The Borneo Post

Spain’s property market goes through the roof

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MADRID: According to a Spanish proverb, it is a bad idea to start building a house from the roof. But that is just what a Spanish firm is doing – and business is booming.

Faced with a lack of available land in big cities such as Madrid and Barcelona, constructi­on firm La Casa por el Tejado is building new apartments on rooftops – a sign that Spanish property is bouncing back eight years after a brutal crash.

Home prices are nearing precrisis levels in downtown areas of major cities, rents and mortgages are surging, the prices of hotels and resorts are sky- rocketing and a round of mergers and acquisitio­ns have broken out among major property investors.

Though the market overall is still a long way from its giddy peaks, before the global financial crisis, few would have predicted today’s recovery when a decadelong boom ended in 2008, destroying two million jobs and holing the economy.

“In Spain, we have identified more than 4,000 buildings which have available roof tops to build on,” said La Casa’s founder, Joan Artes, whose firm hoists prefabrica­ted apartments by crane onto building roofs.

“At a time when we lack space to build, we’re talking of more than two million square meters.”

The revival has helped Spain to become one of Europe’s few economic success stories, with estimated growth of 3 per cent next year.

Constructi­on accounts for 10 per cent of gross domestic product.

But there are concerns that the market could slow if interest rates rise.

Enrique Losantos, who heads the Spanish operations of real estate firm Jones Lang LaSalle, says the main risk would come from a change in monetary policy.

European Central Bank interest rates are still at rock bottom but it is due to start cutting its asset purchase program next year.

The US Federal Reserve has already raised interest rates and signalled a faster pace of increases in 2017.

“Some deals are made at very low yields and could suffer if there is some sort of shock on interest rates,” said Losantos.

Yields in the residentia­l market stand at 5.9 per cent or closer to 3 or 4 per cent in downtown Barcelona and Madrid or for premium homes, according to property website Idealista. It is 7.4 per cent and 8.4 per cent respective­ly for office and shopping space.

Those yields compare to just 1.4 per cent of Spain’s 10-year debt

A new eldorado with yields of up to 11 per cent is now taking the centre stage: hotels and tourist resorts.

Leading the pack is Hispania, partly owned by billionair­es George Soros and John Paulson, which has bought 16 hotels in Spain, mostly in the Canary Islands and in the Balearic Islands.

In a recent presentati­on to investors, the firm said its 1.1 billion euros investment in 10,532 hotel rooms was landing an average annual return of 10.1 per cent, compared to 6.5 per cent and 4.4 per cent for its office and residentia­l assets. — Reuters

 ??  ?? A prefabrica­ted apartment is set up on a building’s roof by a crane in Barcelona, Spain. Home prices are nearing pre-crisis levels in downtown areas of major cities, rents and mortgages are surging, the prices of hotels and resorts are sky-rocketing...
A prefabrica­ted apartment is set up on a building’s roof by a crane in Barcelona, Spain. Home prices are nearing pre-crisis levels in downtown areas of major cities, rents and mortgages are surging, the prices of hotels and resorts are sky-rocketing...

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