Land Shortages Curb Investors’ Return To RE Development
2 March 2016 – Expansión
CBRE, the Urban Land Institute and Esade gathered together representatives from several real estate groups yesterday in Barcelona; they all agreed about the lack of assets for sale in the market. Benson Elliot, Colonial, Merlin Properties, Vía Célere and Unibail Rodamco have suffered in the last two years from the avalanche of investors that have set their sights on Spanish real estate and have exacerbated the lack of assets on the market. The CEO of Unibail Rodamco in Spain, Simon Orchard, said that “we are forced to develop, because the type of product that is in demand does not exist”. The Director of Merlin Properties, Luis Lázaro agreed with him, “no warehouses have been constructed in Madrid for ten years, but the demand is there, which is leading us to construct turn-key projects”.
The CEO of Colonial, Carmina Ganyet, added that “the lack of quality products does not only relate to the location of buildings, it also manifests itself in terms of their features”, and as such, the group allocates around 20% of its investment to new construction projects, which also offer much higher returns, of 10% and 15%. The Head of Benson Elliott in Spain, Gregg Gilbert, said that his fund is looking for “this kind of return on all of its projects”. And the founder of Vía Célere, Juan Antonio Gómez Pintado, added that the biggest problem is the lack of land and “the government is lagging behind in this regard”.
Original story: Expansión (by M. A.)
Translation: Carmel Drake