Aena Mobilises Mega-Investments in Barajas & El Prat Amounting to €4.2bn

29 November 2018 – El Confidencial

The largest property developer in Spain is not a real estate company, it is AENA, a company that does not depend on the real estate sector for its business, on the contrary. It has started a race, together with external partners, to mobilise investments worth more than €4.2 billion focused on two projects: the urban development of Barajas and El Prat, annexes of the airports in Madrid and Barcelona. Together they represent the largest real estate project in Spain, and they are very focused on logistics due to the proximity to both airport centres, but also on offices. In office space, alone, the firm wants to promote almost 1 million m2 across the two urban areas.

This contradiction that the largest property developer is not an agent of the real estate sector is due to the fact that AENA is a very large landowner. For years, all of its plots have aged as if they were wine. The airport city in Barcelona, for example, was projected more than 14 years ago. But only now has Deloitte been engaged to look for international funds to mobilise that investment and Garrigues been contracted for legal advice about the monumental project.

And it is a long-term project. In the case of Barcelona, the most advanced of the two, it plans go out 20 years. In Barajas, the proposal is twice as long, 40 years. Moreover, according to sources in the sector, of the 622 hectares of net plots in Barajas, 396 hectares are awaiting development.

Given that the blocks of land are so close to the airports of the two capitals, logistics is the fundamental basis of the proposals. According to the latest report from Jones Lang Lasalle, logistics assets are generating yields of between 6% and 7%, a high rate when interest rates are so low. In the case of Barajas, for example, the planned logistics development represents the bulk of the project, 1.2 million m2 of constructed space, which will be the largest logistics centre in Spain, with the added synergy of connecting the current airport cargo area with the so-called Corredor del Henares.

In terms of office space, the plans also involve enormous dimensions. At El Prat, 362,000 m2 of constructed space is planned, almost as much as in the whole of the 22@ district promoted to date (…). And in the case of Madrid, it is even larger. At Barajas, the volume of planned offices is triple that figure, although it will have to be constructed over four decades.

In addition, there will be hangars, commercial areas, hotels and cargo services for aeroplanes. In practice, it will be like building two new cities, one in Barajas and the other in El Prat.

The immediate plans

The closest projects are the phases that have been planned for the next five to eight years. At the airport in Barcelona, the phase that AENA has called “catalysing” spans the first five years, during which time €387 million will be invested in total to promote almost 400,000 m2 in different types of urban planning projects.

These investments will run in parallel to the airport projects that have already been approved. In this way, AENA has already committed investments amounting to €690 million in El Prat, which include a new satellite terminal (…), to be carried out over the next four years.

This phase is longer at Barajas. It will last for eight years and will involve a forecast investment of €953 million, according to the Adolfo Suárez Madrid-Barajas Real Estate Plan. During this phase, more than 500,000 m2 will be constructed (…).

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake

Who is the Largest Residential Property Developer in Madrid

29 November 2018 – El Confidencial

With 12 developments underway comprising 758 homes with some type of protection, the Municipal Housing and Land Company (‘La Empresa Municipal de la Vivienda y Suelo’ or EMVS) is the most active property developer in the city of Madrid. Of the more than 350 residential projects under construction in the capital at the moment, the public initiative (by the Town Hall of Madrid), together with the promotion of cooperative homes or units with some kind of protection, has significant weight in Madrid, given that more than 16% of new build projects underway and 22% of the units under construction are public initiative developments (EMVS) or cooperative promotions.

That is according to data from the consultancy firm CBRE, which has compiled a study to analyse real estate activity in the Spanish capital, using satellites, taking into account both new build projects that require cranes for their completion as well as comprehensive renovation projects that do not need cranes or scaffolding. On the basis of the data obtained, the property developers who are currently carrying out those projects in the 21 districts of Madrid have been identified, be they new build projects, renovations, private homes or social housing units, excluding any homes being marketed on which construction work has not started yet.

The study establishes a ranking with the top 25 residential property developers in the capital on the basis of the number of projects underway and the number of units under construction. That ranking is led by the EMVS both by number of developments as well as by number of homes. Its developments are concentrated in the Pau de Vallecas (8 projects comprising 475 units), Latina (one development comprising 87 homes), Arganzuela (one development comprising 85 units), Villa de Vallecas (one development comprising 72 homes) and Carabanchel (one development comprising 25 homes).

Despite the strong development activity of the EMVS, the reality is that it is the private property developers who lead the activity overall, given that they account for three quarters (78%) of the new home units under construction in the city of Madrid. In fact, there are 12 private property developers with three or more projects under construction, which account for more than a third (34%) of the homes under construction.

Pryconsa and Inmoglacier, the most powerful

The second position in the ranking by number of developments is held by Pryconsa. The company chaired by Marco Colomer currently has seven projects underway, comprising 500 homes (…).

