Tag: barcelona

Political Uncertainty and Populism Threaten RE Recovery

1 June 2015 – El Economista

The electoral success of Manuela Carmena (Ahora Madrid) in Madrid and Ada Colau (Barcelona En Comú) in Barcelona has started to take its first victims in the real estate sector. Barely a week has passed since the elections and “some investors have already suspended deals to purchase property in Spain”, warn certain sources close to the negotiations.

The uncertainty regarding the possible political agreements has hit the property sector hard, “just when it was starting to recover”. In Madrid and Barcelona alone, large urban projects amounting to €14,000 million have already been called into question.

Major construction companies, financial institutions and large international funds are involved in these developments, including the Chinese magnate Wang Jianlin, who came to Spain with plans to invest around €4,000 million and who now see his real estate plans for the country being endangered.

“Right now, the sector is beginning a process of paralysis in certain segments. All of the investors are waiting for the possible political agreements to be settled so that they can carry out transactions”, explain sources in the sector.

“The is a great deal of uncertainty and considerable ungovernability in many cases, as well as expected increases in taxes and public spending, coupled with the suspension of forecast investments, which may result in the withdrawal of foreign capital”, they warn.

This situation may result in “an important step backwards for the emerging recovery”, given that it comes at a time when the real estate sector was really beginning to take off; record levels of investment were recorded last year. Before the elections, experts predicted that the level of transactions was going to continue (this year), but following recent events, “it is now very difficult to make forecasts”. These warnings coincide with others made this week by several important businessmen, such as the Chairman of OHL, Juan Miguel Villar Mir, who said that (political) groups such as Podemos put Spain’s economic recovery in danger. In a similar way, the markets have penalised the election results and the Ibex 35 recorded a loss of 2.91% last week.

(…)

The urban plans proposed by Carmena and Colau leave most of the major projects, both those already underway as well as those still to be awarded, up in the air. In Madrid, they endanger million-euro developments such as Operación Chamartín, the Madrid Río shopping centre, Operación Mahou-Calderón, the Canalejas complex, Operación Edificio España, la Ciudad de Justicia and even Operación Campamento.

Whilst in Barcelona, projects such as La Maquinista and Heron City shopping centres, the refurbishment of the Nou Camp and urban developments in the surrounding area, the ski slope in the free trade zone of Barcelona SnowWorld and the conversion into hotels of iconic buildings such as Torre Agbar, the Deutsche Bank building on Passeig de Gracia or Project Núñez i Navarro are also at risk.

(…)

Original story: El Economista (by Alba Brualla and Javier Mesones)

Translation: Carmel Drake

Colonial To Construct New Office Block Next To Castellana

29 May 2015 – Expansión

The real estate company Colonial has purchased a property on Calle Estébanez Calderón in Madrid, just a stone’s throw from the Paseo de la Castellana. It will demolish the building and construct a new office block in its place. The total investment will amount to €40 million.

The future corporate tower will cover an area of 15,000 square metres above ground and will be exclusively devoted to offices that will be rented out.

Given the scarcity of prime products for sale and the significant pressure from the international market to purchase this kind of product in Madrid and Barcelona, Colonial has decided to build its own property. The company chaired by Juan José Brugera specialises in office buildings in the centres of Madrid, Barcelona and Paris and its assets amount to €6,000 million.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Election Fallout: Uncertainty May Deter Investors & Delay Large Deals

28 May 2015 – Cinco Días

Experts predict that there will be an impact on the rental market and on the sale of debt portfolios. They warn that Madrid and Barcelona will be affected by anti-eviction initiatives.

The rise of political parties advocating the suspension of mortgage foreclosures, the relocation of evicted families (to vacant properties owned by banks and Sareb), and the end of sales of public properties to private owners, at the elections last Sunday, has put the international investment funds, which have been arriving in Spain in recent years with a renewed hunger for property, on alert.

Experts in the market say that although we are still waiting to see the specific impact of these initiatives by the governments, which depend on pacts that are just as uncertain, the situation will cause funds to reduce their already low purchase offers and to postpone large transactions until they know the results of the general elections, scheduled for the end of the year.

“Madrid and Barcelona are the showcase for the country”, explains Mikel Echavarren, CEO of the real estate consultancy firm Irea, predicting that the expected appointment of Ada Colau (Barcelona en Comú) and Manuela Carmena (Ahora Madrid) as the mayoresses of the two large capital cities, “will cause investors’ interest to disappear for four years” in all areas “that depend on decisions by local councils”.

In his opinion, there are three areas of particular concern. On the one hand, the suspension of evictions – or their delay, because, as Echavarren points out, municipalities do not have the legal power to eliminate them altogether – because that would result in a penalty for the budding rental market and above all “longer timeframes, more uncertainty and lower prices” in the offers made by funds for packs of credit with real estate collateral.

Secondly, proposals such as the one made by Colau to suspend the opening of new hotels in Barcelona, “which is one of the most important hotel markets in the world”. And thirdly, the review of the general urban plans in Madrid and Barcelona.

“Either you have a local council that is “pro-business” or investors pack their bags and take their money elsewhere”, warns the director of an investment fund who asked to remain anonymous, stating that “Anglo-Saxon capital does not understand it when urban development is not encouraged”.

“Any change represents uncertainty and money flees from uncertainty”, says Julio Gil, Chairman of the Real Estate Research Foundation (Fundación de Estudios Inmobiliarios or FEI), bearing in mind that as a minimum “funds will consider their investments in Spain to be more risky and therefore will demand high returns”.

Nevertheless, Gil states that for the time being this support for social rather than economic policies is only being seen at the local government level and, to a lesser extent, at the regional government level, but he thinks that the fear of what might happen in the general elections this year may well “delay several (large) transactions” as investors wait to see the outcome.

“The greatest risk is that we drop off of the radar of investors”, warned sources yesterday at ETC Real Estate, a new platform for the management of debt and mortgaged assets, promoted by TDX Indigo, Equifax and Cobralia.

Its partners expect that funds will lower their asset purchase offers, but argue that the change in the political paradigm will make it necessary to promote alternative means of eviction, such as discounts and “daciones en pago” (delivery of the deeds in lieu of payment), amongst others. A management model they promote, they assure, to the funds and banks to whom they render services.

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake

Prices of Luxury Homes To Rise In Madrid And Barcelona

14 May 2015 – Expansión

Recovery / The prices of high-end homes will increase by 5% in Spain’s largest cities in 2015, but they still fall well below those seen in Monaco, London and Paris.

Madrid and Barcelona are two of the large European cities in which luxury housing is least expensive. Nevertheless, it is clear that high quality properties are going to become more expensive in 2015. Specifically, by 5% in the “most prestigious areas” of Barcelona and by between 2% and 3% in Madrid.

Those are the findings of a study by Coldwell Banker – one of the largest networks of real estate brokers in the world – which compares prices per square metre for new, used and luxury housing in prime areas of the continent’s main real estate cities: Monaco, Prague, Rome, Milan, Paris, Valeta (Malta), Berlin and London, as well as in the Madrilenian and Cataluñan capitals. The comparison is linear; it does not take into account the (respective) income of citizens.

In the urban centre of Madrid, the average price per square metre of new housing developments is €5,610, i.e. €110 more than in the centre of Barcelona (€5,500). Those figures are light years away from the (prices seen in) London (€11,500/m2) and Paris (€10,000/m2) and from the stratospheric prices of €80,000 per square metre in the principality of Monaco.

Thus, whilst a 100 m2 apartment in a well-located area of the Spanish capital costs €561,000 on average; in the centre of Monte Carlo, the price of the same property would soar to €8 million. In other words, the same price as 14 such properties in Madrid and 14.5 in Barcelona. We should bear in mind that Monaco has a surface area of just 2 square kilometres, in which almost every centimetre contributes exclusivity and luxury.

Other European cities have less prohibitive prices. The price per usable square metre of a new residential property in Milan amounts to €10,500 and in Rome, to €8,500.

Of the 10 individual real estate markets covered in the report, only three are cheaper than Madrid and Barcelona: Berlin (€4,800 per m2, on average), Valeta (Malta, €3,650/m2) and Prague (€2,770/m2).

The price of luxury housing is increasing with respect to central areas in all of the cities, except for Monaco, which is an extremely “limited” market, says the report. The price per m2 of a new luxury apartment – not necessarily in the centre – is €60,000 in the state of Monaco.

Far below the prices seen in the Principality, the most exclusive capital in Europe is Paris, where the average price per square metre of luxury homes amounts to €25,000. In third place and still in a bubble is London, where residential properties of the highest quality have an average price of €18,000 per square metre.

Prices in London are double those in Madrid (€9,033). Luxury homes in Madrid are 20% more expensive than in Barcelona (€7,500 per square metre).

Limited supply

In Barcelona, “prices will start to recover slowly in the main areas. In the areas of highest demand and prestige, we expect to see an increase of between 3% and 5%”, says the report. In Madrid the increases will amount to between 2% and 3%.

According to Coldwell Banker, the “high quality” residential market in Madrid “is still very limited” and in Barcelona “supply is limited, since there are few new buildings in the centre of the city”. In Madrid, there are approximately 200 developments of this kind in the centre and around 400 in the wider metropolitan area.

That is not the case in other capitals. The supply of new homes in Berlin is “extremely strong”. Investors mostly seek “small furnished, high-end luxury apartments”. Penthouses can cost as much as €20,000 per square metre.

The other goldmine is still London: “In Mayfair and Marylebone, there is a large supply of new projects that are just coming to an end now”, says the report.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Santander, BBVA & Sabadell Start To Build Homes Again

11 May 2015 – Expansión

Property development / The large financial institutions are constructing homes once again in light of the improved macroeconomic outlook, demand in certain areas and the aim of generating profits.

Real estate development is no longer a forbidden phrase in the world of banking. Several major banks have decided to resume the construction of new homes in light of the macroeconomic improvement and the need to capitalise on property inherited from the crisis.

Entities such as Santander, BBVA, Sabadell and Popular are now not only focusing on selling the homes that were foreclosed during the crisis, they have also started to construct new developments over the last few months. Most of these developments are located in Madrid, Barcelona and to a lesser extent, on the coast, where there is still a large stock of homes to sell.

Another catalyst of this new trend has been the reduction in the losses recorded by the real estate arms of these banks. During the first quarter, Santander’s real estate division lost €95 million, the smallest loss since it was created three years ago; and BBVA recorded a loss of €154 million, 37% lower than during the same period in 2014.

Thanks to this, the group chaired by Francisco González announced on Friday that it is studying 25 developments to construct 2,000 homes, and that it has already started another 12 developments to construct 630 million. This statement was made by Lorenzo Castilla, Commercial Director at BBVA Real Estate-Anida: “This is not about filling Spain with cranes, but rather about projects that make sense”, who spoke during Madrid’s International Real Estate Fair (Salón Inmobiliario Internacional de Madrid or SIMA).

(…)

Full balance sheets

As the BBVA director indicates, financial institutions still had more than €83,000 million foreclosed assets (on their balance sheets) at the end of 2014, of which more than €31,000 million related to land and €4,000 million to buildings under construction.

To reduce this burden, the entities are nowadopting two strategies: the sale of homes through their commercial networks, a channel that has accelerated over the last year; and the transfer of portfolios and joint ventures with institutional investors.

For the time being, the entity that has announced the most ambitious housing development plan has been Santander, which reported that it is developing 300 real estate developments, at its most recent results presentation.

Banco Sabadell is also stepping on the accelerator in this sense. Its real estate arm, Solvia, currently has 1,400 homes under construction, primarily in Madrid, Andalucía and Valencia.

Aliseda, the real estate company that renders services to Popular, has also announced an ambitious plan to enter the market for real estate development.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

CDC Sells Its HQ To Platinum Estates For c.€15M

27 April 2015 – Expansión

CDC used to occupy two buildings and has surrendered one of them as security to cover the guarantee imposed by the judge in the case of Palau de la Música.

At a press conference on Friday, CDC (la Convergència Democràtica de Catalunya or Democratic Convergence of Catalunya (political party)) reported the sale of its central headquarters in Barcelona to the Chinese fund Platinum. The political party occupies two adjacent buildings, which have a surface area of 4,500 square metres, on Calle Corcega in Barcelona, and according to sources close to the transaction, the price amounted to almost €15 million.

One of the two properties was surrendered as security to cover a guarantee, after the judge investigating the Millet case, involving the misappropriation of funds from Palau de la Música, imposed a €3.2 million bail charge on CDC.

The coordinator of the internal regime and spokesman for the party, Francesc Sánchez stressed that the headquarters “had not been repossessed” because if it had been “they would not have been able to sell it”.

For the CDC, this transaction is not a simple sale; they say it comes in the context of a (wider) “reorganisation”. In July, i.e. before 27 September (the date on which the Catalan elections will be held) and after the internal consultation by UDC (Unió Demicràtica de Catalunya or Democratic Union of Catalunya) about the model of the State, CDC’s national convention will approve a new ideological base, which will give a social-democratic twist and make clear a sovereign commitment, without ambiguity.

CDC acquired Enher’s former headquarters for €3.7 million (625 million pesetas) in 1998 and moved into the premises in 1999 after the former Catalan President Jordi Pujol faced the ballot box for the final time.

The organisation will continue to rent out its current headquarters for another year and plans to move into a new building after 27 September. Francesc Sánchez listed some of the features that the new building must have: it must also be located in Eixample, it must be bright and spacious and it must have “glass doors” to show transparency and the “inter-relationship” with citizens.

In any event, CDC will be looking for smaller headquarters that are less expensive to maintain. Although the new location must also have capacity to host major events such as national council meetings, which are currently held in hotels.

The purchaser of the building is Platinum Estates, a company headquartered in Hong Kong and owned by the textile magnate Harry Mohinani, of Indian origin. This is not the first investment that the group has made in Barcelona. In 2014, it acquired Telefónica’s former headquarters on Avinguda Roma, known as the Estel building. It paid €56.4 million and plans to dust off the project launched by its former owner, Carlyle, and convert the property into homes. This project has an investment budget of €100 million.

This announcement has taken the real estate market by surprise. At a time when there is surplus capital and few buildings for sale in Barcelona, neither the large consultancy firms, nor the major investor groups were aware that this building was on the market. All signs indicate that the party did not sound out many buyers and that the sale was shrouded in the utmost secrecy.

In 2013, all of the international investor groups returned to the real estate market in Barcelona. And judging by the current pressure in the market, some of them fear that they arrived too late. There is a distinct lack of buildings for sale and the scarcity is even more acute in the centre of the city. A building like the one just sold by CDC meets the expectations of most investors, many of which are looking for buildings to convert into hotels, although in this case, it is expected to continue to be used for offices.

Original story: Expansión (by M. Anglés and D. Casals)

Translation: Carmel Drake

Standard Life Buys Revlon’s HQ In Barcelona For €30M

24 April 2015 – Expansión

The building was sold by the US bank Morgan Stanley

This is the third transaction involving a property in the World Trade Center Almeda Park (Barcelona) in less than a year. The Scottish fund Standard Life has purchased Revlon’s headquarters for almost €30 million. The building was sold by the US bank Morgan Stanley and the deal was advised by Cushman & Wakefield, who did not want to make any comments.

The acquisition closed by Standard Life comes after the Socimi Merlin Properties purchased two other buildings in this office complex last year. In August 2014, Merlin acquired the building leased (in its entirety) to AXA for €47 million. In January, it purchased another office block, which houses various tenants, for €37 million. In both cases, the buildings were sold by the Swiss bank UBS and the deals were advised by Cushman & Wakefield.

The property acquired by Standard Life has a surface area of 10,300 square metres and is mainly occupied by Revlon, but also has other tenants. It was built as a turnkey project for the Colomer Group, which used to be the distributor of Revlon’s line of professional products, and which was acquired by the US group in 2013.

This is not Standard Life’s first investment in Barcelona. In 2011, it acquired a plot of land in the 22@ district for €28 million where it constructed the 250-room Hotel Travelodge de Poblenou. It also used to own two buildings on Gran Vía de Barcelona, although it sold one of those, the one leased to the Catalan Institute of Finance (Instituto Catalán de Finanzas or ICF) to the Generalitat in 2008 for €30 million. This building formed part of a package of assets through which Standard Life entered the Spanish market in the middle of 2007 and which also included buildings located on Paseo de la Castellana, number 55 and Calle Serrano, number 73, both in Madrid.

Original story: Expansión (by Marisa Ángles)

Translation: Carmel Drake

Rothschild Launches Fund To Invest €400M In EU Hotel Sector

13 April 2015 – Expansión

The wealth management specialist creates a real estate (investment) vehicle.

Edmund de Rothschild, the group that specialises in the management of large fortunes, is breaking into the hotel sector. Aina is the name of the real estate fund that Rothschild has launched with the aim of purchasing four- and five-star hotels, (of between 90 and 150 rooms and between 150 and 450 rooms) in Europe.

Managed by Jaume Tapies, the former Chairman of the international network Relais & Chateaux, Aina is seeking to raise more than €400 million, and more than half of that amount will relate to debt. The roadmap predicts the signing of around 20 transactions with an average value of around €20 million to €25 million.

Aina has identified 29 cities of interest, due to their potential for tourism and business, where there is no excess supply or barriers to entry. The list includes two Spanish cities, Madrid and Barcelona, and two others may join them, namely Sevilla and Bilbao. “Spain is a priority country and now is a good time to invest there, as well as in Italy and Portugal, and in the major capital cities such as London, Paris and Amsterdam”, says Tapies.

Aina, whose investment plan will take two years to complete, has a process open with institutional investors to secure €200 million in funding, which is about to close. Edmund de Rothschild will be responsible for the administration and custody of the funds. The minimum investment required to participate is €1 million. The fund will have a life of seven years and the investment period will be three years. The gearing ratio will range between 40% and 50% of the total portfolio value, and on an exceptional basis, may reach up to 60% for a single asset.

Profitability

The strategy also centres on risk diversification. One single hotel may account for 25% of the investment, at most, and no single country may account for more than 40%. On the other side of the scale, profitability will also be high, at 15% p.a., based on the profitability of the rental income and the potential for the increase in the value of the assets.

The fund will focus on finding properties with discounts of between 25% and 40% of their market value. Subsequently, it will increase their values by between 25% and 30% by redesigning their operating models and will obtain a similar percentage from the sale of these properties to investors that have lower long-term profitability requirements.

So far, investors from Spain, South America, Australia and Asia have all expressed their interest in participating in Aina.

In addition to the management team led by Tapies, Aina has an advisory board, which includes, amongst others, Charles Petrucelli, former Chairman of the travel division of American Express; Antoine Corinthios, former Chairman of Four Seasons in EMEA; and Jean-Jacques Gauer, for Chairman of Leading Hotels of the World.

Gabriel García is also advising the fund; he owns the Hotel Orfila in Madrid and is the Chairman of Relais & Chateaux in Spain.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

The Student Hotel Buys Two Halls Of Residence In Barcelona

10 April 2015 – JLL Press Release

This is the first transaction involving the sale of student halls as investment properties in Barcelona.

The real estate consultancy firm JLL has advised The Student Hotel (TSH) on its purchase of two halls of residence in the city of Barcelona. The company already owns similar assets in Holland. Until now, the buildings were owned by a company, in which BBVA holds a stake.

The two properties are leased under a long-term contract to the student residence operator Melon District: Melon District Marina and Melon District Poble-sec – both are characterised by their excellent locations and good transport links to the main universities.

Marina is located on Calle Sacho de Ávila, in the 22@ neighbourhood of the city, a business district that is (currently) undergoing a complete regeneration. It is the location of choice for communications and technology companies, university campuses, as well as shopping centres, hotels and exhibitions centres. Meanwhile, Poble-sec is located on Avenida Paralel, in the Sants-Montjuic neighbourhood, which is mainly a residential area, but which is very well connected to the city centre and the university areas, and is surrounded by theatres and restaurants.

The two properties contain 600 rooms in total, covering an above-ground surface area of 16,700m2, as well as shops, with a surface area of 3,140m2, and 150 parking spaces.

“The sales process has received a lot of interest from both domestic and overseas investors, which clearly shows that the Spanish real estate market is one of the favourite destinations for capital at the moment”, explains Jordi Toboso, CEO of JLL in Cataluña. He also says that this transaction “shows the growing interest amongst investors for other types of assets, such as halls of residence in Spain, and in particular in Barcelona”.

 Original story: JLL Press Release

Translation: Carmel Drake

Meridia Acquires 11 Office Buildings For €100M

27 March 2015 – Cinco Días

Meridia Capital has purchased eleven office buildings in Madrid and Barcelona from GE Capital Real Estate for €100 million. Together the buildings have a total surface area of 84,000 square metres.

Seven of the assets acquired are located in Barcelona and the other four are in Madrid; all of them are located in the main business areas of the two cities.

The portfolio acquired in Barcelona includes the Meridian building, an 18-floor office block measuring 24,000 square metres.

Specifically, the buildings in Madrid are located on Calle Alcalá, 518 and Calle Gobelas, 35-49, according to Cushman & Wakefield, the real estate consultant that has advised the sale, which was signed on Thursday.

The properties acquired in Barcelona are located in the 22@ district (on Joan d’Àustria, 39-47; Paseo Garcia Faria, 49-51; and Calle Josep Ferrater i Mora, 2-4), Avenida Rio de Janeiro, 56-66, Via Layetana, 4, Calle Girona, 2 and Calle Pare Rodés de Sabadell, 26.

In a statement, the CEO of the real estate company Meridia Capital, Juan Barba, highlighted that the transaction, the fourth signed by its fund “Ibérica Fondo Inmobiliario Meridia” in Spain represents “a significant step forward” because it “significantly” increases its exposure to the office segment.

For his part, the founder and CEO of Meridia Capital, Javier Faus (pictured above), reiterated the firm’s commitment to continue investing in the Spanish real estate sector, which he considers “offers very exciting opportunities”.

Original story: Cinco Días

Translation: Carmel Drake