Year: 2019

Countdown to Los Berrocales: Investment of €4.4bn Over 20 Years

18 February 2019 – Eje Prime

More millions for Los Berrocales. Joaquín Gómez, manager of the Los Berrocales Compensation Board, expects investment of up to €4.4 billion from the owners and future housing developers over 20 years. That amount will be added to the €200 million that has already been invested by the owners in pipelines, collectors, infrastructures, service roads and earth movement work.

The proposal that has been reached with the owners of Los Berrocales is that the neighbourhood will be constructed in phases. First, phases I and III, which are expected to involve the construction of 10,000 homes over 10 years. The rest of the construction work will be carried out in the following decade. Up to 100,000 homes from the plan, located in Los Cerros and Valdecarros, will be suspended due to the requests filed for compensation against the Town Hall, according to reports from Cinco Días.

Nevertheless, the approval of the agreement does not mean that the construction work is going to begin immediately. In fact, Gómez expects that construction of the homes could begin in 2022 or 2023. For now, there are no threats of suspensions for political reasons given that Ahora Madrid, Ciudadanos and the PP are all in favour of the project. The position of Pepu Hernández, the likely socialist candidate, if he is elected mayor, remains to be seen.

The owners of the 8.3 million m2 of land include Habitat, Pryconsa, Santander, Caixabank and Liberbank. Another of the major landowners is the Town Hall of Madrid, which holds almost 8% of the plots.

Original story: Eje Prime 

Translation: Carmel Drake

Prologis Acquires 5 Logistics Assets Spanning 58,000m2 in Madrid & Barcelona

18 February 2019 – Eje Prime

Prologis is growing in Spain. The US company, which specialises in logistics, has announced the acquisition of five logistics assets spanning a combined surface area of 58,000 m2. The properties have been acquired from Kefren and are located in Madrid and Barcelona. The operation has been carried out through Prologis European Properties Fund.

The five acquired properties have a high occupancy rate, with stable rental contracts and a diverse base of tenants, according to the company. Those tenants include a combination of external logistics suppliers and end users in the automotive and engineering sectors, amongst others.

Until the end of 2018, Prologis had undertaken investments in properties and projects under development spanning 71 million m2 in total across nineteen countries.

Original story: Eje Prime

Translation: Carmel Drake

Urbania to Open a Hall of Residence for Students in Pamplona

18 February 2019 – Expansión

Urbania is increasing its commitment to halls of residence for students. The real estate firm, through its subsidiary Syllabus, is planning to open a new accommodation block for university students in Pamplona, with 300 rooms and an investment of €17 million. This hall of residence in Pamplona will be added to the group’s other projects in Madrid, Málaga and Valencia. Moreover, the group is analysing new opportunities.

The hall of residence in Pamplona will occupy a plot with a surface area of 8,837 m2. Construction will commence in 2019 and is expected to be completed in 2021. This accommodation is going to be constructed in the area near to the El Sadar stadium, a stone’s throw from the Universidad Pública de Navarra and its sports facilities, the Uned campus and less than 2km away from the Universidad de Navarra campus.

The new hall of residence will comprise six storeys and will have an extensive green area inside. As well as the 300 rooms, it will have several shared kitchens, spaces for study, a gym, a cinema area, a coworking space, leisure areas and a laundry (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Bankinter’s Socimi Negotiates the Purchase of Hotel Meliá Valencia

18 February 2019 – Expansión

Atom wants to strengthen its portfolio with the acquisition of one of the main hotels in Valencia for €50 million.

Bankinter’s hotel Socimi, Atom, wants to strengthen its portfolio and add the Meliá Valencia (formerly the Hilton Valencia) to its list of assets. The property is one of the main hotels in the city, located on Avenida de las Cortes Valencianas, close to the Palacio de Congresos.

Atom, which made its debut on the Alternative Investment Market (MAB) in November, is holding negotiations with the fund Colony to purchase the 4-star hotel for around €50 million, according to explanations provided by market sources speaking to Expansión. Those same sources state that, although the negotiations are in an advanced stage, no agreement has yet been reached between the parties.

History

The hotel, located in a tower standing more than 110m tall, was officially inaugurated in February 2008 and has had several owners since then. The establishment, which has around 300 rooms and 21 meeting rooms, with the capacity to host up to 875 people, is managed by Meliá.

Colony purchased this asset along with some other Spanish hotels just a year ago from the investor group Continental Property Investment, controlled by the Lebanese businessman Boutros El-Khouri (…).

With this operation, Atom would increase its portfolio, which currently comprises 21 hotels and 5,232 rooms, with a gross value of €485 million. 82% of the hotels in its portfolio are 4-star properties and 60% are holiday establishments (…).

Original story: Expansión (by R. Arroyo, R. Sampedro & A.C. Álvarez)

Translation: Carmel Drake

CBRE: New Homes Under Construction on the Costa del Sol Will Be Sold for c. €6,000/m2

18 February 2019 – Diario Sur

Six thousand euros or one million pesetas (…). That is what the buyers of the new single-family homes in Nueva Andalucía, in Marbella, can expect to pay per square metre. The real estate consultancy CB Richard Ellis has compiled a report about the characteristics of the new build developments that are being constructed on the Costa del Sol. And, the changing trend is reaching such an extreme that the analysts involved are talking about “a new building paradigm” in the residential market on the Costa del Sol, in this cycle of reactivation of the sector. The general conclusion is simple: better quality homes are being built, with more considered designs and common services, but also with much higher prices.

The document points out that in the past, the large number of transactions were sold for speculative purposes and, therefore, fundamental questions such as finishes, orientation, views and distribution were often neglected in the developments that were put on the market (…).

But times have changed. In this new cycle, property developers are taking care of their products and focusing their attention on clients with medium/high purchasing power and primarily those from overseas. It is not so much a question of location, be it in one specific municipality or another, but rather the quality of the product. (…). Now, most of the developers are backing more contemporaneous designs, with straight lines and large windows, with some of the best finishes in the market.

Change in model

“The reality is that during the last cycle, homes were built for the average market, but following the crisis years, almost everything is now being constructed to serve a niche in the market, of average-high purchasing power, which was previously unmet demand”, explains Andrés Moreno, Director of the Valuations Department at CBRE in Andalucía (…). “Now, much more care is being taken. Everything is designed with the final purchaser in mind (…)”.

The report highlights that the Costa del Sol is consolidating its position as an exclusive and luxurious destination. And that trend means that the newest flats are far from affordable for the general public (…).

In areas around Torremolinos, there are developments with sales prices of more than €4,000/m2, when the average for the area does not exceed €2,500/m2 for second-hand properties. In the Fuengirola/El Higuerón area, new build homes are being marketed for more than €4,000/m2. Prices amount to close to €3,000/m2 in La Cala de Mijas and rise to €6,000/m2 in Nueva Andalucía and Behahavís. The average budget of these clients ranges between €500,000 and €1 million.

Original story: Diario Sur (by Ignacio Lillo)

Translation: Carmel Drake

Merlin to Invest €500M to Double its Logistics Portfolio

15 February 2019 – Eje Prime

Merlin Properties is also joining the logistics boom. The real estate company is preparing a new development plan for warehouses and storerooms to double its existing logistics portfolio in Spain and Portugal over the next four years. The objective of the company is to incorporate an additional 1 million m2 into its portfolio in this sector with an investment of €500 million, according to reports from Cinco Días.

The real estate company, which forms part of the Ibex 35, already owns logistics platforms spanning 1.1 million m2, spaces that are leased to various operators in the sector. Currently, Merlin is developing the so-called plan Best II, scheduled for 2021, with the construction of 500,000 m2 of logistics space in Madrid, Guadalajara and Toledo, and it is already working on Best III, which sources at the company explain will add another 500,000 m2 by 2023, in that case also on land in Portugal.

With the construction of these warehouses, Merlin’s objective is to diversify its portfolio and improve its yield, given that these types of assets offer a higher return. Currently, the Socimi owns assets worth €11.8 billion, of which €780 million correspond to logistics properties, accounting for just 6.7% of the portfolio.

Original story: Eje Prime 

Translation: Carmel Drake

Eventbrite to Open its First European Development Centre in Madrid

15 February 2019 – Europa Press

The global technological event management and ticket purchasing platform, Eventbrite, is going to create its first European development centre in the Spanish capital, whereby strengthening its presence in the country after acquiring Ticketea in 2018, according to reports from the entity.

Eventbrite has 14 offices across 11 countries, with a global team of 1,000 workers, of which 80 are based at its offices in Madrid and Alicante.

With the opening of the new development centre, which will open its doors in May 2019, the company expects to triple its team, primarily with engineers and product developers.

The new centre will be located in a four-storey building spanning more than 2,300 m2 on Paseo de la Habana in Madrid. It will house a workspace, cafeteria, library, relaxation areas, a lactation room, outdoor recreational spaces and an area open to the local community where the company plans to organise events and meetings (…).

Original story: Europa Press

Translation: Carmel Drake

El Corte Inglés Considers Creating a Socimi to List its Real Estate Assets on the Stock Market

15 February 2019 – Modaes.es

El Corte Inglés is looking for solutions for its portfolio of real estate assets. The Qatari sheikh Hamad Al Thani, the third largest shareholder in the Madrilenian department store group, has proposed the creation of a Socimi to manage the rental of its assets.

The plan proposed by Al Thani, who entered the company’s share capital last summer, involves creating a company in which El Corte Inglés would own a 51% stake. The remaining 49% of the shares would be listed on the stock market.

The Qatari investor already proposed this solution to the previous President of the group, Dimas Gimeno, but it was not successful then, according to El Economista. For the time being, the Board of Directors of El Corte Inglés has not received a formal petition regarding the plan.

The real estate portfolio of El Corte Inglés is worth €17.1 billion, according to a report from Tinsa. The department stores and hypermarkets are worth €15.0 billion, whilst the warehouses, offices and mixed-use buildings are worth €1.1 billion. Finally, the high street establishments are valued at €1 billion.

It is estimated that, in the event that the operation proposed by the sheikh goes ahead, the valuation of the assets could amount to half their current value, around €8.2 billion, according to Tinsa.

In parallel, the group is continuing to work on the sale of 130 real estate assets worth €2 billion in conjunction with the consultancy firm PwC. The property that El Corte Inglés wants to divest now comprises land, offices and buildings defined as non-strategic. Those assets also include some logistics centres.

The objective of these divestments is to reduce the group’s debt so that it can obtain a level of solvency that will allow it to raise financing in the capital markets at a lower price. In this sense, Núñez de la Rosa, the President of the group, has committed to reducing the group’s liabilities by €1 billion in twelve months.

Currently, the real estate portfolio of El Corte Inglés comprises 94 shopping centres, which account for 87% of the total value of the company’s assets. Two of those properties are valued at more than €500 million each, and another two are worth between €400 million and €500 million each.

The department store group recorded EBITDA of €335 million during the first half of 2018, up by 4.4% YoY. Between January and August, the company recorded turnover of €7.6 billion, up by 0.4% YoY.

Original story: Modaes.es

Translation: Carmel Drake

Coworkings: the New King of the Real Estate Sector

15 February 2019 – Eje Prime

Millennials, flexibility, start ups…All of the socio-demographic trends are inevitably leading to one common place: coworking offices. Flexible workspaces have become the great promise of the real estate sector but their largest operator, IWG, generates just 15% of its revenues from them and WeWork is multiplying its losses year after year. What risks does the model have? Can it withstand a recession without the guarantee of the traditional five years of mandatory occupancy? And what if Amazon and Facebook, its tenants of today, end up becoming its main competition?

In 2017 alone, the total volume of flexible workspace in the twenty largest markets around the world grew by 30%, equivalent to 1 million m2. Since 2014, the sector has doubled, and in cities such as London, they account for 20% of the office space leased, according to a report from JLL. In Barcelona, that figure already amounts to 12%.

The consultancy firm forecasts that the European stock will grow by between 25% and 30% per annum on average over the next five years and will account for 30% of some corporate real estate portfolios by 2030. But those predictions hide the major challenges that are threatening the great promise of the sector.

One of the main challenges facing the model is that the operator is tied to a given property for at least five years, like in the case of a traditional office, but its tenants have contracts that last for months or even hours. When the next crisis hits, what guarantees does the owner have that the operator will be able to continue paying the rent?