By number of units under construction, the second place in the ranking is held by Inmoglacier, with 748 homes under construction, distributed across just five developments, all of which are concentrated in Parque Ingenieros in Villaverde (…), all with some kind of protection and constructed on land acquired from Sepes more than three years ago. The company chaired by Ignacio Moreno (…) is one of the most active property developers in the capital and is focused towards a segment of the population capable of acquiring a home at affordable prices.

“At first glance, the sector appears to be vey fragmented. The 351 residential projects underway in Madrid are split between 241 companies or cooperatives. However, many property developers assign a separate legal entity to each promotion (…) and so it is not always easy to identify the large groups (and commercial brands) behind each project”, explains Samuel Población, National Residential Director at CBRE speaking to El Confidencial (…).

By area, the main national property developers are committed to constructing large projects in new areas, such as Arroyo del Fresno (Amenabar and Grupo Pinilla), Valdebebas, Parque de Ingenieros and El Cañaveral, where the projects with the largest number of units are concentrated. Companies such as Grupo Ibosa (…) and Vía Celere, along with the newcomer Brosh, complete the ranking (…).

International firms stick to the rich neighbourhoods

In terms of the property developers with a more international profile, by contrast, they are continuing with a strategy focused on the renovation of homes inside the city, in the most sought-after neighbourhoods. Venezuelan property developers have been particularly active, including Gran Roque (…), which has a dozen residential projects underway comprising more than 100 homes in some of the most sought-after areas of Madrid (…).

Also, Grosvenor (from the UK) and Darya Homes or Dazia Capital (France) are concentrating their activity exclusively in the districts of Centro, Chamberí and Salamanca. Those three developers – include Gran Roque – are currently managing 10 residential remodelling projects, which are characterised by the limited number of units (14 on average) and a clear vocation towards the high- and very high-end segments of the market.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Impact Hub Opens its 4th Co-Working in Madrid Spanning 2,300 m2

28 November 2018 – Eje Prime

Impact Hub is expanding in Madrid. The co-working company has just opened its fourth centre in the Spanish capital, a space spanning 2,300 m2 in the Justicia neighbourhood, which is home to 250 work spaces. It is the company’s second opening in the city so far this year, according to a statement by Impact Hub.

The co-working office is located in the Barceló area, in the heart of Madrid, and is distributed over three storeys. In addition to the work spaces, the property houses fourteen meeting rooms of varying sizes for events and meetings.

This new opening follows another that the company completed in April in Chueca, where it has a centre spanning 2,000 m2 on Calle Piamonte. Nevertheless, the company’s expansion activity will not end with this fourth centre.

During the first quarter of 2019, Impact Hub will open its fifth centre in Madrid in Torre Picasso, as revealed by Eje Prime. That co-working office will occupy 2,000 m2 of space in the property owned by Pontegadea, which has leased the commercial premises in the iconic skyscraper to the company.

When it opens in Torre Picasso, the company will have more than 9,000 m2 of flexible office space and will positioned as the fourth player in the co-working sector in Spain. The company’s first two centres are located in the Las Letras neighbourhood.

Antonio González, Director General of Impact Hub Madrid, highlights that his company aspires to be “a bridge between diverse organisations to join efforts and talent towards a common goal: that of generating a positive impact from the field of entrepreneurship and innovation.

In Madrid and Barcelona alone, the market for co-working offices grew by 71% to September, according to data from a report about flexible working spaces compiled by the consultancy firm Cushman & Wakefield.

Original story: Eje Prime 

Translation: Carmel Drake

ACR: Construction Costs Rise by 10.3% in 2018

28 November 2018 – Eje Prime

Construction, at the price of gold. The costs relating to residential construction increased by 10.3% in 2018, according to the second edition of the Direct Construction Costs Index published by the ACR group.

In this way, the upward trend that started in 2015 is continuing, mainly due to the exponential rise in the cost of labour and the slight upturn in the price of materials. The data provided by the property developer reflects significant growth in the most representative items of buildings such as, for example, the façades, internal divisions and structure.

For Michel Elizalde, CEO of the ACR Group, “the sector must react to this reality and look for solutions that help to alleviate the effects of such a volatile scenario”. According to the executive, the solution involves “finding more collaborative contractual formulae with clients; seeking more stable relationship frameworks; embarking on training so that professionals are prepared; and taking determined steps towards the industrialisation of components and processes”.

Original story: Eje Prime 

Translation: Carmel Drake

Pryconsa Plans to Build 1,500 Rental Homes

28 November 2018 – Eje Prime

Pryconsa is backing the residential rental sector after fifty years in the business. The construction firm is going to enter the market for the first time soon with the development of 1,500 new homes. For the time being, the company is awaiting the outcome of the regulatory changes that the Government is working on relating to the Urban Rental Law.

“It is quite tricky when the rules of the game change halfway through playing”, said Marco Colomer, President of Pryconsa. In this regard, the executive is closely monitoring the possible increase in the duration of rental contracts from three years to five years, as well as the possibility that Town Halls will place limits on house prices in areas that have experienced sharp increases.

Colomer said that the group already has two projects with licences and others with land reserves. Both the company and the pension fund that will become its financial partner are waiting for “the conditions to be ideal to be able to start development”.

Pryconsa’s plan involves constructing 1,500 homes in Madrid, as well as in other provincial capitals with more than 500,000 inhabitants, which is why it may have Barcelona, Valencia, Zaragoza and Sevilla in its sights.

Original story: Eje Prime

Translation: Carmel Drake

Castellana Properties Incorporates Unibail’s Shopping Centres into its Portfolio

28 November 2018 – Eje Prime

Castellana Properties is now the ninth largest Socimi in Spain. The company, which is controlled by the South African fund Vukile, has doubled the value of its portfolio to €900 million by incorporating the firm Morzal Property into the fold. Morzal is the vehicle through which Vukile purchased four shopping centres from the giant Unibail-Rodamco-Westfield in July.

The General Shareholders’ Meeting of Castellana approved the purchase of 100% of Morzal at the same price as the initial operation was closed, according to Eje Prime. The incorporation of the company, which paid Unibail-Rodamco-Westfield €490 million in July for its four assets, has been carried out through a capital increase subscribed by a non-monetary contribution of Morzal’s share capital, attributing a value of €6 per share to the shares of Castellana Properties.

Following this incorporation, the Socimi has increased its portfolio with the following shopping centres: Los Arcos (Sevilla), Bahía Sur (Cádiz), El Faro (Badajoz) and Vallsur (Valladolid). In total, the manager is adding a gross leasable area (GLA) of 121,300 m2 to reach a total of 318,622 m2 distributed all over Spain.

The market capitalisation of the company now amounts to €460 million, whilst the average value of its assets has increased from €27 million to €48 million, and its vacant space has decreased from 3.3% to 1.8%.

“The acquisition of these four shopping centres significantly strengthens our portfolio and reaffirms our commitment to the retail real estate sector in Spain”, said Alfonso Brunet, CEO of Castellana Properties.

Similarly, in terms of the future, Vukile has the commitment to inject another €200 million into Castellana over the coming years, as revealed by Eje Prime. In April, the fund subscribed an agreement with the Socimi to undertake capital increases for that maximum value in the event that it does not find the necessary partners to continue buying retail parks and shopping centres with, “given the need for financing to undertake such investments”.

Original story: Eje Prime 

Translation: Carmel Drake

Pisos.com: House Sales will Amount to 520,000 in 2018

29 November 2018 – Expansión

The housing market is going to break a record in terms of sales in 2018, by exceeding the 500,000 threshold for the first time since 2008. The strength in demand and the pull of the large capitals is going to translate into 520,000 house sales this year, up by 13% compared to 2017, according to forecasts from the portal Pisos.com.

On the other hand, the dynamism of the market and the shortage of available supply in the areas where demand is greatest will continue to cause prices to increase. They could close this year with a rise of 6%, with a price per square metre of €1,700/m2, and in 2019, flats will cost between €1,750/m2 and €1,800/m2 on average.

In terms of forecast house sales in 2019, the Head of Research at Pisos.com, Ferran Font, explained that “these figures will be maintained, given that the upwards trajectory is close to reaching its reasonable ceiling”. “Over the next few years, we expect the sector to close between 500,000 and 600,000 sales per year. If that figure were to increase to 800,000, it would be a bad sign for the sector”, added Font.

The arrival of investors into the real estate market explains part of the upwards performance of the sector. 25% of house sales were made without the need for financing, “which shows that property is serving as a good refuge for investment during the period of low interest rates”.

Andalucía, Cataluña and Madrid are the autonomous regions where most house sales are taking place. Nevertheless, the entry of the Community of Valencia into the leading regions is worth noting. According to Font, it is a growing market, where there is a lot of activity. As a result, the Community of Valencia is where there are the most sales for every 1,000 inhabitants. Meanwhile, Madrid will close the year with 78,000 house sales, up by 13% YoY to account for 15% of the national total.

In Barcelona, by contrast, “there is a change in the trend”, warns Font. The increase in house prices that the Catalan capital experienced at such high rates during 2016 and 2017 has reached its peak in 2018.

As a result, demand is moving to other towns. “Initially, it was moving towards the outskirts, but now it is moving towards adjoining municipalities” noted Font.

The maximums reached in the Catalan capital and the reorientation of demand are having an effect on the number of sales registered in Barcelona. At the beginning of 2017, Barcelona was growing at double-digit rates. But by the end of last year, sales had started to moderate, and during the first quarter of 2018, they started to register YoY decreases of 17% (…).

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Foreign Capital Causes Investment in Madrid’s Offices to Soar

29 November 2018 – Expansión

Foreign capital is raising its game in the office market in Madrid and has caused investment during the third quarter to soar to a record level: almost €800 million. That figure, which is the largest since 2007, is explained by three mega-operations, which had a combined total of €511 million and accounted for almost 65% of the total transaction volume, according to a report compiled by the real estate consultancy Savills Aguirre Newman.

By volume, the largest transaction closed in the period was the purchase by the British firm Tristan Capital of a portfolio of offices spanning 78,000 m2 in Madrid from Colonial for around €280 million; it was followed by the purchase by the French firm Amundi Immobilier of the Pórtico building in Campo de las Naciones; and the acquisition of FCC’s headquarters in Las Tablas by Safra Sarasin.

In Spain, during the first three quarters of the year, the cumulative investment in offices amounted to €2.1 billion, which almost equals the total amount transacted in the whole of 2017. Specifically, Madrid accounted for 70% of the total invested during the first nine months of the year, with €1.4 billion worth of transactions signed.

Forecasts

In terms of forecasts, the consultancy firm has identified that almost €1 billion of operations are under negotiation and could be closed within the coming months. “The dynamism in terms of demand and the increase in products for sale in open processes could mean that the annual volume closes at 2016 levels, exceeding the figure recorded in 2017 by more than 50%.

In terms of absorption, the total volume during the third quarter increased the cumulative figure to 440,000 m2, which represents a YoY increase of 4%. “The good behaviour of the market during the third quarter allows us to forecast an annual volume of more than 600,000 m2”, explain sources at the consultancy firm.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

MH Apartments Arrives in Madrid

29 November 2018 – Expansión

MH Apartments, the chain of tourist apartments founded by Javier Monguió (pictured below) in 2003, has just made its debut in Madrid with the opening of a building containing 24 apartments in the central square of Tirso de Molina and is preparing to open a new establishment in Prague, its third in the Czech city, containing 50 apartments.

With the incorporation of the building in Madrid and the upcoming opening, in March, of its third establishment in Prague, the company now has around fifteen buildings across three cities. With the two new openings, MH Apartments will have 250 apartments and around 1,300 beds.

The majority of its business is located in Barcelona, where it has 11 buildings. “Madrid formed part of our natural growth plans. This opening allows us to diversify our portfolio and take advantage of the boom in tourism in the city”, explains the founder and General Director of MH Apartments, Javier Monguió, in an interview with Expansión.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The Fund Centricus Enters the Bid to Buy Solvia

28 November 2018 – Expansión

A candidate with an exotic air about it has entered the auction for Solvia, the real estate subsidiary controlled in its entirety by Sabadell. The fund Centricus, which is headquartered in London but which has several Chinese and Japanese shareholders, has submitted a binding offer to acquire Sabadell’s asset management platform, according to sources familiar with the process.

Official sources at the bank preferred not to comment in this regard. Centricus wants to enter the Spanish market to compete with the large investment funds specialising in asset management, such as two of the other players interested in Solvia: Cerberus and Intrum, formerly Lindorff.

Centricus manages assets worth more than USD 20 billion and has worked together with the Japanese giant SoftBank to raise funds amounting to USD 100 billion at the international level.

Asian alliances

The British fund also recently joined forces with the Chinese companies China Merchants Group and SPF Group to launch a USD 15 billion fund to invest in technology companies.

Centricus, Cerberus and Intrum have all submitted binding offers for Solvia amounting to more than €300 million. According to sources close to the operation, one of the funds has even offered an amount close to the €400 million that Sabadell aspires to receive. The bank has awarded the mandate to divest Solvia to Alantra.

Sabadell activated the sale of its real estate platform after cleaning up €11.5 billion in toxic assets from its balance sheet. At that time, it preferred to not sell Solvia, like the majority of its competitors did, to try to maximise its revenues. The bank considers that the real estate platform has significant latent profits. Cerberus could be the favourite in the contest since it is now holding advanced conversations with the entity.

Natural buyer

The US fund is the “natural” buyer for Solvia, say financial sources. In fact, during the summer, Cerberus acquired two large portfolios of foreclosed properties from Sabadell (Challenger and Coliseum), with a combined gross value of €9.1 billion.

Sabadell wants to sign the sale of the real estate platform before the end of this year to have its balance sheet free of property remnants. Solvia manages 148,000 assets, with a value of more than €30 billion. In parallel, the bank has also placed up for sale its property developer subsidiary, Solvia Desarrollos Inmobiliarios. The completion of that operation has been delayed until the beginning of 2019.

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake