Month: June 2018

Spain’s Property Development Sector Will Continue its Expansive Cycle for the Next 3 Years

30 May 2018 – Eje Empresas

The CEO of Neinor Homes, Juan Velayos, has highlighted that the “healthy and strong bullish cycle” that the property development market is experiencing at the moment, will result in a “positive” performance over the next three years, before reaching “a situation of stability lasting many years”.

The main challenge (facing the market) is to “become more predictable”, in aspects such as the time it takes to obtain licences, a problem that may be resolved because “the market is going to continue helping”, according to Velayos.

The Director of Strategy and Investment at Aedas Homes, Sergio Gálvez, explained that the situation in the property development sector is “unique” given that it is recovering from “a very low level”.

The Executive President of Inmobiliaria del Sur, Ricardo Pumar, agrees that “the macroeconomic forecasts point to a very good situation for the next three years”.

Pumar stressed that the recovery is “widespread” but he has opted to facilitate access to housing for young people to “boost the whole sector”.

The President of Quabit Inmobiliaria, Félix Abánades, predicts that the expansion cycle “will last for six years” and he agreed that there will be “significant increases in prices” over the next three to four years.

The market for property developers is clearly expanding and growing with a very “solid” demand, he added.

Investors back the property development sector

The Partner at the consultancy firm Deloitte, Alberto Valls, highlighted that “investor appetite continues” but is still a long way off the levels seen before the economic crisis.

“There are barriers to entry, such as capital, the lack of available land to build on and the limited production capacity”, he said.

He said that half of the property development market is concentrated in Madrid, Barcelona, Alicante, Málaga and Valencia.

The Spanish sector is more fragmented than those of other European countries, given that the top five property developers account for just 6% of the market, whereas in the UK and France, they represent around 40%.

Nevertheless, Valls pointed out that “the trend is towards corporate concentration and the stock market debut of new players”.

Original story: Eje Empresas

Translation: Carmel Drake

M&G European Property Fund Expands Portfolio in Spain

29 May 2018 – Real Assets

M&G European Property Fund has expanded its portfolio with the acquisition of industrial and retail assets in Spain.

The €3bn core European property fund, managed by M&G Investments’ real estate arm, said it bought two industrial and two retail assets for €80m.

The two retail acquisitions are H&M Reyes Catolicos in Granada and Gran Via 68 in Madrid.  Both sites, which total 3,668sqm, are leased.

The industrial sites Teka Logistics Platform and a further asset in the Getafe logistics corridor are both in Madrid. The sites have a combined size of 55,092 sqm.

Fund manager David Jackson, said: “Our latest research suggests the Spanish economy will continue to perform well, with its recovery having accelerated in 2017.

“This extends to the commercial real estate market, where we predict average rental growth in both industrial and retail will range between 3% and 4% per year for the next three years in Madrid.”

Jackson said these new acquisitions fit perfectly with our strategy to increase our exposure to Continental Europe by investing in core assets in strong growth markets.

“We see a strong correlation between the level of rental growth and tourist spend in major tourist destinations across Europe; Madrid and Granada are very good examples of this trend.”

Federico Bros, a director of asset management for Spain and Portugal, said: “We have seen strong demand for high street retail in prime locations across Spain. Both of the retail sites we have purchased are in established locations and offer great rental growth prospects.

“The industrial sector in Spain also offers strong rental growth prospects as online activity accelerates and these acquisitions help us diversify our portfolio in key sectors.”

M&G European Property Fund was launched in 2006, with a mandate to invest in a globally diversified portfolio of assets in mature European markets outside the UK.

Original story: IPE Real Assets

Translation: Carmel Drake

ICG Makes €105M Investment in Eroski Spanish Hypermarkets

31 May 2018 – Property Magazine

Intermediate Capital Group (ICG) will invest €105 million in six Spanish hypermarkets. ICG has partnered with Inmobiliaria Armuco S.L., a real estate company 45% owned by Eroski, a food retailer in Northern Spain, to acquire five of its hypermarkets and one more completely owned by Eroski in a primary sale and leaseback transaction underpinned by 21-year, CPI-linked, triple-net leases.

The assets are located in the Basque region of Spain and each rank in the top quartile in terms of Eroski’s trading performance. According to Savills, Spain has enjoyed a return to growth in excess of 3% for the last three consecutive years and is predicted to outperform the Eurozone, in terms of GDP, for the next three years.

Chris Nichols, Managing Director of ICG Sale and Leaseback, commented: “We are pleased to have partnered with Eroski on this transaction and to have acquired six assets in strategic priority locations for Eroski. We have a pipeline of deals, and are actively looking for further opportunities in this space, both in Spain and across the wider European market”.

ICG was advised by Savills and Eversheds.

Original story: Property Magazine

Edited by: Carmel Drake

Land Oligopoly: 10 Cities Account for 55% of the Developments Underway in Spain

31 May 2018 – Eje Prime

The data is conclusive: ten cities account for 55% of the residential developments underway in Spain. They constitute a municipal land oligopoly, which is now showing signs of tension on the demand side given the lack of buildable land available for development and the delays by the public administrations when it comes to approving building permits. “The concentration of the population in the major cities is a phenomenon that is going to increase over the next few years”, predicts Sergio Gálvez, Director of Strategy and Investment at the property developer Aedas Homes in the context of the Madrid Real Estate Fair (SIMA) conference on land and its strategic market.

The executive of the listed Spanish company also explained that the delays in the granting of licences in certain cities are lasting for up to ten months. Gálvez regrets that “any delay suffered in the production chain clearly results in a higher sales price for the end client”.

The Director of Aedas, who believes that “the public administrations still have a long way to go in terms of the agility of the licence-granting process”, was accompanied at the roundtable by Ignacio Ocejo, Partner at Kronos Homes. The director of the Spanish property developer turned the spotlight onto financing: “the situation in the financial world has changed drastically with the new cycle; in the past, the supply could have been four times larger”.

Nevertheless, Ocejo was favourable of the fact that land financing is now “much more controlled” because capital can still be obtained under reasonable conditions. “I do not think that it is a problem, the banks themselves are being proactive when it comes to financing; the problem is more that there are fewer entities”, said the Director of Kronos.

Meanwhile, the Commercial Director of the appraisal firm Tinsa, Pedro Soria, seemed more concerned than his roundtable colleagues about land and its overheating (…) “In some places, we are already seeing price caps on land”, says Soria, “the only option left if we want to achieve the desired returns is to raise house prices”. In the event that land prices continue to rise, the Tinsa executive sees a “risk”, nevertheless, the market could be more profitable on the land investment side than when it comes to house building itself.

Spain is seeing an improvement in its new home permits once again, but the figures are still well below the more than 800,000 permits granted in the most active years of the boom in the 2000s. In this regard, Ocejo explains that “in a scenario of stability and compared with the previous cycle”, an increase in new builds at a rate of between 25% and 30% would be “positive”. “A healthy market for me would see the construction of between 130,000 and 160,000 new homes each year in Spain”, added the Partner of Kronos Homes.

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

Kronos Finalises €400M Investment in Cataluña with Land Purchases in Gavá & Sant Cugat

1 June 2018 – Eje Prime

Kronos Homes wants to be a leading player in the Catalan residential market. The Spanish property developer has just completed the purchase of two plots in Gavá and Sant Cugat del Vallés. These two operations form part of the significant investment plan that the company has initiated in Cataluña, where it already has investments amounting to €400 million. “The objective is to close at least two more operations in Cataluña before the end of 2018”, explained Manuel Holgado, Partner at the real estate firm, speaking to Eje Prime.

The first of the acquired plots, in Gavá, has a surface area of approximately 173,500 m2, with capacity for the construction of 1,500 homes. The company plans to start marketing this project within two years.

In the case of the plot in Sant Cugat, it is located in the centre of the prime Barcelona city and spans 33,800 m2, on which 320 homes are going to be built. These more than 1,800 homes will be added to the 900 units that the firm currently has underway in four other projects.

Two of those projects are located in Tarragona, a province in the south of Cataluña, with one development in the provincial capital and one in Calafell. Both will start to be marketed this June and the property developer, founded in 2014 by Saïd Hejal, has taken advantage of the opportunity presented by the Madrid Real Estate Fair (SIMA) to unveil the two developments.

The investment by Kronos is Cataluña is going to continue to increase over the coming months and Holgado says that “we would like to close at least two more operations before the end of 2018”. The company’s Director General, Majda Labied, also points out that “we have just opened an office in the centre of Barcelona, which strengthens our 100% commitment to Cataluña”.

Currently, the property developer has two promotions in the province of Barcelona, namely H20 and O12, two residential projects with an innovative design, which are located in the maritime area of Badalona. The first promotion has 252 homes with 25 different types of homes.

Entry into the Costa Brava

Having entered Barcelona and Tarragona, Kronos now only has Girona and Lleida left to conquer. The Costa Brava is one area “where we have been working actively for a while”, explains Holgado, although the property developer has not yet found the right opportunity to start a project there.

The forecast by Kronos Homes for the next four years involves it doubling the number of homes underway in Cataluña at the moment. The real estate firm also has a presence in Madrid, the Costa del Sol, Andalucía and Levante, and wants to branch out into new markets over the next few years. Areas such as Euskadi, for example, have always been on the company’s radar. The firm is keen to invest and position itself as one of the leading property developers in Spain.

Investment of €500 million in land all over Spain 

To build homes, you need land and, to that end, Kronos is going to invest €500 million between now and 2021 in the purchase of primarily residential land. The company will thereby acquire sufficient land to build 8,000 homes all over the country.

With a land bank spanning more than 1 million m2, spread between Madrid, Cataluña, Costa del Sol and Alicante, the intention of Hejal and the other shareholders that support him, including, in addition to Holgado and Labied, Ignacio Ocejo and Enrique Feduchy, is to expand the business to more Spanish provinces. The firm is currently making headway in the provinces of Córdoba, Sevilla and Cádiz, amongst others.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake