E&V: Co-working, e-commerce – New Niches Boom in the Spanish RE Market

2 April 2019 – El Confidencial

The Spanish tertiary sector is consolidating its position as one of the most attractive in the world. Investment rose by more than 10% in 2018 to €12.3 billion, boosted by overseas investors, who accounted for 65% of all operations, according to a report published by Engel & Völkers.

Moreover, this interest is set to maintain its momentum over the coming years. In 2019, logistics is expected to continue its upward trend in light of the unstoppable growth of e-commerce. In the office sector, experts forecast on-going diversification, with demand growing for regular offices on the outskirts of cities, as well as for co-working spaces in the centre of large capitals.

In the alternative asset segment, interest is also expected to continue, especially in nursing homes for the elderly and halls of residence for students. In the retail sector, multi-channel offerings are forecast to grow, with the most important brands concentrating their retail businesses into flagship stores in very central locations. Also, in the retail sector, the move by traditional out-of-town operators, such as Ikea and Media Markt, into downtown locations is expected to become more widespread.

In terms of rental prices for commercial premises, in Madrid, in the most sought-after areas of Salamanca, Chamberí, Sol, Chueca- Justicia and Malasaña, maximum prices amount to €90/m2/month, dropping to €55/m2/month in secondary areas and to €45/m2/month elsewhere.

Meanwhile, in Barcelona, prices are highest on the most sought-after streets, located in Ciutat Vella, Tapinería and Eixample. There, average prices range between €30/m2/month and €40/m2/month.

Original story: El Confidencial (by E.C.)

Translation/Summary: Carmel Drake

BNP Paribas: Investment in the Real Estate Sector Amounted to €2.0bn in Q1 2018

1 April 2019 – Eje Prime

Investment in real estate assets amounted to €2.0 billion during the first quarter of 2019, down by 5% compared to the same period in 2018, according to data from the consultancy firm BNP Paribas Real Estate.

Investment in the office sector amounted to €900 million, accounting for 47% of the total, with prime yields remaining stable at 3.25% in Madrid and 3.5% in Barcelona.

Investment in the retail segment amounted to €410 million, where prime yields reached 3% on high street stores, 5% on shopping centres and 5.75% on retail parks.

Investment in alternative assets amounted to €305 million, with investors increasingly interested in halls of residence for students and nursing homes for the elderly.

Finally, in the logistics sector, investment amounted to €206 million, boosted by the growth in e-commerce and consumption.

By type of investor, 50% of the transacted volume proceeded from investment funds, whilst Socimis contributed 18% of the total volume.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

C&W: Investment in High Street Premises Soared by 70% in 2018 to €1.7bn

6 March 2019 – Eje Prime

According to the latest edition of Cushman & Wakefield’s Investment Insight report, investment in high street assets in Spain soared by 70% in 2018 to reach €1.7 billion. In total, 52 operations were closed last year, accounting for 38% of all investments in commercial assets. The fashion and banking sectors accounted for the most deals.

Meanwhile, 32 operations were closed in the shopping centre segment, where the total investment amounted to almost €1.9 billion, down by 25% compared to 2017. In addition, 7 retail parks were sold last year for €236 million.

In the office sector, investment rose by 29% YoY in 2018 to reach €3.1 billion, with Madrid accounting for 66% of that total (€2.1 billion) and Barcelona accounting for 31% (€950 million).

In the logistics sector, e-commerce drove a sharp increase in investment to reach €1.2 billion, with 890,000 m2 of logistics space leased in Madrid and 345,000 m2 in Barcelona.

In terms of alternative assets, investment in student halls amounted to €220 million in 2018, whilst investment in nursing homes leapt to €281 million.

Original story: Eje Prime

Translation: Carmel Drake

Student Properties to Promote a New Hall of Residence in the South of Spain

25 January 2019 – Eje Prime

Student Properties is continuing to grow its portfolio. The company has approved a series of measures at an Extraordinary Shareholders’ Meeting to undertake the development of a new hall of residence in the south of Spain, according to a statement filed by the company with the Alternative Investment Market (MAB).

The company has approved the incorporation of a property dedicated to student halls, which will be promoted in a town in the south of Spain.

It has also approved to submit “a capital increase through a non-monetary contribution, through which the company will become the sole shareholder of the company that owns the property through the exchange of shares in the company for shares in the company that owns the property” to a future General Shareholders’ Meeting.

The company, which specialises in the acquisition and management of halls of residence for students, is owned by: Altamar Capital Partners, which deals with the global management of alternative assets; Amira Real Estate, which specialises in the management of real estate assets and investments; and Elcano Servicios Patrimoniales, which specialises in the provision of real estate services.

Original story: Eje Prime

Translation: Carmel Drake

BNP Paribas: RE Investment Rose by 8% in 2018 to €11.6bn

9 January 2019 – El Periódico

The volume of annual investment in the Spanish real estate sector amounted to €11.63 billion in 2018, which represented an increase of 8% compared to 2017. If we add the corporate operations with underlying real estate to that volume, then the figure increases to €19 billion, which represents an investment record since the end of the crisis, according to the latest report from BNP Paribas Real Estate in Spain. The report highlights that interest from investors in the Spanish real estate sector in 2018 was at its highest level for a decade.

During the fourth quarter of the year, the volume of direct investment in real estate assets – offices, logistics warehouses, hotels, retail and residential – amounted to €3.7 billion in total, which represented an increase of 58% YoY. The evolution of investor activity, therefore, exceeded the expectations of the sector at the beginning of the year.

“The good times that the fundamentals of the market are enjoying, with occupancy levels at maximums and rents that are stable or expanding in the most consolidated markets, together with the surplus capital and the limited alternatives offered by other financial products, have fostered a frenetic pace of activity in the investment market”, explains the report.

By type of asset, the commercial sector (retail) was the star of the year. The volume invested in commercial assets during 2018 amounted to €4.28 billion, which represents an increase of 23% compared to 2017. During the fourth quarter, investment reached €1.26 billion, and so the sector achieved a quarterly market share of 35%. The largest operation during the final quarter of the year was the purchase of a portfolio of three shopping centres – Max Center, Gran Casa and Valle Real – by Sonae Sierra and Perter Varbacka for €485 million.

Commercial yields

Demand from investors for high street retail assets was high, given that they consider them to be a very stable product. Similarly, there was a high interest in land for the development of retail parks, in light of the scarce supply of this type of asset. The yields continued at 3.00% for prime premises; between 5.00% and 5.25% for prime shopping centres; and at 5.75% for prime retail parks.

In terms of the office market, the investment volume recorded during the fourth quarter was €986 million taking the total figure for the year to €2.228 billion. That represented a slight YoY decrease of 4%. The shortage of products for sale meant that fewer operations materialised in 2018 than in 2017. The prime yield in the office market remained at 3.25% in Madrid and 3.50% in Barcelona.

The logistics market continues to rise. The increase in e-commerce and the strong performance of the consumer sector and the economy, in general, have encouraged investment in this type of asset. The investment volume registered during the fourth quarter of the year amounted to €400 million, whilst the total figure for the year (€1.3 billion) represented a new investment record, and an increase of 30% compared to 2017. The shortage of products, combined with the high investment pressure resulted in a considerable adjustment in yields, which amounted to 5.30% in the prime logistics market in the fourth quarter of 2018.

Investors

Investment funds were the great stars of the market, representing 61% of the total volume transacted in 2018. Socimis have been very present in the investment market, both on the buy and sell sides in the main land transactions to develop new products. Finally, the presence of family offices (private investors) stood out, with acquisitions, in general, for volumes of less than €50 million.

Alternative investments remained in the spotlight of investors, who were mainly attracted by student residences, clinics and nursing homes for the elderly. The cumulative volume invested in those types of assets amounted to €600 million in 2018.

Original story: El Periódico (by Max Jiménez Botías)

Translation: Carmel Drake

Bankinter Creates a Fund to Invest €400M in Student Halls

19 November 2018 – Real Estate Press

Bankinter has launched a venture capital fund that is going to invest €400 million in the promotion of student halls in the main university cities across Spain and Portugal. The fund is called ‘Fondo V Student Iberia’ and is going to be managed by Plenium Partners. To date, it has acquired a plot in Granada and it plans to buy more land in Valencia and Porto.

The fund has an initial capital fund of €150 million, and although it was created with the idea of giving the option for the entity’s private banking clients to invest upwards of €200,000, Bankinter itself has contributed €10 million. In addition, the US real estate manager Valeo – which owns more than 75,000 beds in student halls and nursing homes, primarily in the USA, contributed another €4 million and Plenium Partners, €1.5 million.

From there, “Fondo V Student Iberia” established its main hypotheses, which include the construction within a period of 2 years and the launch and operation a year later of at least four university residences containing 2,500 beds in total, in which it is going to invest up to €200 million.

With that objective in mind, it has already carried out its first acquisition, the purchase of a plot of land in Granada for which it has paid €8.8 million. It calculates that it is going to invest €41.3 million in total to build a 5-storey student residence containing 519 beds there, which will open its doors in September 2020.

Moreover, it is negotiating other alternatives to grow to almost 2,500 beds in the near future and has identified different opportunities to expand its portfolio to 9,000 beds.

The group is seeking to expand initially in the Iberian market, through the development, construction, execution and management of residential assets for students, primarily in Madrid, Barcelona, Valencia, Granada, Sevilla, Málaga, Lisbon and Porto.

The aim is to constitute a portfolio of assets that generate “predictable and recurrent” annual income in the hands of managing partners with proven experience, explains the document.

In this way, Bankinter is continuing its strategy of investing in alternative funds, after launching Helia, a venture capital fund that invests in renewable energy, and launching onto the market the Socimis Ores with commercial properties and Atom with hotels.

But now, it has placed its focus on university residences because Spain has 1.6 million students in total, close to the historical maximum, and also because it is one of the main destinations for international university students (and the top destination for those participating in Erasmus).

It is considered to be a sector with stable and growing demand; and it is estimated that between approximately 400,000 and 470,000 students are looking for accommodation. Moreover, a potential increase is expected in the student population in Spain and of Asian students, especially from China and India, where they have a lower presence than in other European countries such as Italy, Germany and France.

All of this will help the internationalisation strategy of the Spanish universities and the aim of obtaining value from the fact that Spanish is the second most widely spoken language in the world, with 400 million speakers.

Original story: Real Estate Press

Translation: Carmel Drake

TH Real Estate Changes its Focus in Spain to Purchase Logistics Properties, Offices & Alternative Assets

11 June 2018 – Eje Prime

After ten years in Spain, TH Real Estate is changing its focus in terms of acquisitions. The company, which has historically purchased retail assets in the country, is going to change strategy to strengthen its portfolio with logistics properties, office buildings and alternative assets, such as halls of residence for students. That is according to Marta Cladera (pictured below), Director General of TH Real Estate Iberia, talking to Eje Prime in an interview.

“Traditionally, and due to the type of active funds, we have been very focused on the purchase of retail products” – said Cladera – “Now, we want to nurture our portfolio with logistics buildings, offices and alternative assets, such as halls of residence”. “We are analysing the market, we have a good track record in other types of assets, and so we will be able to create a portfolio with new types of assets and we will begin this year”, she added.

TH Real Estate will carry out these purchases through its fund European City Fund, which is one of the most active at the moment in terms of acquisitions and which has sufficient resources to undertake new purchases. By type of asset, the plans in terms of alternative assets involve not only the purchase of properties but also “teaming up with other operators, which may be from other parts of Europe”. In this way, TH Real Estate will follow in the footsteps of other funds such as CBRE GI and Axa, which, in their strategy to enter the hall of residence business, purchased Resa, the largest student hall company in Continental Europe.

In terms of the office sector, Cladera assures that “the competition is fierce” and the supply “is scarce”. “We are looking for buildings costing upwards of €50 million, but the supply that we are finding is not prime and those that are prime due to their location need a lot of renovation work, and that is something that holds us back, given that the numbers have to make sense for us to proceed and we have to focus on returns”, said the director.

Currently, TH Real Estate manages a portfolio worth €103 billion around the world, although Spain represents a small proportion of that, accounting for just 2% of its total business. In the Spanish market, the company owns assets worth €2 billion. “Although it is small compared to other markets, you have to look at the evolution: when we arrived in 2007, the portfolio was worth €200 million, as such, the growth over the last ten years has been significant”, she said. TH Real Estate’s team in Spain comprises nine people.

Socimi: under consideration 

Although this move is still in an embryonic phase, TH Real Estate does not rule out joining the Socimi party that is raging in Spain with some of its assets (…).

Currently, TH Real Estate owns fifteen assets across the Iberian Peninsula, of which fourteen are located in Spain and one in Portugal. Of those, two are logistics assets (acquired in 2017), and the rest are retail properties. One of the formulae that the group has used in the country has been to create joint ventures with different players for the acquisition of assets. Such was the case of the purchase of 50% of Xanadú from Intu for €264.4 million, for example (…).

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Corestate to Build 400-Bed Hall of Residence in Sevilla

3 May 2018 – Eje Prime

Corestate is expanding its footprint in the Spanish real estate sector. The fund, which is headquartered in Luxembourg, has purchased a plot of land in Sevilla from Helena Rivero, daughter of the former President of Metrovacesa Joaquín Rivero, for the construction of its second hall of residence for students in Spain. Having operated in the country since 2015, when it arrived at the hand of Grupo Villar Mir, the group has signed the acquisition of 2,200 m2 of land on which it will construct a building with 413 beds.

The project in the Andalucían capital comes after another one that the fund started work on in 2016 in Madrid, where it is currently working on the finishing touches to its first hall of residence for students in Spain. It is a renovated building in the Moncloa district, which is going to have 206 rooms and whose doors are expected to open in September, according to El Confidencial.

The plot in Sevilla is located on the Eusa campus, the university complex of the Sevillan Chamber of Commerce. With a buildable surface area of 11,000 m2, the construction work is going to be led by one of Corestate’s brands, Youniq. On the inside, the hall of residence will have a gym, study rooms, a swimming pool and fully equipped kitchens. The amount of the investment that the fund is going to make in the project has not been revealed.

Last year, Rivero purchased the plot that she has now sold plus another one, spanning 1,700 m2, located in the Club Antares area from the Chamber of Commerce. For both plots, the institution received €7.5 million.

On the Club Antares plot, Rivero is planning to compete with Corestate by constructing a prime hall of residence for students. The Andalucían businesswoman is holding conversations with another fund, Temprano Capital, to carry out that project in conjunction with the specialist operator Collegiate. The firm and the manager are already working together in Spain on a project in Finestrelles (Barcelona), as Eje Prime revealed.

In 2017, university halls of residences were the jewel in the alternative asset crown, a segment that grew significantly last year. In total, the real estate sector invested €560 million in the construction of rooms for students, compared with just €50 million that was transacted in 2016, according to data from the real estate consultancy JLL.

Original story: Eje Prime

Translation: Carmel Drake

A Family Office Buys a Nursing Home in Barcelona from Sanitas

26 April 2018 – Eje Prime

Alternative assets are attracting attention from a large number of players in the sector, including even the most discrete. A family office, whose identity has not been revealed, has acquired the Sanitas Cornellà nursing home, located in the town of Baix Llobregat, in Barcelona.

The home, which is located in Plaça Catalunya and which has been operational since December last year, contains 140 beds spread over 118 rooms, of which 96 are individual and 44 are double. The asset has a surface area of 6,270 m2.

The centre will continue to be operated by Sanitas Mayores, the specialist division of the insurance group. That company currently manages 46 nursing homes, including eleven in Catalunya and fourteen in Madrid, along with 3 day-centres, comprising more than 6,000 beds in total and employing a team of more than 3,000 professionals. The average occupancy rate of its properties amounts to 96%.

Original story: Eje Prime

Translation: Carmel Drake

CPPIB Puts Valencia’s Largest Hall of Residence Up For Sale

25 April 2018 – El Economista

The Canadian pension fund CPPIB is going to take advantage of the investor appetite that currently exists for student halls of residence by placing the “For Sale” sign up over one of its assets in Spain. Galileo Galilei is the largest accommodation block for students in Valencia and one of the largest in the country, according to confirmation from several sources speaking to this newspaper.

With more than 500 beds, the asset will come onto the market during the course of the next month, given that its owner has entrusted the sales process to the international consultancy firm Savills, which declined to comment.

Currently, this hall of residence, which is the only one located on the campus of the Universidad Politécnica de Valencia, forms part of the Liberty Living portfolio, one of the largest managers of student halls of residence in the United Kingdom. CPPIB acquired the British group in March 2015 for GBP 1.1 billion (around €1.2 billion) and continued to grow its portfolio.

In December 2016, CPPIB closed an important operation with Blackstone, which divested a portfolio of 13 student halls, located in the United Kingdom, Germany and Spain, which included Galileo Galilei. For that package, comprising 6,484 beds, the pension fund paid around GBP 460 million (€536 million) to the US firm.

Almost a year and a half later and with the sector in Spain in full boom, CPPIB has decided to put this property on the market in an operation that, according to the experts, could amount to €32 million.

Galileo Galilei currently has 520 beds spread across individual, double and triple rooms, which range in price from €515/month to €846/month. That figure includes all consumption, restaurant services, doctors, cleaning and sports activities.

In addition, the hall of residence offers supplementary services such as laundry, sheet and towel changes, a university support academy for all subjects, IT and nutritional advice, amongst others. Moreover, on the ground floor, the property houses a shopping arcade with restaurants and cafeterias offering special prices for students and various local shops such as a beauty salon, a hairdresser, a print shop, a travel agent, a newsagent, a driving school and a language academy.

With these features and its high occupancy rate, Galileo Galilei is expected to arouse significant interest amongst investors looking to gain positions in the alternative asset market in Spain in the main university cities, such as the case of Valencia. “Since 2016, the city has appeared in the Top 100 ranking of the QS Best Student Cities, which highlights the best cities in the world for students. It is also one of the most sought-after locations by European students participating in the Erasmus program,” says Patricio Palomar, Senior Investment Consultant at Aire Partners.

In fact, the expert highlights the growth potential of the supply in this market, which in its metropolitan area “has around 165,000 students matriculated, a mobility rate of approximately 29% and just 4,123 beds in colleges and halls of residence, which results in a supply rate that falls below the Spanish average”, Moreover, Palomar points out that “the process of economic recovery currently being seen in this area is expected to lead to an increase in demand from domestic and international students alike, and this situation of imbalance may be accentuated even further”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake