction industry. Sales of new Spanish homes are expected to continue climbing in 2016, with CBRE forecasting the market for new homes in the Catalonian city to double in the next decade.

At the start of the year, a survey by CBRE of found that 72.3 per cent of 100 real estate executives expected more than 100,000 new homes to be constructed in 2016.

In the second half of the year, the general mood appears positive. Official figures at the beginning of August say that new home sales surged 12 per cent in May 2016, compared to May 2015, a promising indicator of recovery in Spain’s construction sector. The most recent H1 figures released by homebuilder Taylor Wimpey España also show a substantial increase in the company’s total order book of 29.5 per cent year-on-year.

A more recent report from CBRE, meanwhile, highlights Barcelona as a particularly booming area, predicting the market in the region to almost double in the coming decade, with potential demand for 7,900 new homes each year in the province between 2016 and 2025. That would require a “robust” recovery, notes Spanish Property Insight, although planning approvals did rebound to 4,540 units in 2015, above the number of completions for the first time since 2007, which demonstrates recovery is underway.

Guifré Homedes Amat, the International Sales Director of Amat Immobiliaris, reports that local demand for new homes has improved in the area this year, driving a “major change” in the new construction sector.

“Demand for new housing is driven by foreign purchases of second homes in coastal areas, while in the Catalan capital international buyer accounts for about 20 per cent of the total, with interest mainly in the Eixample,” reports Europa Press, quoting CBRE’s report.

Rising income, low interest rates and higher financing, meanwhile, makes for a favourable investment environment, with the lack of developable land set to drive up prices in Madrid, Barcelona and the Balearic Islands.

In the last year, searches for Barcelona on have risen 9.1 per cent, as overseas buyers increasingly turn their attention to the city. As well the potential for investment, though, agents also highlight a general rise in interest for new builds, due to the quality and lifestyle benefits they off.

Stefan Noben, UK Market Manager at TM Real Estate Group, comments: “We predict that the sales of new homes will continue to rise this year and the idea of buying off-plan is set to rise in popularity. Indeed, many of our customers start off thinking that they would like to buy what looks like a ‘cheap’ older property and renovate it themselves but very quickly realise that the amenities and high-end interiors that come with buying a quality new-build are just too tempting.”