28 December 2015 – Expansión
The Torre Espacio skyscraper, Gran Vía 32 retail store, the Plenilunio shopping centre and the Hotel Ritz in Madrid are just a few examples of the real estate assets that have changed hands in the last year and which have placed the level of real estate investment in Spain at levels never seen before.
Between January and December, investment in non-residential properties (in other words, in offices, shopping centres, retail premises, hotels, warehouses and logistics centres) amounted to €12,250 million, according to the consultancy CBRE; and 2015 is expected to close with a total volume of €13,000 million, an unprecedented figure in the sector in Spain.
Even though the volume of real estate investment was strong in 2014, with a total of €10,000 million – returning to the pre-crisis figure of 2007 – that amount was surpassed within the first nine months of 2015: between January and September, purchases involving assets worth €10,800 million were closed, up by 57% compared with 2014 and by €600 million compared with 2014 as a whole.
This record figure is explained by the return of international funds to the Spanish market, following their exit when the bubble burst (they have been returning slowly since the end of 2013), as well as the rise in a new type of company: the Socimis.
This type of company emerged in 2009 when legislation was created for the launch of these vehicles, inspired by the American REITs. Nevertheless, it was not until the reform (of that legislation) in 2012, that the first Socimis, which were primary managing family wealth, started to flourish. Two years later, the first large real estate companies debuted on Madrid’s stock exchange and there are now four such listed companies: Merlin Properties, Hispania, Lar España and Axiare. (…).
Indeed, one of these, Merlin Properties, has starred in the largest operation in the sector this year, which, despite being a corporate purchase, is included because of its real estate component: the purchase of Testa, formerly a subsidiary of the construction group Sacyr.
Excluding this acquisition, the sector recorded total investment of €7,621 million during the 9 months to September, after a very active summer (traditionally a period when very few operations are closed).
The largest operations included acquisitions of single assets, such as the Megapark shopping centre in Bilbao, which the Socimi Lar España purchased for €170 million, as well as the purchase of batches of properties, such as the Thunder portfolio, comprising two office complexes in Madrid and Barcelona, acquired by Axa Real Estate; and the purchase of 16 supermarkets leased to Dia and Carrefour by the fund Kennedy Wilson, which paid more than €85 million.
Hotels have also experienced a significant boost in terms of investment this year. “In 2014, hotel investment amounted to €1,100 million; this year, we have already exceeded €1,900 million and we expect to close the year with a volume of €2,000 million”, said Mikel Marco-Gardoqui, from CBRE. (…).
The experts at the consultancy firm expect interest from the funds to continue into next year. “We think that investment will amount to around €10,000 million in 2016, although we expect to see fewer operations, because prices are going to increase (…)”, says Heriberto Terual, Director of Corporate Finance at CBRE.
Original story: Expansión (by R. Ruiz)
Translation: Carmel Drake