28 March 2017 – Expansión
Three years after their launch, Spain’s listed real estate investment companies (Socimis) have set their sights firmly on the residential sector, with the launch of firms dedicated exclusively to that market, and the implementation of high profile projects to rival the large players in the sector.
“This phenomenon is mainly driven by supply and demand factors. From the point of view of demand, Spain has been a country where people have traditionally preferred to buy rather than rent. Nevertheless, over the last few years, we have seen a marked increase in the percentage of the population who prefers to rent and around 22% of Spaniards now opt to lease a home, up by 10% from a decade ago”, explains Alberto Valls, Partner in Financial Advisory at Deloitte.
This “clear rising trend” in demand for rental homes in Spain is coming up against limited specialist supply, with barely any companies dedicated to leasing properties in a professional way or with a particularly noteworthy portfolio of homes. “They are responding to a need to professionalise the rental housing market in order to provide high-quality products and services to tenants, in the face of growing demand for this kind of housing compared with home ownership”, said Samuel Población, National Director of Residential and Land at CBRE.
Investment in good locations
One such company is Vitruvio. That Socimi debuted on the stock market in July last year, specialising in residential buildings and offices located along the Ayalá-Colón-Sagasta thoroughfare of Madrid. “Vitruvio does what investors in real estate have always done: we buy in good locations, we secure tenants that generate rental income and we take on little debt so as to avoid running into difficulties in times of crisis, although we earn less in the boom times” (…), explains Joaquín López-Chicheri, CEO at Vitruvio.
“The fact that the landlord is a listed company is irrelevant for the tenant, a priori. The differentiating factor is the specialist management that larger vehicles can offer and the benefits that tenants receive in aspects such as the professionalisation of the customer services, which, will likely, result in quicker and more effective responses to possible incidents. Those players that manage to improve the quality of their service will have a substantial competitive advantage when it comes to capturing the growing volume of demand”, says Valls.
Last Wednesday, the thirty-second Socimi, Albirana, debuted on the MAB. Managed by Anticipa, the company owns thousands of assets located all over Spain, especially in Cataluña and Madrid, of which almost 5,000 are homes.
In addition to the listed companies, there is another firm that, although it has not debuted on the stock market yet, is destined to be a leader in the residential rental market in Spain, namely, Testa Residencial. The company, which emerged from the assets that resulted from Merlin Properties’ purchase of Metrovacesa and Testa, has turned itself into a vehicle for channelling thousands of homes that were previously owned by its shareholder banks: Santander, BBVA and Popular. Its portfolio contains more than 8,000 units, worth €1,750 million (…).
Meanwhile, in the luxury neighbourhood of Salamanca in Madrid, overlooking Calles Juan Bravo, Maldonado, Lagasca and Claudio Coello, the Socimi Lar España and its main shareholder, the fund manager Pimco, are developing Lagasca 99 (…).
Original story: Expansión (by Rocío Ruiz)
Translation: Carmel Drake