Tightened Lending Standards Put Drag on New Developments

8 November 2019 – Developers are complaining of a lack of financing in the sector due to tightened lending standards and the high cost of alternative financing. Spain’s banks are looking to reduce their exposure to the real estate market, at a time when many of them still have extensive amounts of NPLs and REO on their balance sheets. At the same time, alternative financing vehicles often have interest rates reaching up to 10%, making many potential developments economically unviable.

A conference on financing and alternative investment in the real estate sector, organised by the IE Real Estate Club and the Urbanitae real estate investment platform, saw market sources discuss the problems facing the sector.

Developers argued that banks should provide more financing to that they can build the 150,000 homes a year the country requires. Currently, sources say that banks will only extend financing to only the largest developers who can 30% to 40% of the financing using equity. Smaller firms with less access to capital are often unable to get 100% for new developments.

Original Story: Expansión – Carlos Lospitao

Adaptation/Translation: Richard D. K. Turner

CBRE: Inv’t In Industrial & Logistics Assets Totals €386M In H1 2015

15 July 2015 – Misnaves.es

Investment in industrial and logistics assets in Spain amounted to €386 million during the 6 months to June 2015. This figure is considerably higher than the one recorded during the same period in 2014, when only €113 million was invested, according to data from CBRE, the leading global consultancy and real estate service company.

Several factors have contributed to this increase, including the greater ease of access to financing and the expectation that rents will rise.

International investors are continuing to see Spain as an attractive market, based on their analysis of location and type of asset. Investment funds and Socimis have been the main purchasers.

Madrid and Guadalajara accounted for the majority of the activity, although one-off transactions were also recorded in other Spanish cities. These include Merlin Properties’ purchase of Testa’s portfolio, spread across several regions, with a total surface area of 209,000 m2. They also include Rockspring’s purchase of two logistical warehouses, still under construction, in Montepino and Torrejón de Ardoz, with a surface area of 49,000 m2, which will be completed during the first quarter of 2016.

Two transactions were also recorded in Barcelona, including Baraka Global Invest’s purchase from Inbusa of Alstom’s facilities in Santa Perpetua de Mogoda, with a surface area of 370,000 m2 and a price of €60 million.

Both the increase in liquidity and purchasing activity, as well as the scarcity of supply in the market, has led to the compression of prime rental yields since 2012, to their current levels of between 6.5% and 7%.

Original story: Misnaves.es

Translation: Carmel Drake