New housing stock amounts to over 500,000 homes. There still exist areas with high disequilibrium and over supply, stock is decreasing progressively, primarily in big cities, however 30% of the supply is located in more complex markets where houses are considered difficult to sell. Stock of new homes is expected to decrease by 24.5% in 2016 down to 350,000 homes (source: ASPRIMA).

Está previsto que la oferta de vivienda nueva se reduzca un 24,5% en 2016 hasta las 350.000 unidades (fuente: Asprima).

The number of residential transactions continues the positive trend initiated in 2014 and is confirmed by 2015 data. Residential transactions increased by approximately 11% in 2015, in part thanks to second hand homes deals which represent 78% of total transactions.

Meanwhile, the demand fundamentals are improving. Employment continues to grow and unemployment rate fell again. Both data affiliation to Social Security as EPA in 2015 confirmed the positive trend for the labor market, which, together with the recovery of consumer confidence, is driving demand to a stronger position. Foreign investors, and mainly investors from UK (23.95%), are major players in the Spanish residential sector, as they account for 14% of total transactions.

In 2015, residential prices increased driven by the higher demand. According to Ministerio de Fomento,the average price increase by 1.9%.

However, it cannot be generalized , since the price spike is registered essentially in very specific areas like large cities (Madrid, Barcelona) or tourist areas (the Balearic Islands and Costa del Sol).

There is interest in the residential investment market, both for direct investment as for debt portfolios. The interest is driven by the significant price adjustment and positive macroeconomic outlook coupled with low interest rates.

There are attractive opportunities in large portfolio purchase for subsequent rental and management, as well as for value creation through development and refurbishment of buildings.

Therefore, the residential market offers again investment opportunities, mainly in assets located in prime locations in big cities and touristic areas, Madrid, Barcelona, the Balearic Islands and Costa del Sol.

Source: JLL