The rise in costs in the works is stressing the developer sector, although for the moment, companies expect to be able to absorb this inflation, transferring it to a price increase for clients in the price of free housing, although the protected one may suffer a stoppage. so stated Juan Antonio Gomez-Pintadopresident of the association of promoters APCE and of the Madrid business association Asprima, at the presentation this Tuesday of the Madrid Real Estate Exhibition (SIMA), which will start in the week of May 26.
Gómez-Pintado explained that in free or private housing what has more weight with respect to the total investment for the developer is the land, which in large cities can account for between 36% and 40% of total investment. Therefore, the president of the promoters points out that the impact of the rise in the price of materials and labor is greatly minimized.
“The construction costs are up 18% since May 2020 to this current May. If we transfer that to private housing, in the investment as a whole that has been affecting around 7%”. Gómez-Pintado pointed out that if the sum of the increase in housing prices that has occurred since 2020 is taken, in 2021 and that we live in 2022, “we see that the impact of rising costs is absorbed,” he explained.
“The same does not happen in protected housing, where the weight of the land is considerably less than in private housing, we see that the impact of the rise in construction costs is 16%. And here it is difficult to develop this type of housing” , he asserted, since the modules (public prices) have been fixed in most of the autonomous communities since 2008.
The works are seeing how the price of some materials has risen due to the increase in the price of energy, especially since the Russian invasion in Ukraine, such as cement, aluminium, steel and ceramics.
The employer’s president also warned about the slowness of the autonomous communities in preparing the processing of Next Generation European funds, who have to arrive for housing rehabilitation and urban regeneration. The Government foresees a disbursement of 6,820 million from the housing recovery plan and a goal of rehabilitating 1.2 million homes, but there are regrets that the regions are not prepared. “There is a risk that if these funds do not arrive, the plan will not achieve its goals,” he warned.
Regarding the forecast for the start of works for 2021, he believed that we still have to wait to see how the sector recovers after being impacted by the rise in costs and the uncertainty caused by the war in Ukraine, but in any case he believes that the number of housing starts will be lower than the more than 100,000 houses last year.
15,000 homes on offer
The promoters are expected to bring an offer of 15,000 homes to SIMA, according to the organizing company Planner Media. Between 70% and 75% of these houses are located in the Community of Madrid, the rest in neighboring provinces and on the coast. The number of single-family houses for sale has increased, around 24% of the portfolio, in line with the new requirements of buyers after the Covid-19 pandemic.
270 companies and entities will participate in this new edition of SIMA. will participate in the next edition of the Real Estate Exhibition (SIMA), which will be presented today during a press breakfast that will take place at the Hotel Hospes Puerta de Alcalá from 10:00 a.m. SIMA will be held from May 26 to 29 at IFEMA MADRID.
This number of companies places this year’s edition at almost identical levels to those registered at the last edition of SIMA before the outbreak of the pandemic and confirms, on the other hand, the clear recovery of the activity of the promoter sector and its entry in a new cycle of normality, according to the promoters.