“On paper, that does seem like a risk, but the reality is that the coworking phenomenon was launched during the crisis”, explain sources at Savills Aguirre Newman. All sectors suffer when there is a recession, but traditional offices are hit harder because whoever cannot bear those costs can afford a coworking space”, argue the sources at the consultancy firm.

Another of the risk factors is that coworking offices have capitalised on the lack of available office space in the centre of cities and also, on the shortage of appropriate spaces for the new ways of working within traditional companies (…).

“The players driving the sector are multi-nationals that are looking for appropriate spaces for their innovation teams or for project-based work”, says Manel de Bes, Director of the Office department at Forcadell.

But, what will happen when the offices of these large companies have adapted to the new scenario? “At the moment, most companies are in the experimental phase; if they consider that the trials do not meet their needs, they will be able to return to more conventional models”, explains JLL’s report (…).

From rock star to conservative player

Within the coworking phenomenon, the rock star is WeWork. The New York-based company, which became the largest lessee of offices in its home city last year, is worth USD 20 billion, but it recorded losses of USD 723 million in the first half of last year.

“Its model is based on taking over the best buildings, in the most prime areas and then competing with other operators on price: it is not sustainable”, argues a competitor in the sector. “Sooner or later, they will have to raise their prices”, he assures.

IWG’s model is more conservative. That firm has an umbrella of five brands and thirty years of history. “We have gone through three or four cycles and we cover our backs: first, by diversifying in terms of the type of tenant to minimise risk. We also ask the owners to invest and we do not select the best buildings or at any price”, said Philippe Jiménez, head of the group in the Spanish market (…).

De Bes from Forcadell forecasts that “Over the medium term, just four or five operators will remain: those that lease 200 m2 or 400 m2 in secondary areas will exit the market”. In fact, the market is already becoming more concentrated: since 2015, the five most important operators have accounted for 50% of all of the new flexible workspace in Europe (…).

Original story: Eje Prime (by Iria P. Gestal)

Translation: Carmel Drake

The Capriles Family will Set the Tone for Operación Calderón with Flats Priced from €5,700/m2

14 February 2019 – El Confidencial

It is a question of weeks. Gran Roque, the investment vehicle owned by the Venezuelans Miguel Ángel and Áxel Capriles, is going to start marketing homes in its most affordable development in Madrid within the next few weeks. The development comprises 105 homes and is located just 600 metres from the Vicente Calderón stadium. The properties are going to be put on the market for €5,700/m2. That price will, undoubtedly, serve as a reference for the potential buyers of the plots in the future Operación Mahou-Calderón, which is currently on standby until the plans for the urbanisation and Reparcelation of the area have been definitively approved.

As reported by El Confidencial, in October 2017, the Venezuelan clan purchased buildable land from Prosegur, just a few metres from where Operación Calderón is going to be built. For that plot, which has not required any type of urban development procedure and which is designated for residential use, as provided for in the General Urban Development Plan (PGOUM) for Madrid dated 1997, they paid around €25 million, approximately €2,900/m2. That price is close to those what is being considered for the plots owned by Atlético de Madrid.

According to explanations provided to El Confidencial by various sources, the development comprises five 5-storey buildings – except for one that has 4 storeys – and to optimise the price, Gran Roque has decided to start by marketing just two of the blocks, which contain 55 flats. In other words, like other property developers have been doing in Madrid, if the first homes maintain a high rate of sales, all indications are that the prices in the subsequent phases will be higher.

The construction permit will be ready by the end of April or the beginning of May, and so the marketing cannot officially begin until then. Nevertheless, 20% of the 55 units have already been reserved, according to assurances given by those same sources.

The project includes 2-, 3-, and 4-bedroom homes, all of which have a parking space and storeroom included in the price. The smallest units will go on the market from €450,000 plus VAT; the 3-bedroom homes will start at €550,000; and the largest homes will cost more than €600,000. That equates to a price of €5,700/m2, which is very high for many Madrilenians, but well below the prices typically charged for luxury developments.

Located just a few metres from Madrid Río and the Río Manzanares, the development will contain two swimming pools (one for children and one for adults), a gym, a children’s play area, a bicycle room and 24-hour surveillance, amongst other features. In total, it will have 1,719 m2 of common space (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake