26 September 2016 – El Mundo
The real estate market is constantly evolving and adapting to new times and players, such as, for example, Listed Real Estate Market Investment Companies (Socimis). These investment vehicles, which have significant tax advantages and whose structure was created in 2012 to promote the leasing of properties, is now becoming a major player in the residential rental market.
To date, large real estate firms have created most of the Socimis in the market. They have spent billions of euros on investments, with the primary aim of managing tertiary and commercial assets. There have been a handful of purely residential Socimis on the scene, but they have been mostly driven at a family level. But that is now changing, after several high profile firms linked in one way or another to housing have decided to launch new Socimis. This is being perceived as a real declaration of intent that will lead to the professionalization of the rental housing market.
This professional boost will happen through initiatives such as those launched by Quid Pro Quo Alquiler (the Socimi being prepared by Alquiler Seguro) and Domo Activos Socimi (Domo Gestora), amongst others. They are just two of the new companies that are being called upon to define the before and after in the rental housing sector.
Why is this change happening in the real estate sector? “Nothing in particular has happened. We are seeing a normal process in terms of the evolution of the Socimis. At the beginning, it made complete sense to use them to acquire offices and shopping centres, because it was easier to find those products and at good prices. The situation was completely the opposite in the residential sector, where there were few packages of private homes available to buy. Over time, it has made sense for companies to start to group together large residential portfolios and commit to that formula”, explains José Luis Ruiz Bartolomé, real estate consultant and partner at Certus Capital.
Sources at Hispania, one of the leading Socimis in Spain, confirm that housing is less attractive. “The asset is very intense in terms of management and it requires a certain condensed critical mass to be profitable. Portfolios of very diverse homes should be avoided as they make management more difficult and increase costs”, said Cristina García, CEO at Hispania. For this reason, Hispania only investments in whole buildings, “because that means that we are able to renovate entire assets, increase their values significantly and optimise costs”, said García.
In this sense, it is worth highlighting that the new Socimis are backing the rental of diverse homes. The best example is the Socimi owned by Alquiler Seguro – a firm that specialises in brokering leases -, which will settle for properties purchased by qualifying investors from their current clients (it manages more than 50,000 contracts). On the other hand, Domo Activos Socimi will be the first property developer Socimi in Spain; it will focus on acquiring buildable land and constructing apartments for rental.
Alquiler Seguro’s initial plans involve capturing €50 million in funding and for the Socimi to launch with around 500 homes. Within four or five years, it hopes to raise up to €500 million and expand the portfolio to include around 6,000 units. Antonio Carroza, CEO at Alquiler Seguro, confirms that Quid Pro Quo’s goal is “to professionalize leasing and provide the market with a constant, homogenous and continuous supply”. (…).
Original story: El Mundo (by Jorge Salido Cobo)
Translation: Carmel Drake