TSI
Home sales in Spain up over 12% on a quarterly basis
The number of homes sold in Spain increased by 12.1% in the second quarter compared to a year earlier and was boosted by an increasing number of foreign buyers. Data from the Ministry of Public Works shows that a total of 91,338 homes were sold in the quarter, the best second quarter since 2010. It also shows that 16.4% of the sales were to foreign residents, as the number of purchases by non-Spanish citizens rose for the 12 quarter in a row. In the 12 months from July 2013 to June 2014, some 337,115 homes were sold in Spain, a 12.2% increase from the same period a year earlier, according to the Ministry’s data. The gains were led by a 12.2% increase in the Canary Islands. Other areas continued to see sales declines but much more moderate than in previous quarters. Meanwhile, a judge in Almeria has awarded €135,000 damages to three British families who bought illegal homes a decade ago in Albox, in a case which might open the door for similar legal action around Spain. The judge ruled that they bought their homes in ‘good faith’ and decided that they deserved compensation for living with the possibility of losing their home. The judge also awarded €7,800 to another British family, whose savings were trapped in a home that was half built before work was stopped. It is estimated that more than 250,000 homes were built illegally in Andalusia during the boom years, creating an emotional and complex issue for local authorities. A plan was approved by the ruling junta in 2012 to legalise homes, but there has been little progress. A few weeks ago junta president Susana Díaz announced an additional 25,000 homes could be saved from destruction, under a new amendment to the plan. But there is still uncertainty about the fate of and ultimate legal status of the homes. For years owners, many of them expats, have not known whether their homes would be demolished. In many cases they could not rent or resell their property with the legal case ongoing. Last month prosecutors called for the demolition of 93 homes in Albox but the local mayor said the homes would likely be saved by the new legislation. ‘This whole drama of illegal homes remains a terrible stain on the reputation of Andalusia as somewhere to invest, discouraging fresh money and ultimately impoverishing the local community,’ said Mark Stucklin of Spanish Property Insight. ‘People who bought in good faith and ended up with illegal homes through no fault of their own have been treated appallingly by the Spanish authorities,’ he added. ‘It’s very probable that the homes might be legalised in a time frame that depends upon administrative procedures,’ the sentencing judge said but the judge in the Albox case went a step further, awarding damages to the owners. Developers and architects are liable for the payments. But if they can’t pay, the judge ordered the local town hall to pick up the bill for failing to control the situation and… Continue reading
UK commercial property set to see strongest returns for 25 years
The UK commercial property market may achieve returns of over 20% for 2014, making it the strongest return the country has seen in the last quarter century, according to new research. With liquidity in the market and increased investor confidence, performance for the year is forecast to be exceptional, says a new report from global real estate fund manager M&G Real Estate. Although in the medium term, M&G Real Estate’s research anticipates the market reverting to the trend level of between 6% and 8%. But the UK Real Estate Market Outlook report for September 2014 highlights that heightened confidence in the UK’s economy, with growth ahead of its closest competitors, the United States and Canada. Confidence is triggering increased occupier demand, particularly in the office and industrial markets. This demand is resulting in lower vacancy rates and accelerating rental growth. At a time of low supply of stock owing to previous constrained levels of construction, the UK property market is now attracting substantial interest from both UK and international investors. Rapid yield compression, aided by rental growth, has pushed average capital values up by 6.7% over the six months to August 2014, according to IPD. Despite declining yields, investors’ risk appetite looks set to grow with property yields continuing to offer a sizeable spread above bond yields as shown in the chart below. Notably, secondary offices in the South East are now outperforming prime assets, proving that prime is not always best. Throughout the rest of the country, secondary stock is catching up with those of prime assets as risk appetite increases but the better end of secondary will likely remain much preferred over the weaker end. ‘The UK economy and property market are experiencing rapid growth, leaving behind a period of difficulty that discouraged risk appetite across the board. It’s a different picture now as the weight of capital targeting the sector is showing no signs of let up,’ said Richard Gwilliam, head of research at M&G Real Estate. ‘Investors, however, should not be blinded by a high short term yield without fully assessing the risks to the long term income stream of an asset. The strongest option for investors looking for mid to long-term rental growth is the office market encircling London, particularly those fringe areas benefiting from infrastructure projects,’ he added. Continue reading
Micro mansions set to become popular in UK, it is suggested
Rising house prices, particularly in London, have left many people with little option but to opt for the most affordable, and sometimes smallest, home they can find, it is claimed. However, extra small living spaces or micro mansions are in fact highly sought after in many cities providing they are well designed and perfectly positioned, according to agents. In its Housing Futures report, national estate agents Strutt & Parker identifies the trend for this type of property as something we should expect to see a lot more of in the UK in the years to come. ‘Small can be beautiful. The micro mansion serves as the ultimate living solution for those who prize location over space. As urbanisation gathers pace around the world, central locations in the most sought after cities have become too expensive for the majority,’ said Stephanie McMahon, head of research at Strutt & Parker. She explained that dedicated tiny living spaces are not oddities that can be found in every city, where broom cupboards have been converted into some semblance of accommodation but carefully designed and well planned homes. ‘The rise of the micro flat looks set to mirror what has happened with modern technology. Everything in our homes will shrink as they become smarter and more compact,’ she added. Whilst proper micro mansions are not big in the UK as yet, they are far more common in Japan and the US. A micro mansion is 100 to 250 square feet, compared to a typical small bedroom flat of around 750 square feet. They often have the ceiling height to accommodate mezzanine sleeping spaces and are designed to be much like a boat with each component serving two of more uses. Typical features are under floor storage, pull down beds, steps that convert to chairs and sofas, and kitchen worktops that slide away after use. ‘Micro mansions have the potential to provide a viable solution to the UK’s housing crisis in crowded cities. They attract those requiring short term space, or who work in multiple locations and simply need a place to sleep. As our cities accelerate their pull on the global workforce, they will be increasingly popular,’ said McMahon. Continue reading
