Spanish Online Real Estate Market

This is a guest post from Javier Hernandez, responsible for the Spanish market for Nestoria. He blogs regularly in Spanish on the Nestoria España blog.

State of the market
The Spanish real estate market finds itself in a very delicate situation. From 1998 to 2007 the real estate market represented a major engine of the Spanish economy. House prices usually increased by more than 10% year on year, following the successful Spanish banking system and the boom of tourism industry. M&A transactions within the RE sector and highly leveraged operations made Spain grow substantially over the last decade. The contribution to GDP of the real estate sector reached a remarkable 19% at the beginning of 2008.

Much of this growth came in the new builds sector. Unfortunately, and like in several other European countries, 2008 has been a tough year for developers overall. Smaller and big groups like Martinsa-Fadesa, Llanera, Colonial and recently Tremon went bankrupt. Others were able to get more time and re-negotiate the terms of the loans they are struggling with. The vast majority have highly leveraged balance sheets and the long-term outlook remains tricky unless the market regains confidence.

The number of real estate transactions in August 2008 decreased by a 38% (Source: INE) compared with August 2007. Nevertheless, the prices didn’t follow the same trend. Houses prices’ slowdown has been not as dramatic as in the US. Most of the buyers acquired their home not as a place to live (the population is not very mobile) but also thinking of it as an investment vehicle. The second fact explains why few people are willing to sell. In short: the market is frozen and the future is unclear.

According to OECD stats the Spanish market is the most overvalued real estate market in the world, in terms of the ration of property prices to average incomes.

Despite the overall decrease in transactions and drop in offline RE market transactions, the online property market is growing in terms of users. It grew by 5% in audience last month compared to the previous year according to comScore. Lettings have also risen slowly but steadily during this year and overall online real estate spending has gone up to a 32% in 2008 (Source: Nielsen Online, Nov 08).

Market Structure
There are several big nationwide estate agents (Alfa, Remax, Don Piso) but overall the market remains very fragmented. Small and very local estate agents are very important in the industry.
There is no clear number one player. According to September’s comScore figures, fotocasa.es is slightly above its main rival, idealista.com. fotocasa.es is owned by the Norwegian yellow pages group Schibsted and idealista.com is privately held.

fotocasa.es takes advantage of its offline print background in terms of sales force and has most of the country well covered. However, idealista.com has taken the lead in Madrid and its branding campaigns and innovative features are very creative and well known by both the market and consumers.

There is a gap between these two leaders and the other main players. Beyond these two, there are also a very innovative and savvy second tier with players like portae.com (as part of Endesa energy), tucasa.com, globaliza.com, facilisimo.com, sacacasa.com (owned by major media group Vocento), yaencontre.com, atrea.com (owned by BBVA), and ivive.com. enalquiler.com is the largest lettings portal.

As you can see from the list above the Spanish market has many different portals competing. Agents typically list on several portals, and sellers list their property with several agents. In addition portals accept FSBO listings (usually for free).

Two direct consequences derive from this:
1. Duplication of listings is very common, and 2. Agents are typically very vague about the address of a property for fear of other agents “stealing” the listing.

Nevertheless, players are very sophisticated and content has a high quality on top portals (except geodata).

Good online sources of information about the industry are Tecnologia Inmobiliaria, Inmoblog, Cienladrillos and Juan Carlos del Olmo’s interesting weblog. For macroeconomics and housing trends, you can check the exhaustive reports of the research department of major bank BBVA.

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