ibiza prime real estate market 1q 2016 report

IBIZA Prime Real Estate Market

1Q 2016 Report

Snapshots

www.housesinibiza.com

http://www.housesinibiza.com


IBIZA Prime Real Estate Market1Q 2016 Report

Summary

So, after a record year for the island in 2015, this year is looking at least as good in terms of tourism, insular economic data and the housing sector. Foreign and Spanish investors are showing strong interest in prime real estate and both transactions and average spend is expected to be up again in 2016.

Christmas 2015 and the early part of the year have been very busy and the season appears to be expanding quietly to include the winter months with an increase of 20% in visitors.

The change in government and the political landscape has meant, at least initially, a much stricter approach to planning and housing legislation. Building and refurbishing permissions have been cut back meaning the available legalised offer is evermore scarce and consequently driving prices higher.

Land to develop has become even stricter and restricted and again those with planning permission have increased considerably in value.

All in all, we expect to see another strong summer season and continued interest in the prime real estate market . We expect an increase in transactions and an increase in prices again in 2016, following the trend established in the past 3 years.

The vacation rental market again is expected to be strong this year and is now consolidating attractive rental yields for buy to let investors, net yields can be around the 5%.

Prices range enormously but for prime real estate expect to pay over € 4 mm for a 480 m2 finished product in the countryside with a large plot (30,000 m2 plus) or a similar sized house with a sea view close to the sea albeit on smaller plots (5,000 m2 minus)

Fincas or houses to be rebuilt or refurbished depend largely on licenses but again expect to pay between € 2 mm and € 2,5 mm. Building cost for prime are some € 2500/m2

Good sized plots with an active license to build can command prices of over € 2mm

A frontline apartment with some 150m2 with sea views on the golden mile in Ibiza town costs upwards of €1.5 mm

As it stands, it is pretty much a sellers market! Clive Heathcote-Houses in Ibiza


• 5% increase in transactions in 2015

• More than a 20% increase in the prime market transactions

• British,Germans, Dutch and Spaniards lead the market and strong growth from the Swiss and Americans

• Average spend jumps 15%

• Over 75% are cash buyers.0

300

600

900

1200

1500

2010 2011 2012 2013 2014 2015

1.4021.333

8411.052933

1.177

Housing Transactions

0

48

96

144

192

240

2008 2009 2010 2011 2012 2013 2014

685846817687

231

Residential Housing Starts

Residential housing starts


New builds have fallen sharply in the past decade!

The slow down in developments and new building on the back of the gloomy world economy and

stagnant credit markets have sharply slowed the rhythm in

recent years

Stricter planning legislation has also reduced some of the volumes seen in the past.


0

120

240

360

480

600

2010 2011 2012 2013 2014 2015E

414

260200

251180

518

Residentail building licenses

Residential building licenses

Big jump in building licenses!

This is mainly due to refurbishing properties and increasing existing home volumes


The estimated housing stock on the island of some 70,000

units.

Listed sales are in the region of 2000 units and for prime

property we estimate there are less than 400 units

available for sale.

Prime real estate transactions have increased some 20% in

2015

Houses for Sale Units Average price € /m2 %

Listed Internet Sales 1749 4,081

Houses 763 4,701 43.62%

Over € 1,5 mm 315 6,258 18.01%

Over € 2 mm 193 7,043 11.03%

Over € 3 mm 84 8,675 4.80%

Top Agency listings Units > € 3 mm

w 191 18 9.42%x 168 21 12.50%y 134 49 36.57%z 86 29 33.72%

Housing stock for sale


1Q 2016 Passenger arrivals The winter season is growing!

Sharp increase in UK ,German and Benelux passengers (+50%).

505 on private jets.

20% more flights

Airline

Passengers 2016 2015 Difference

YTD 450,080 383,887 17.24%

January 126,758 106,430 19.10%

February 128,862 112,930 14.11%

March 194,460 164,527 18.19%

Source Aena

0

800000

1600000

2400000

3200000

4000000

2012 2013 2014 2015

3.225.4903.091.9012.851.2982.761.738

Passenger Arrivals

Yet another record year in 2015!

% INCREASE IN BENELUX

GERMAN & FRENCH ITALIAN

SPANISH & UK GROW

Passenger arrivals 2012-15



280000

560000

840000

1120000

1400000

UK GERMANY ITALY FRANCE NETHERLANDS SPAIN

1.298.288

164.140

95.513

348.387

289.079

808.605

1.165.443

142.318

92.050

348.694330.620

798.223

1.092.761

118.63086.564

320.957293.921

783.466

2013 2014 2015

Passenger arrivals/nationality


Good growth in the main markets (UK & Spain)

Consolidation in the German, French and Italian market

Sharp increase in the Benelux markets


0

600000

1200000

1800000

2400000

3000000

2010 2011 2012 2013 2014 2015E

2.800.0002.733.5582.447.5752.334.6922.378.967

1.780.685

Tourists

Visitors 2010- 2015


50% increase in 6 years

Forecast for 2016 is flat to a 10% increase

Sharp increases in visitors from the Benelux, Switzerland and

the USA


7000000

7400000

7800000

8200000

8600000

9000000

2010 2011 2012 2013 2014 2015

8.311.7368.099.509

8.515.924

8.163.5768.474.229

7.303.262

Total nights/ hotels

Total Visitor Stays/Hotel Hotels stays are consolidating above the 8mm

mark. The house rental market has grown

exponentially in the past 5 years and explains the growth in tourist arrivals yet the

consolidation of hotel stays. The rental market has grown over 50% in the past 5 years and absorbed a large part of the

growth

0

500000

1000000

1500000

2000000

2500000

2010 2011 2012 2013 2014 2015E

2.500.0002.438.9622.359.2392.214.5632.113.9131.780.118

Expenditure € mm

Visitors Expenditure 2010- 2015 Increase in receipts reflects the increase in

visitors

Note the average spend has been growing steadily in the last years as premium offer has developed aggressively in the past

decade.

0

320

640

960

1280

1600

2010 2011 2012 2013 2014 2015 3Q

195215

140677244

245263230

324358

244

399

570599

470

291262

1.4631.3891.3881.3511.390

1.299

Hotel Rental Home Owners Other

Visitors Expenditure 2010- 2015

Breakdown € mm

Hotel expenditure jumps in 2015 after stagnating for the past few years

Home rentals are consolidating, after more than doubling in recent years, but note

Other grow sharply, it could well be that it is actually house rentals being accounted for

in Other.

120000

126000

132000

138000

144000

150000

2008 2009 2010 2011 2012 2013 2014 2015

141.000140.000140.000137.000

134.000132.000

129.000125.000

Population

Resident population


Population has been growing sharply in the past

decade and is currently consolidating current levels.

We are seeing growth in foreigners coming to Ibiza to

live as an alternative high quality lifestyle option and

expect this segment to grow strongly in coming years.


5.668

23.359

25.362

36.189

49.693

Eivissa Santa Eularia San Josep San Antoni San Joan

Resident population


Population is distributed with the South of the island more densely populated .

The North is significantly sparser compared to the south .

There is a growing investor interest in the North which more geared to

preserving the spiritual side of the island and leaving the grit, bustle and noise to

the South.


4.0904.460

2.4003.900

3.5004.300

102.000

Spain Italy UK Germany France Rumania Morrocco

Resident population


30% of the population are foreigners.

Within the EU Italian,,German,French,Rumanian and UK

residents are the largest .

Non EU is lead by Moroccans, Ecuadorians and Argentinians.


0

130

260

390

520

650

2010 2011 2012 2013 2014

548545551551550

Hotels

Total Hotels/Establishments

Hotels have remained stable in recent years but the sector have seen much refurbishing, and several visible acquisitions by foreign investors.

There is a short supply of luxury / boutique hotels.

7 establishments (1.2%) and 1827 beds (2.3%)

0

18

36

54

72

90

2008 2009 2010 2011 2012 2013 2014 2015

74,273,675,673,674,168,961,467,3

Occupancy %

Hotel Occupancy %


Hotel occupancy levels are consolidating above the 70% level.

Out of season occupancy has grown from 33% to 44%

The percentage of hotels remaining open all year has increased slowly in recent years as the season is gently

expanding.


0

40

80

120

160

200

2010 2011 2012 2013 2014 2015

145145138136125133

Average Daily Spend €

Hotel Guests Average Daily Spend


Average daily expenditure of hotel guests is stable in the past couple of

years.

ADR and Revpar have jumped in 2015

0

40

80

120

160

200

2012 2013 2014 2015

88686460

117908280

ADR € RevPar €


0

18000

36000

54000

72000

90000

2010 2011 2012 2013 2014

79.16178.86779.56579.59478.925

Beds

Total Available Beds


Available beds have held steady in past years.

A huge increase in the vacation rental market has

absorbed much of the growth.

We are seeing active M&A in the Hotel sector and large

refurbishing projects ongoing, especially in the 4**** &

5***** segments.
