Málaga Vies to Compete with Madrid & Barcelona in the Office Sector

11 April 2018 – La Opinión de Málaga

The yields for investors (in Málaga) range between 5% and 7.5%, and exceed these reference areas, although the experts agree that more tertiary development is needed. The real estate sector highlights the recovery of its activity and rules out signs of a bubble in the housing sector.

The real estate market in Málaga is on the rise and is in the spotlight of all investors both in the residential sphere as well as in the tertiary and office segments, according to comments made by several experts yesterday at a forum organised by Málaga’s Association of Construction Companies and Property Developers (ACP). They also ruled out that that there is currently a risk of a bubble since the rate of growth is being sustained. In the office sector and from the point of view of investors, Málaga capital, specifically, is positioning itself as a great alternative to the saturated markets of Madrid and Barcelona, which are showing signs of “depletion” with the lowest yields for 20 years (3.2% in the prime areas and 6.25% in the more peripheral districts), according to explanations provided by the Director of Investments at Savills Aguirre Newman, Pablo Méndez. By contrast, yields in Málaga range between 5% and 7.5%, with potential for returns that exceed by 1.5 points the markets that have traditionally monopolised investors’ interest.

“The office market has to look for new destinations to house its money and, after Madrid and Barcelona, Málaga is in an enviable position. We need to take advantage of that. There is office demand that is not being met in Málaga, which means that a great investment opportunity is opening up”, said Méndez. A recent study by his consultancy firm revealed that Málaga capital, with an office stock spanning 600,000 m2, has reached leasing and occupancy levels not seen since before the crisis, with percentages of 90% in the prime areas, the financial district and the area around Vialia, established as the Business Centre.

Rents amount to €12/m2/month on average, with maximum values of €18/m2/month for buildings on the most sought-after streets. This trend will continue in 2018, with the forecast that rental transactions could reach record volumes, boosted by sectors such as real estate, services and technology, which means that properties that have been available for almost a decade may have new tenants.

In light of this scenario of a “shortage” of sites, Méndez warns that the city needs new tertiary developments and office buildings given that the spaces that currently have most availability, on the Andalucía Technology Park (PTA), do not meet the expectations of companies who prefer a more urban environment for their workers. Areas such as Martiricos and La Térmica, in his opinion, represent development enclaves that could be used to alleviate this situation.

“Right now, the decisions as to whether to change headquarters are taken by considering the human resources team, the communications, the flexibility of hours, the services in the vicinity. There has been a substantial change in terms of the demand from tenants. The way of working has changed. Companies want to be more central and in their own environments”, he said (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake

Málaga Capital Attracts Attention from Top Real Estate Investors

10 April 2018 – Diario Sur

“We are in love with Málaga”. Just like that, without any qualms, Juan Velayos, CEO of Neinor Homes declared his love for the city. (…). Neinor is one of the large real estate giants to have emerged during this new cycle in the housing market. Fed by international investment funds, the property developer is building tens of thousands of homes all over the country. And Málaga is one of the jewels in its crown. “Our forecast sales for the province amount to €850 million”, announced Velayos today at a real estate meeting organised by the Association of Construction Companies and Property Developers (ACP) in the auditorium of the Museo Picasso.

The most striking aspect is that 40% of those forecast sales correspond to Málaga capital, where Neinor starred in a macro-operation last year when it purchased land from Unicaja, as a result of which it is going to be able to build almost 1,000 homes. Velayos highlighted the great appeal of the city for investors and property developers, in part due to the tourist boom and in part because “things are being done significantly better here than in other places” in terms of the processing of urban development plans. (…). The other experts participating in the forum were in agreement with Velayos: Málaga capital is starting to become an entity in its own right in the real estate market, whereas previously it was always in the shadow of the Costa del Sol brand.

In this way, the Regional Director of CaixaBank in Andalucía, Juan Ignacio Zafra, highlighted that the city “is enjoying a unique time”, adding that the western coast “continues and will continue to operate well” and that the eastern coast “has enormous potential capacity” still to be developed.

The Commercial Director of Tinsa, Pedro Soria, stressed that Málaga is the Mediterranean capital where homes are sold the quickest, after Barcelona. And the Director of Capital markets at Savills Aguirre Newman, Pablo Méndez, revealed that the office market in the city also has significant potential, given that Madrid and Barcelona – until now the only two cities that have operated as proper markets in the tertiary sector – are showing signs of depletion and investors are on the hunt for new opportunities. “Very few cities have an office stock of the size of Málaga: around 600,000 m2. But the stock is old, with a significant shortage of buildings that fulfil current requirements in terms of sustainability, energy efficiency and comfort”, he explained. “Monthly rents average around €12/m2, which is insufficient for investors, but we are now seeing maximum rents of €18/m2/month in the centre. When the average rent reaches €14/m2/month, we will start to see new office building projects, which is what we need”, he added, warning, as an aside, about the need to reserve tertiary land in attractive areas of the city.

The Secretary-General of the ACP, Violeta Aragón, highlighted the good times that the real estate sector is enjoying in the province, although she ruled out any risk of a bubble. (…). “The growth percentages may seem exorbitant, but the reality is that we are starting from levels well below those seen ten years ago”, she explained, providing some examples: last year 3,800 new home permits were granted, compared with 40,000 in 2008; and the average price per square metre amounted to €1,479/m2 last year, compared with the peak of €2,415/m2 in 2008.

Original story: Diario Sur (by Nuria Triguero)

Translation: Carmel Drake

Málaga Will Need 6,000 New Homes Per Year To Meet Demand

5 April 2016 – La Opinión de Málaga

Indicators for the housing market are starting to recover after years of a complete slump in house sales, however high rates of unemployment and family indebtedness mean that most of Málaga’s population still has limited possibilities when it comes to buying a home.

Nevertheless, the Bank of Spain predicts in a report that the province of Málaga will require 84,812 primary homes between now and 2029 to meet the demand for new households that will be constituted during that period. The study predicts that in Málaga, in a scenario built on actual economic and population trends in recent years, more than 6,000 new households will be created each year, a figure that makes it the second most dynamic province after Madrid (where more than 21,000 households are expected to be created) and ahead of Sevilla (4,097), Murcia (3,564) and Granada (3,104). The figures are negative in 17 Spanish provinces because the population forecasts indicate that there will be fewer households overall. (…).

These calculations do not mean that all of those homes will have to be built from scratch. The report reminds its readers that one of the legacies of the crisis in the country has been the persistence of the stock of finished homes that have still not been sold. In fact, the Bank of Spain says that the potential demand reflected in the study “may be met through the construction of new properties, but also in the first instance, through the sale of homes that have already been built”. Besides, many new families may choose to rent or buy second-hand homes.

In Málaga, according to the most recent official figures from the Ministry of Development, the housing stock contained 12,672 homes at the end of 2014, although the Association of Construction Companies and Property Developers in Malaga (ACP) believes that this figure may have now been reduced to almost half. (…).

The rest of the country

At the national level, the report says that 63,000 households will be created each year in Spain, under the base case scenario and 238,000 households will be established in the most optimistic scenario, resulting in a potential housing volume for that period of between 900,000 and 3.3 million. According to the Ministry of Development, the stock of new homes pending sale in Spain comprised around 540,000 units at the end of 2014, having decreased gently since 2010. (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake