Category: Land

Juan Velayos: Spain’s New Property Developers Will Regulate Land Prices

10 April 2017 – El Economista

Neinor Homes is advancing with the purchase of land to fulfil its plans, which include reaching a cruising speed of completing the construction of between 3,500 and 4,000 homes per year.

In the first quarter alone, the firm, which just a week ago was the first property developer to debut on the stock market in Spain since the crisis, spent €51.5 million buying up buildable land, amounting to almost 90,000 m2 and with capacity for the construction of 700 homes.

“We are continuing to see that now is a good time in the market to buy land”, said Juan Velayos, CEO at Neinor. In this sense, the director stated that the company that he manages is going to continue being very rigorous in these operations to achieve the property developer margin of 18% that it has set itself.

With respect to the rises in market prices that are being seen in some areas, Velayos considers that the new players in the property development market “will act as a natural regulator of the market”.

“I do not think that land prices are going to continue to rise by as much, provided buyers are disciplined. This is a business that is now working with its own funds and buyers with this profile are much stricter with their purchases”. “Unlike what I hear on the grapevine, I do not think that we are going to see a repeat of what has happened in previous periods and that we will only see price rises that make sense”.

The director said that the difference is marked by equity. “When the banks were putting up the cash, they (property developers) were more aggressive. Nevertheless, when you are spending money from your own pocket, you are more inclined to be disciplined. That phenomenon is going to regulate the market”.

On the other hand, Velayos considers that the availability of land is very important. “I think that Spain is going to have a lot of land for several years”. “It is true that there is a problem with buildable land, which we are all aware of. It is also true that the time needed to make land “buildable” is eternal, but there is no shortage of land”.

The director considers that “the solution is none other than to try to ensure that those time frames don’t last forever like they currently do, but there is no problem in Spain in terms of land classified as residential. Simply, the urban planning procedures need to adopt coherent deadlines, and that will gradually happen”.

“I believe that Spain is entering a new phase in which the sector is basically being institutionalised. I am sure that this cannot only remain in the private part of the value chain”. In this way, he is optimistic and hopes that the public sector will start to understand that “the property development market generates a lot of employment, wealth and contributes to GDP”, and that in the end “those harmed by the lack of land are none other than property buyers”.

The property developer will complete and hand over 300 homes this year, however, it will not be until 2018 when the homes of the new stage will start to be completed. Currently, Neinor Homes has more than 4,000 homes in progress and more than 2,000 homes in an advanced phase.

Original story: El Economista

Translation: Carmel Drake

Aelca Plans To Sell c. 1,000 Homes In 2017

10 April 2017 – El Mundo

The map of the new real estate sector is continuing to take shape, one step at a time, and it is becoming increasingly clear who the main players are going to be and what role each one of them is going to adopt in this cycle. The latest star to come to the fore is Aelca, a property developer founded in Madrid at the end of 2012, in which the US fund Värde Partners purchased a 75% stake in the middle of 2016, taking over the shares that the construction company Avintia had held until then.

After working for almost five years in a very discrete way, Aelca has arrived at this current point in the recovery of the real estate sector with a very clear objective: “We want to be the leading house builder in this new cycle”, explain its founders and CEOs Javier Gómez and José Juan Martín (pictured above, left and right, respectively).

A priori, this aim does not sound like a particularly original aim – it is very similar to those expressed by the three other great property developers, namely, Neinor Homes, Aedas Homes and Vía Célere. (…).

Perhaps, the main difference between Aelca and the other “big four”, as sources at Aelca refer to this select group of giants in the property development sector, is the number of homes that the company has already completed. “We have been working behind the scenes, preparing the way for where we are today”, say Gómez and Martín. “None of the other three large companies has completed 900 homes like we have over the last few years”, they add.

That figure, beyond its absolute value, needs to be put in context, remembering that during the crisis that hit the housing market between 2008 and the end of 2014, almost all sales and starts of new build homes were suspended. (…).

The financial partner’s (Värde) entry into the company’s share capital came in response to the need for growth that its founders understood a property developer such as theirs needed, in order to survive in the residential market that is being created. “In the nine months that we have been working with Värde, we have gone from having land on which to build 3,000 homes to having double that figure”, said Martín. (…).

Aelca closed 2016 with turnover of €103 million and more than 600 homes sold. This year, the company plans to increase revenues by 49%, to €154 million and sell around 1,000 homes.

