Spain’s New Property Developer Kings – Who’s Who?

5 October 2015 – El Economista

The funds, financial institutions and real estate companies that have survived the crisis, forecast that they will construct 150,000 new homes and 50,000 secondary residences per year until 2020.

After the burst of the real estate bubble and the harsh years of the crisis, a new panorama is now emerging in the construction sector with several new players in the wings. Many funds and financial institutions have already emerged as the new stars of the residential development segment and have taken on a significant role in the sector.

Nevertheless, these banks and investment firms will have to share the market with some of the survivors from the past, namely the former property developers. A handful managed to survive the drought, as they diversified their businesses and/or made intelligent developments before the crisis, and they are now ready to become property kings once again.

Neinor Homes, will undoubtedly be one of the most active companies over the next few years, since according to its forecasts, it will construct between 2,000 and 3,000 homes per year. The company, led by Juan Velayos (former CEO of Renta Corporación) is the largest residential real estate company created in Spain following seven years of recession.

Neinor Homes is pushing down hard on the accelerator. This year alone it will invest around €1,000 million on the purchase of land, which it will add to the land worth €350 million that is already holds on its balance sheet. (…).

The banks are also entering the sector

According to the first report prepared by Solvia, to analyse the trends in the real estate market, the banks, through their servicers, have also positioned themselves amongst the main property developers. Solvia itself is playing a significant role in the new panorama. The real estate company owned by Banco Sabadell has already developed more than 3,380 homes over the last few years and has around €4,200 million in land assets under management. (…).

BBVA has also launched itself into property development, as the Commercial Director of BBVA Real Estate – Anida, Lorenzo Castilla explains. The entity is evaluating the development of 25 sites for the construction of 2,000 homes, whilst already developing another 12 for the construction of 630 properties.

The director clearly describes the new model that has now been implemented in the sector, he says that “it is not about filling Spain with cranes, but rather focusing on projects that make sense”, given that “there was a distinct lack of rationale during the boom years”.

According to the estimates published in Solvia’s Market View report, both Altamira, the real estate subsidiary of Banco Santander, and Cerberus will develop between 1,000 and 2,000 homes per year. In the case of the US fund, this development will be centred on the urban complex it purchased together with Orion from NH, in Sotogrande (Cádiz) for €225 million. (…).

The real estate companies make a return

Solvia’s report also highlights that property developers such as Via Célere, Corporación Promotors, Pryconsa and Inmobiliaria Espacio will also be developing between 500 and 1,000 homes per year. (…).

All of these projects come in stark contrast to the still very high figures for unsold housing stock (533,734 units in 2014). Moreover, the experts say that a significant volume of this stock may never be sold, however, the sector justifies the new developments. Solvia says that the business model that it applies now is more conservative than in previous years, since land purchases are generally being financed using own funds. In addition, “the lack of stock in certain areas, and the existence of pent-up demand, makes the conditions very favourable for a return to development”.

On the basis of this data, property developers estimate an annual output of 150,000 new homes and 50,000 secondary residences between 2016 and 2020.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

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