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BBVA report predicts positive 2015

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Date: 2014, 12 December

The Spanish bank BBVA has released a report on the Spanish property sector in which it forecasts that there will be a moderate recovery in 2015. The bank believes that demand for Spanish property is now at the point of inflection and prices are rapidly stabilising in what is a real turning point for the Spanish market.

The report called Spain's Real Estate Flash (Flash inmobiliario de España) was released by BBVA Research and BBVA Real Estate. The bank will begin releasing monthly updates on the Spanish property sector which will analyse the most important market variables: prices, sales, construction and mortgage concessions.

The report states that data up to November 2014 reveals a rise in demand which is due to an increase in employment and also an improvement in the levels of consumer confidence in Spain. Economic improvements are also leading to the recent rises in lending which is providing a further boost for the market.

Positive developments can also be seen in the number of construction licence concessions so far this year, up 5.7% to September (Ministry of Public Works stats). INE statistics show that investment in Spanish real estate is also up and grew by 1.3% during the third quarter of 2014.

For BBVA the construction sector has already bottomed out and there will now be a rise in residential development. Prices have entered a period of stabilisation and everything points towards there being a positive 2015 during which the sector builds on the promising changes which have occurred in 2014.

5 key elements to consider when buying your Spanish property
The purchase of a property is one of the most important moments in anyone's life and it is essential for any buyer to enter the process with a clear idea of what they want and with an awareness of any possible pitfalls. This is especially true when buying a property abroad as you may not be fully accustomed to the country's culture and language.

While there are possibly hundreds of things one must consider when buying in Spain here we have listed 5 of the most important aspects to keep in mind:

Budget: Before anything else it is important to set a budget for your purchase. Having a clearly defined budget will streamline your property search and mean that estate agencies can quickly and effectively identify suitable properties saving you time and money. When calculating your budget it is important to bear in mind that you will need to factor in an extra 10-15% to cover taxes and fees depending on where you are buying and what ty pe of property (new-build or resale). These costs will be higher if you are getting a mortgage on the property.

Legal advice: It is vital to seek independent professional legal advice for a purchase in Spain to avoid making costly mistakes and to give you peace of mind. Your lawyer will undertake all the necessary due diligence on the purchase and, if granted power of attorney, will be able to act on your behalf and save you having to make numerous trips to Spain to open a bank account, obtain an NIE number and other necessary procedures.

Mortgage: As mentioned in point 1, a mortgage will mean you will incur additional costs on your purchase as extra fees will have to be paid to the Notary and bank charges will also apply. Currently it is possible to get up to 80% finance when purchasing from a bank and if buying a resale property you will normally be able to get between 50-60% of the property's value covered by a mortgage. Also, be sure to shop around as some banks will offer much better deals than others.

Objective: What do you want from the property, will it be a permanent residence, a holiday home or purely an investment or a mix of these? It's useful to know exactly what you aim to achieve from your purchase as it will affect the location and type of property you should be considering. It is also important to do research on regional laws to ensure your objective is achievable. For example an investment in a Barcelona property to let as a tourist rental would have to be made with extreme care as there is currently a freeze on the concession of tourist rental licences and a growing hostility towards the private holiday rental market in the city.

Dream property: Draw up a list of requirements for the property itself and factor in the budget and objective which you have decided upon. You will want to consider among other things whether you want a new-build or resale property, whether you want to buy on a development or not and what characteristics you want the property to possess. It is important of course to be realistic so first search for what is available on the market for around your budget to get an idea of what you will be able to expect to afford. Keep in mind that it is still a buyers market in Spain and that there is a lot of choice in many areas so you will be able to be more demanding with your specification.

Solvia studies the financing of 150 new developments
The health of Spain's residential property sector is undeniably improving as we see increases in sales, price decreases slowing and a rise in mortgage concessions. Many believe that this final factor is the key: the banks are starting to lend again, and this appears to now not only be limited to lending to individuals but also to developers.

It has been revealed that Banco Sabadell, the owner of Solvia which acts as its real estate division, is studying the possibility of financing around 150 new developments in Spain. Banco Sabadell's Director of Real Estate Investment, Joan Bertrán, stated that "in the last six months we have seen the recovery of the Spanish property development sector".

Bertrán was speaking at a conference organised by the alumni organization of ESADE and admitted to those present that banco Sabadell is already financing development. He also mentioned the professionalisation of the sector saying that the dev elopers currently operating are good professionals and know they cannot "simply present any old project".

The Director did say however, that the bank has very strict controls and both the developer and development must meet specific criteria in order to receive financing. He said that the bank approaches the applications as if they themselves were going to develop the projects in order to ensure they are completely viable.

Banco Sabadell has approximately ?12 billion worth of real estate assets under its control and develops around 900 properties annually. The bank's real estate division Solvia has been one of the most successful in Spain and has won numerous awards for its marketing campaigns leading to it taking on assets from other banks to push through the sales channel.

Bertrán says that the main problem which Solvia currently has is with its land assets which are proving very difficult to sell as "there are currently no buyers for them". He believes tha t for the sale of land to pick up the property sector as a whole will have to recover further as investments in land are more complex and risky than other types of property.

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