Projects underway

Currently, the company has 43 property developments in progress in the Community of Madrid, with a total of 1,316 homes. Its delegation in the South region has projects comprising 498 units; the Cataluña-Aragón delegation is building 241 homes, and the Valencia and Alicante region is constructing 145 units. In total, 2,200 homes under construction, according to its plans, and that figure will rise a lot soon.

In line with its strategic objective to consolidate its dominant position in the residential market, Aelca plans to start marketing another 16 developments this year in several locations across the provinces of Barcelona, Málaga, Valencia, Vizcaya and Madrid. (…).

Original story: El Mundo (by Luis M. De Ciria)

Translation: Carmel Drake

Aragón Creates Logistics Group To Unify Sale Of 240 Ha

6 April 2017 – El Periódico de Aragón

Land covering 2,400,000 m2 (240 hectares) in total, a surface area that resembles the Zaragoza neighbourhood of Delicias. That is the volume of land that Aragón Plataforma Logística (APL), the new public company being created by the regional government, is going to sell. The objectives of the future company APL will be to unify the management, promotion and sale of assets that are currently owned by a variety of regional companies.

Specifically, it will group together three large industrial estates in Zaragoza (Plaza), Huesca (Plhus) and Teruel (Platea), as well as Zaragoza Expo Empresarial, la Sociedad para el Desarrollo de Calamocha (Sodecasa) and Plaza Desarrollos Logísticos (PDL, the property developer behind Caladero). With this supply of spaces, to which the Fraga platform (Plfraga) will likely be added soon, the region is looking to strengthen its position as the largest logistics market in the south of Europe.

APL, which should be constituted within the next few weeks through a decree, will be entirely owned by the regional government, specifically, the Corporación Empresarial Pública de Aragón, which will own 100%. The new management team at the Government of Aragón is seeking to optimise and streamline the operation of logistics, industrial and tertiary assets at all levels. (…).

The logistics sector accounts for 5.5% of the region’s GDP and has secured private investment amounting to more than €3,000 million since 2005 when the first phase of Plaza was launched. (…).

Original story: El Periódico de Aragón (by Jorge Heras Pastor)

Translation: Carmel Drake

Neinor Buys 7,000m2 Plot Of Land In Valencia

5 April 2017 – Expansión

Neinor Homes is stepping on the accelerator and strengthening its presence in Spain by entering a new region. The property developer – which debuted on the stock market on Wednesday 29 March –  has completed the purchase of its first plot of land in Valencia, with a buildable surface area of 7,000 m2, where it will construct 54 homes. This acquisition allows the company, which is controlled by the US fund Lone Star, to expand its operations to Valencia, where it is considering opening a local office.

According to the company, the market in Valencia displays the characteristics that it demands for its investments: a shortage of structural supply, a lack of competition, positive population growth and unsatisfied demand. For this reason, it is looking for “new opportunities in the city”.

Since the beginning of January, the company has invested €51.5 million in the purchase of buildable land in Sitges, Gerona, Sabadell, Mairena de Aljarafe (Sevilla), Sazares (Málaga), Madrid and Valencia. These plots will allow the developer to build more than 700 homes on almost 90,000 m2 of land.

The CEO of Neinor, Juan Velayos (pictured above), said that the purchases made during the first quarter place the company on the road to exceed its annual objective in terms of acquisitions, set at €200 million. “It is a confirmation that we are still able to buy carefully selected plots of land from non-natural landowners, such as banks and companies without any development activity”.

In this way, sources at Neinor underlined that each one of these operations exceeds the profitability objectives set by the property developer and that they were closed only after rigorous legal, technical and commercial due diligence had been completed.

The firm has 1 million m2 of land in its portfolio, with a gross value of €1,120 million, on which it plans to construct more than 9,000 homes.

At the end of February, the company had 60 active developments – already started or planned to be launched – in País Vasco, Madrid, Cataluña, Andalucía and the Community of Valencia, on which it plans to construct 4,002 homes.

The property developer plans to reach cruising speed in 2020, with the completion and delivery of between 3,500 and 4,000 homes per year.

The company, which plans to announce its results on 26 April, closed last year with revenues of €228.6 million and a gross operating profit (EBITDA) of €9.6 million.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

UK Fund Shaftesbury Buys Plot Of Land In 22@ District

31 March 2017 – Eje Prime

The UK fund is satisfying its investment appetite in the Spanish market by making acquisitions. In this vein, it has just added a plot of land in the 22@ district of Barcelona to its portfolio of assets. The plot is located at number 66 on Calle Cristóbal de Moura, according to Frédéric Mangeant, the Director General of the fund in Spain. Following this purchase, the group plans to construct an office building on the site.

Although the company did not want to make a statement about the amount of the operation, sources close to the deal say that the fund must have paid around €10 million. According to the same sources, Shaftesbury has purchased the plot of land from “a bad bank”, and is now waiting to receive all of the necessary licences from the Town Hall of Barcelona before it starts construction of the property.

Shaftesbury is thereby committing itself to one of the areas that is expected to grow by the most in the Catalan capital. The 22@ district is attracting a large number of companies, both from within Spain as well as from overseas, wanting to open offices in Barcelona. In the same way, a large number of real estate companies are committing themselves to the construction of new office buildings to satisfy demand (…).

Shaftesbury’s purchase of this plot of land forms part of the group’s plans to grow in the Spanish market. Headquartered in Luxembourg, the fund’s leader in Spain is Frédéric Mangeant, an executive who previously served as a managing partner of the international real estate consultancy Knight Frank and who is a member of the Board of Directors of Real Valladolid Football Club.

Shaftesbury’s Spanish subsidiary began its expansion in Spain in 2014, with the purchase of a building at number 48 on Calle José Abascal in Madrid, which it acquired from Sareb for €26.5 million. The fund has converted that property into a luxury residential building. According to sources in the sector, the 17 homes cost around €8,500/m2, and are set to become a benchmark for the multiple high-end projects that are currently underway in the capital (…).

The Shaftesbury Asset Management group manages more than €1,700 million of real estate assets and created the fund Shaftesbury Real Estate Partners 1 in 2015 with the objective of investing approximately €300 million.

Original story: Eje Prime

Translation: Carmel Drake

Neinor’s Share Price Rises By 3.16% On First Day Of Trading

31 March 2017 – Eje Prime

Neinor Homes ended its first day of trading on the stock market on a high, as its share price increased by 3.16% following its debut on Wednesday. Its shares ended their first trading session at a price of €16.98 per share compared with the price of €16.46 set for their debut on the stock market.

The largest real estate development company to be listed in the last decade saw its shares appreciate by 9.96% at one point, given that during trading its share price fluctuated between a low and high of €16.98 and €18.10 per share, respectively.

The real estate company’s shares began trading at 12:00, following the traditional ringing of the bell by its CEO, Juan Velayos (pictured above) and the representative of Lone Star, Juan Pepa, at the Bilbao Stock Exchange, where the firm has its corporate headquarters.

The objective of the real estate company’s IPO is to reduce debt and continue acquiring plots of land in areas with strong demand. Neinor intends to list on the stock markets in Madrid, Bilbao and Valencia.

The group owns one of the largest portfolios of buildable land in Spain, comprising 161 developments and 9,086 homes. As at 31 December 2016, its buildable land portfolio was worth €1,120 million and had a development value of €2,548 million.

Original story: Eje Prime

Translation: Carmel Drake

IPE: Málaga’s Land Shortage Will Drive Up House Prices

29 March 2017 – La Opinión de Málaga

During 2017, the Malagan real estate market is expected to continue along the path to recovery that it began two years ago, however, the lack of available buildable land along the Costa del Sol to meet current demand from developers and investors looks set to limit the growth of the sector. That is according to the

That is according to the Institute of Business Practice (IPE), which presented the 24th edition of its Real Estate Pulsimeter for Málaga last week. It warned that this lack of available buildable land in certain municipalities could result in the future effect of a rise in house prices in certain enclaves. In fact, the Director of the IPE’s Real Estate Practice, José Antonio Pérez (pictured above), said that this “new bubble” is already being seen in some parts of the Costa del Sol.

“There is more demand than available supply and if we do not resolve that mismatch, we will see prices rise again. The main problem is the lack of buildable land, understood as land that is suitable for the presentation of plans and for obtaining a licence. (…)”, he said.

In his opinion, the lack of available supply is due, on the one hand, to the “restrictions” imposed by the PGOU and the slowness of the urban planning procedure in certain towns compared to others, and, on the other hand, to the fact that some of these plots of land are owned by individuals and investment funds that are not interested in developing them, for the time being at least. Pérez pointed out that Sareb still owns lots of plots of land that it took over from financial entities, which are “clogging up the market”, despite the fact that the bad bank is working as fast as it can to find an exit from those assets.

As part of this trend, the IPE made reference to the special role being played by the so-called “golden triangle” of the Costa del Sol, which comprises the areas of Marbella west, Benahavís south and Estepona east. There, “the price of buildable land is doubling, products that suit the needs of solvent clients are running out and financial competition between landowners is becoming speculative and monopolistic”. Pérez also explained that, given the lack of available land along the west coast, investors are also starting to look for sites to develop along the east coast.

Málaga leads the way

The figures from the Real Estate Pulsimeter (….) confirm (…) that Málaga is one of the most important areas in terms of the recovery of the sector. (…).

House sales grew by 6% (in Málaga) in 2016 to reach a total of almost 26,200; and the IPE forecasts a similar increase for 2017, which would take the figure to around 27,700. Currently, c. 50% of purchases are paid for in cash and the other half are financed through mortgages, which gives us an idea of the importance of foreign buyers and investors here, as they are the main people who can acquire properties without having to resort to financing.

“Malaga’s position of leadership in the real estate sector is also reflected when we draw comparisons between Spain, Andalucía and Málaga with respect to the growth in the number of housing permits granted in 2016 vs. 2015 – the figure grew by 35% in Málaga, and by 20% and 16.9% in Spain and Andalucía, respectively. Something similar happened with the growth in the number of new homes started – Spain, with growth of 33% in 2016 vs 2015, was a long way below the rate of growth in Málaga (54%)”, says the IPE. (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake

Domo Gestora’s Socimi Acquires Its First Plot Of Land

24 March 2017 – Inmodiario

Domo Activos Socimi, the Socimi promoted by the real estate manager Domo, has acquired its first asset. The asset in question is a plot of land, located in Ensanche de Vallecas, in Madrid, where the company plans to develop a residential building comprising 80 homes for rent with the option to buy. This Socimi’s business model focuses on buying land on which to construct buildings for their subsequent rental. Once the mandatory three years during which they must lease the properties out has passed, the Socimi will then proceed to sell them, whereby benefitting from the tax benefits enjoyed by these types of companies. In this way, all of the profits generated from the date the land is acquired until the date the properties are sold is taxed at 0% for Corporation Tax purposes.

According to the company’s estimates, the returns on this project, once the divestment has been made, could reach 10% per annum. Before the sale and whilst the properties are being leased, investors will receive profits resulting from the rental income, in the form of dividend payments.

Domo Activos Socimi will debut on the Alternative Investment Market (MAB) in the recently created sub-segment, called “Socimi under development”. Socimis that allocate less than 70% of their assets for rent trade there. In this case, Domo Activos Socimi will ask to be incorporated into this sub-segment, given that initially, it will own just one plot of land.

Domo Activos Socimi’s business model allows its shareholders to participate in the advantages and returns offered by traditional Socimis, as well as in the returns offered by the development and construction of properties.

Domo Activos Socimi plans to file its request to join the MAB during the first half of 2017. This milestone will allow Domo to fulfil one of the main objectives that it set itself when it launched this Socimi, namely, to enable small and medium-sized investors to access investments with these characteristics.

Domo Activos Socimi has successfully completed its first capital increase, which has allowed it to acquire this plot of land and for the time being and until it debuts on the MAB, with the traditional “Ringing of the bell”, it may increase its share capital again, which would likely require a minimum necessary investment per shareholder of €100,000.

Original story: Inmodiario 

Translation: Carmel Drake

Lone Star Will Sell Up To 60% Of Neinor When It Goes Public

8 March 2017 – La Vanguardia

On Monday, the US fund Lone Star announced its intention to initiate the flotation on the stock market of its Spanish subsidiary, the property developer Neinor Homes, with the sale of up to 60% of its shares. Neinor, which is due to debut on the stock market in April, will thereby become the first property developer to go public following the outbreak of the real estate crisis in 2007.

Market sources explained that Lone Star is valuing Neinor at around €2,000 million. The fund acquired the former real estate subsidiary from Kutxabank in 2014 for €925 million and then invested another €200 million in a capital increase in order to purchase land: with a cumulative investment of €1,100 million, the debut will allow the fund to capitalise on its commitment to the Spanish real estate sector in record time.

The property developer led by Juan Velayos (pictured above) explained in the preliminary documentation sent to the CNMV that the stock market debut will be performed in two phases. During the first phase, the firm will make a primary offer or IPO aimed at institutional investors, through which it hopes to raise €100 million, which it will use to reduce its corporate debt. It will then carry out a secondary offer, by selling shares that are currently held by Lone Star’s minority shareholders.

According to Neinor, the placement will leave between 40% and 60% of the company’s share capital as free float. Lone Star and the company itself have made a commitment to not undertake any additional sales of its shares for 180 days, whilst the management team led by Juan Velayos, the former CEO at Renta Corporación, has extended that commitment for a period of between one and three years.

Neinor owns land for the construction of 161 developments and 9,086 homes: as at December 2016, those plots had a gross value of €1,120 million and a gross development value of €2,548 million, which guarantees the company’s activity until 2021.

Since its creation, the company has been planning its IPO, applying standards of corporate governance, professionalisation and customary transparency in listed companies. Based on the valuation of €2,000 million that the placement firms are entertaining, Neinor will become the third largest real estate company on the Spanish stock market, behind only Merlin (with a capitalisation of €5,000 million) and Colonial (€2,450 million) and ahead of Hispania (€1,300 million) and Axiare (€980 million).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

Foro Consultores: Land Prices Soar In Certain Pockets Of Madrid

13 February 2017 – El Confidencial

Land prices are soaring, house prices are rising, the buying frenzy is gaining momentum in some areas and in certain developments…Is history repeating itself? Are we witnessing the gestation of a new real estate bubble, albeit not on a national scale, but nevertheless in certain areas of the country. That is what seems to be happening in some neighbourhoods of Madrid. But, the answer, for the time being at least, seems unanimous: not yet.

Buildable land, in other words, land that is ready to be built upon, is running out and, across Spain, there is barely enough land left upon which to construct the 1.5 million homes estimated to be required to supply the market for the next 8.6 years. In Madrid, the land will run out in just over 6 years, according to the latest report from the appraisal company Tinsa. It identifies a worrying shortage of this type of land in areas of expansion to the north of Madrid, as well as in certain specific points of the metropolitan area, such as Pozuelo, Villanueva de la Cañada, Coslada and Rivas. In some of these areas, according to warnings from Tinsa, there will be no buildable land left within 12-24 months. This situation has, unsurprisingly, led to sharp increases in land prices in certain areas. And these rises are concerning the sector. Where are these first warning signs starting to sound?

Valdebebas

The large real estate development in the north of Madrid, which was launched at the height of the crisis and which has fallen victim to numerous legal setbacks, has become, in the eyes of the residential sector, a clear example of the extent to which land can become a very sought-after, as well as a very dangerous, asset.

“Without doubt, it is one of the areas where land prices have grown significantly. In 2014, they ranged between €750/m2 and €900/m2, whereas nowadays operations are being closed for more than €1,200/m2 and €1,300/m2, and the perception in the market is that land can no longer be sold for less than €1,400/m2”, explained Vicente Quintanilla, Director of the department for Investment and Land at Foro Consultores. According to this expert, “this trend generates significant tension in terms of the prices of new builds, which are being sold for €3,000/m2 in certain developments”. (…).

Pozuelo, Aravaca…

Another market where prices have also risen significantly is the municipality of Pozuelo de Alarcón, where Sareb sold land for around €1,000/m2. (…).

Indeed, the supply of land in Pozuelo has completely run out and families in need of homes are heading to other markets, such as in Boadilla del Monte, a cheaper alternative. According to data from Foro Consultores, the gap in prices is very significant. “To give you an idea, a family home or chalet in Boadilla costs around €450,000 on average, compared with between €700,000 and €1 million in Pozuelo.

Scarce and sought-after plots of land have also seen sharp price increases in recent years. “In El Camino de Barrial, in Aravaca, land prices have risen from €1,200/m2 in 2014 to around €2,000/m2 now. (….).

Boadilla del Monte, at boiling point

Boadilla del Monte is another one of the markets that has experienced a huge boom over the last two years. And there, it has not been due to the scarcity of land, but rather because of the strong demand from families who, as described above, cannot find homes in Pozuelo de Alarcón.

“For family home plots, land prices have increased from €400-500/m2 in 2014 to €800-900/m2 in2016, say Foro Consultores. (…).

Euphoria in Méndez Álvaro and rises in El Cañaveral

In the heart of the capital, where land is noteworthy due to its absence, land prices have increased considerably. In 2014, buyers paid €1,000/m2 and in a recent operation, whereby Adif and Renfe sold a plot to Vía Célere, the price paid amounted to around €1,900/m2. (…).

This increase in land prices is not exclusive to the area to the north of Madrid (…). The price of more affordable land and cheaper homes has also risen significantly in recent months.

Such is the case of El Cañaveral, in the east of Madrid, where “last summer, land prices amounted to around €360-370/m2 and now plots are going for €450-500/m2” (…).

Finally, all of the experts lament the fact that during the crisis, no agreement was reached to manage land, which has resulted in this significant shortage and in the inevitable increase in prices. They advocate greater agility in terms of urban planning, especially where the shortage is leading to a bottleneck in the market.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake