Tag: Brexit

Global Geopolitics Fuels Demand for Luxury Homes in Madrid

12 May 2019 – El Confidencial

Wealthy investors and families from China, Russia, Venezuela and Mexico are particularly active in the luxury home segment in Madrid, in particular in the districts of Salamanca, Chamberí, Retiro and Moncloa-Aravaca.

According to the College of Property Registrars, foreigners accounted for 6.7% of all residential purchases over €500,000 in the Community of Madrid in 2017, a figure that rose to 8.4% in 2018.

There are several pull-factors motivating these buyers including tax exemptions, golden visas (thanks to Law 14/2013), (relative) legal certainty, low rates of crime and affordable prices, compared to Miami and other European capitals. The language, climate and excellent transport infrastructure also play their role, as do the world-class universities and business schools in the Spanish capital.

A number of push-factors are also evident, which is where the geopolitical developments come into play. The political and economic crisis in Venezuela, the election of Andrés Manuel López Obrador as the President of Mexico in December, the political uncertainty in Cataluña and even the on-going Brexit saga, are all important reasons for wealthy buyers to turn their backs on their home countries in favour of Madrid when it comes to buying a property.

To date, since they were introduced in 2014, 2,948 golden visas have been granted for the purchase of luxury homes, with half going to Chinese citizens (1,476) and a fifth going to Russians (621).

Moreover, according to official statistics from Spain’s National Institute for Statistics, the number of Mexican residents in Spain has risen from just over 20,000 in 2014 to more than 25,200 by the end of 2018, of whom one third live in Madrid.

Meanwhile, the number of Venezuelan residents has increased from just over 32,000 five years ago to 57,120 in 2018. Nevertheless, in both cases, the real number of arrivals is higher since many move to Spain through family links making them entitled to Spanish passports.

Original story: El Confidencial (by Marcos García)

Translation/Summary: Carmel Drake

Brexit Deters Brits from Buying Homes in Andalucía

17 March 2019 – ABC Sevilla

The residential market in Andalucían is booming, despite the slowdown in demand from British buyers. The regional market is split into two clear segments – the market for second-hand homes for holiday use along the Costa del Sol, centred around Marbella and Estepona – and the market for primary residences across the rest of the autonomous region, where Málaga, Córdoba and Sevilla stand out with the most activity.

In the former, despite the decrease in demand from British purchasers due to Brexit, there has been a notable increase in buyers from the north of Europe, especially from Belgium and the Nordic countries.

In the latter, the local population, which primarily comprises families aged between 45 and 55 years old, with savings and stable incomes, is driving demand. For example, house sales in Córdoba grew by 16% in 2018, according to INE.

Original story: ABC Sevilla (by E. Freire)

Translation/Summary: Carmel Drake

Aedas will Collaborate with Socimis to Build Rental Homes

21 October 2018 – La Vanguardia

The property developerAedas Homes has started negotiations with several Socimis to offer them “turnkey” projects for rental homes that they will be able to manage, and has ruled out, at least for the time being, turning itself into a listed real estate investment company (Socimi).

The CEO of Aedas Homes, David Martínez, explained to Efe that the intention of these negotiations is to allocate some of the residential land that it owns to building “turnkey” homes for rental, although the firm is continuing with the development and sale of its own homes in most cases.

“We cannot launch two developments at the same time because they would cannibalise each other, but we can launch one for sale by us and the other for rental by a Socimi”, explained Martínez by way of example for the areas in which his firm has land for two neighbouring plots for development.

What Martínez did rule out is the possibility of Aedas Homes becoming a listed real estate investment company (Socimi), at least for the time being.

“In the future, we can explore the possibilities, but, that is not something that interests at the moment, because our objective is to grow as a property developer”, he highlighted.

Moreover, the firm has no plans to explore other segments of the real estate market or venture overseas.

“Residential is a sufficiently large niche, which requires specialisation, primarily in the areas of high demand”, said the senior executive at Aedas, who also acknowledged that his company is interested in buying land from large owners such as, for example, Sareb.

Moreover, and when asked about the Government’s announcement to promote a stock of 20,000 new homes for social rental, Martínez said that “any initiative is welcome”.

In this regard, he said that “it is clear that this country needs homes, for ownership and rental”, and that “although rental prices are rising well above expectations, that is a clear sign that there is a housing deficit”.

The CEO of the property developer estimates that overseas demand amounts to 30,000 homes per year, which is “quite stable”, with British buyers “still the strongest, despite Brexit”, but there has also been a rise in acquisitions by Belgians, Dutch, Nordics and Russians.

In terms of reserving 30% of homes in new developments for social rental, an initiative approved by the Town Hall of Barcelona, Martínez does not think that the Generalitat of Cataluña will approve it and that, if it were to, “it would generate uncertainty and so would not be a good decision”.

What he does ask Town Halls is for them to speed up the granting of licences and changes to urban plans to allow an increase in density in Spain’s cities.

By way of example, he explained demolishing a block of low-rise homes, rehousing the residents and building taller developments, which would avoid the “expansive growth” of cities and the consequent problems that this causes for mobility.

In addition, he indicated that one of the challenges facing Aedas is to increase its industrialised construction of homes, building most of a home in a factory, for example. This method is not very widespread in Spain yet but his firm has been promoting it in six of the developments that it currently has underway.

Original story: La Vanguardia

Translation: Carmel Drake

Spanish Government Fears a Slowdown in Tourism Due to Fall in Arrivals by Germans and British

31 August 2018

COMPETITION FROM GREECE, EGYPT AND TURKEY / “The symptoms of the slowdown we have observed are beginning to consolidate,” Turespaña expects the year to end with “very moderate, zero or negative growth.”

The Government of Pedro Sanchez has added its voice to the experts forecasting a turbulent year for tourism, believing that the sector could end the year with “very moderate, zero or negative growth.”

Successive falls in the main indicators (e.g. hotel occupancy rates, overnight stays, prices) and comments by representatives of the sector, such as Exceltur, sounded the alarm several months ago, warning that the sector was in the throes of a slowdown.

“The behaviour of our three major emitting markets, and that of Italy, the Netherlands and the US, can tilt the balance between very moderate growth and zero or negative growth,” the Spanish government warned through Turespaña in its Quarterly Prospective Report for International Tourism, published at the end of August.

“We must not forget that 2017 was an absolute record year across the board,” sources at the Ministry for Industry, Trade and Tourism said in statements to this newspaper. In 2017, Spain received almost 82 million tourists, a figure that made Spain a world leader in international arrivals, only behind France.

Even so, the forecast for arrivals for the period from July to October is positive, with an estimated increase of 2.4% in the number of tourists, for a total number of arrivals for this period nearing 38 million.

The report notes that “the symptoms of the slowdown we have observed are beginning to consolidate.” The problem is that Spain’s two principal emitting markets for tourists both began to opt for other destinations. The price of oil, the appreciation of the euro, the effects of Brexit and the insecurity generated by the independence movement in Catalonia are some of the proximate causes. In July, the number of German tourists who visited Spain fell by 11%, and the number of British arrivals fell by 6%. Between July and October, Turespaña expects British tourists to fall by 4.2%, and overnight stays by Germans will fall by 5.1%.

German tourists begin to replace Spain with Greece as a destination. “Although it is less well-known than Spain, it gets higher marks ​​in the minds of German tourists as a unique destination,” says another report by Turespaña. In the case of British tourists, Turkey and Egypt have recovered their shares of the reservations of tour operators, to the detriment of Spain, which registered a fall of 4% in reservations between July and October, losing a 3.6%-share.

Turespaña does expect that tourist spending will continue to increase at a good pace, with an expected increase of 5.3% between July and October. “We are working to attract tourists with greater purchasing power and to lengthen their stays to increase spending,” they explain.

Original Story: ProOrbyt Expansión – I. Benedito

Translation: Richard Turner

 

Taylor Wimpey Invests €95M in Costa del Sol to Meet Demand from Brits

14 June 2018 – Eje Prime

Taylor Wimpey España is going to invest €95 million in seven of the developments that it has up for sale on the Costa del Sol. The property developer is strengthening its commitment to the Malagan coast after verifying that Brits, one of its main client cohorts, have doubled their investment in housing in Spain.

“Demand is increasing in general”, explained the Director of Sales and Marketing at  Taylor Wimpey España, Marc Pritchard. The executive also added that “although the Brexit effect caused Brits to buy less in 2017, the fear is disappearing”.

Another important factor in the evolution of house purchases by Brits is the devaluation of the pound, which last year made investment in Spanish housing more expensive for buyers from the islands.

Nevertheless, Spain is still the preferred destination for Brits looking to buy a home, something that is reiterated by the British Embassy in the country. Across the whole of Spain, there are around 300,000 British citizens and “they are still the main overseas buyers of homes, accounting for 15% of the total”, says Pritchard.

In the ranking of foreign nationalities who buy homes in Spain, the Brits exceed the French, who account for 8.64% of the total; the Germans, with 7.77%; the Belgians, with 6.39%; and the Swedes, who continue as a historical investor, accounting for 6.38% of the total.

Original story: Eje Prime

Translation: Carmel Drake

Meliá to Open 1 New Hotel Every 15 Days During 2018 and 2019

7 June 2018 – Expansión

Meliá is accelerating its growth trajectory and is seeking to continue exporting its brands overseas. The Mallorcan hotel chain is planning to open 50 new hotels around the globe over the next two years. “This means that, on average, and with the exception of force majeure or unexpected events, we will be opening a hotel somewhere in the world almost every two weeks”, said Gabriel Escarrer Jaume, Vice President and CEO of the group at the General Shareholders’ Meeting yesterday.

The company ended last year with 375 hotels and 96,239 rooms in 43 countries. Of the total, 68% of the group’s hotels are located in Europe, the Middle East and Africa (EMEA), 33% in America and 9% in Asia-Pacific.

In this sense, the President of Meliá, Gabriel Escarrer Juliá, highlighted that expansion will continue to be a fundamental “motor” for growth. Escarrer Juliá explained that of the new openings planned until 2019, 20% will be located in EMEA countries, another 20% in the Mediterranean, 27% in America and another 33% in Asia-Pacific.

“Our bet for Asia-Pacific is clear if we consider that since 2013, we have more than quadrupled the number of hotels there to 45, including those that are operational and being opened”, he said.

Escarrer highlighted the operating performance of the company, which last year generated a profit, excluding capital gains, of €128.7 million, up by 27.8%, which allowed it to distribute a dividend of €0.1682 per share, in other words, €38.6 million.

Currently, 31% of the group’s EBTIDA, around €90 million, stems from the management of hotels. “This model allows us to generate high returns with minimal capital requirements since we invest in the acquisition of high-value management contracts and not in real estate assets”.

The CEO of Meliá underlined the effort undertaken in terms of digitalisation and quantified the investment in this area at €100 million over the last three years. That has resulted in the greater role of the corporate website in the business. The director explained that revenues proceeding from melia.com amounted to €520 million in 2017, up by 21%.

The director said that the group’s strategy involves continuing to rotate assets and strengthen their alliances with their partners to grow and improve the hotel portfolio. In 2017, Meliá spent €244 million maintaining and renovating its hotel portfolio.

“We have initiated a new valuation of our portfolio of assets, the global results of which we will have during the third quarter. I trust that the outcome of that valuation exercise will be positive.

Escarrer also referred to the challenges facing the company, including the push from new competitors such as Airbnb and the political instability.

Risk factors

“We feel very comfortable and confident of being able to fulfil the objectives of our strategic plan, although we monitor the main risk factors in our industry very closely, such as the evolution of the so-called collaborative economies and of processes that generate uncertainty, such as Brexit and the complex political situations in countries such as Italy and Spain”.

In any case, he reiterated the forecasts for 2018, with an improvement in RevPAR (average revenue per available room) (…) and an increase in margins of between 100 and 150 basis points.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Christie & Co: There Are Still Plenty of Opportunities for Hoteliers in Spain

22 January 2018 – Press Release

Businesses can look forward to a period of increasing confidence as we head into 2018, according to the latest report by Christie & Co, specialist hotel property adviser in Spain and business property adviser in the United Kingdom. 

In its Business Outlook 2018 report, Christie & Co reviews the most important investment figures in Spain, Europe and the UK, as well as the main hotel indicators for the market in 2017.

According to the data available to Christie & Co, Spanish hoteliers must strengthen their position in the face of the recovery of competing destinations, such as Turkey, Egypt and Greece, which will exert greater pressure on prices and may divert some of the outbound tourism from northern Europe towards other sun and beach destinations.

The report emphasises the increase in investment registered in 2017 in Spain, mostly carried out by investors (51.2%), whose seven largest operations amounted to more than the entire country’s investment figure in 2016. In addition, the proportion of foreign investment represented 56% of total investment and mostly proceeded from the United States, the United Kingdom and France.

Regarding Portugal, the report highlights that only seven deals were known to the market in 2017, involving hotel assets sold individually to hotel operators (MGM Muthu and Hoti Hotels) and investors (Internos). The potential of Portugal in terms of hotel investment is growing, with many investors interested in Porto, Lisbon and the Algarve, mainly due to a remarkable market recovery, which, in the case of Lisbon recorded an increase in occupancy rates and RevPar of 2.8% and 14%, respsectively, during the 9 months to September 2017, with respect to the same period in 2016 (…)

Regarding the UK, where the advisor covers a wider range of sectors, Christie & Co identifies those which benefitted from activity fuelled, in part, by the availability of finance and a surge of investors, many from outside the UK, looking for good opportunities and strong returns.

The continued uncertainty surrounding Brexit has made its impact across all sectors, but the UK has also welcomed a spike in tourism and a surge of foreign capital into the UK market. Asian investors particularly view the UK as an attractive investment opportunity thanks to the country’s stability and relatively low value of the Pound (…).

As a conclusion to the report, Christie & Co believes that the economy is recovering and there are still plenty of growth opportunities, something that they are also embracing, bolstering their teams both in the UK and Europe, to capitalise their expertise to attract and support both new and well-established clients who need help navigating the market, and who want to ensure a high-performing business.

Original story: Press Release

Edited by: Carmel Drake

Christie & Co: Europe is Still the World’s Most Visited Region

9 January 2018 – Press Release

Europe was still the most appealing destination and most visited region in the world in 2017, despite some disruptions faced in recent years, according to a report published by Christie & Co.

The report, launched by Christie & Co’s Hotel Consultancy team and entitled ‘European Travel Trends and Hotel Investment Hot Spots’ identifies future investment opportunities in the European hotel market by highlighting areas for increasing the value of visitation in the European market, reviewing the growth opportunities of feeder markets in Europe, analysing issues surrounding accessibility and airport capacity and highlighting which markets are expected to achieve strong RevPAR increases in the coming years making them ideal candidates for investment.

Despite other reports detailing the impact of Brexit, to date, the impact on European tourism remains unseen and Christie & Co predict the general positive outlook for tourism in Europe will translate into increased demand for accommodation. European travellers remain the key source for European destinations with domestic and other European travellers accounting for almost 90% of demand. The established feeder markets including the US, Canada, Japan and Australia continue to generate visitation growth for the European market. India and China are expected to experience healthy GDP growth over the next five years and both have populations over four times the US and affluence continues to rise. Thus, creating tremendous visitation potential for the old continent.

Christie & Co have identified two opportunities for increasing the value of visitation in the European market; firstly, Spain and Greece lag behind Western and Northern Europe in terms of value of visitation per international arrival. Christie & Co sees a real opportunity to boost the value of visitation by improving the quality of the hotel stock. Secondly, there are good branding opportunities across the European market as the hotel stock in the majority of European markets remains currently heavily unbranded and in need of investment.

Airport capacity remains a key challenge as accessibility is one of the key drivers for tourism. Christie & Co have analysed eleven major airports in this report and the findings reveal that seasonality concerns can be mitigated through providing additional flights during the shoulder season, making seasonal destinations more attractive outside of their peak times. If airport capacity is addressed promptly it will create wider development opportunities for hotels and further infrastructure.

Anna Eck, from the hotels consultancy team at Christie & Co comments, “The findings of the report show quite clearly that whilst Europe as a destination remains extremely popular, there is huge opportunity for international brands to grow in the region. Markets such as Iceland, Poland, Demark, Portugal and Sweden provide options for hotel chains whilst Ireland, Spain, Portugal Poland and Sweden would be ideal for opportunistic investors willing to take more risk. These markets are all expected to achieve strong RevPAR increases in the coming years as well as demand growth in excess of supply.”

Carine Bonnejean, Head of Consultancy – Hotels at Christie & Co comments, “We have worked closely with our European colleagues to develop this report and as a pan-European team we are able to offer strategic advice to maximise the potential of our clients’ business and investments. The report finds that certain countries are ideal for different types of investor and we are able to identify which cities in those countries are worth prioritising. Whatever the situation, we help to formulate a strategy to generate the best outcome.”

Original story: Press Release

Edited by: Carmel Drake

Sharp Fall in House Purchases by Brits in Alicante due to Brexit

29 December 2017 – El Boletín

A survey of real estate professionals conducted by the College of Real Estate Agents (API) of Alicante reveals that Brexit is having a significant effect on the real estate market in the region. The research indicates that many areas in the province, in particular along the coast, have experienced a notable decrease in the volume of house sales to British buyers in 2017 and that this trend is forecast to intensify in 2018.

The API College of Alicante points out that “traditionally, Brits have represented one of the largest groups of house buyers in Alicante, the province where the most homes and apartments are sold to foreigners in all of Spain”. Some of the Real Estate Agents are certain that 2017 has seen the lowest volume of sales to British citizens in decades”, although the situation is not being replicated with other overseas buyers.

Moreover, API’s research also shows that the decrease in sales to British citizens does not necessarily mean a reduction in the volume of purchases by foreigners, given that the gap being left by the Brits is being covered by foreigners from other countries. The report indicates that Belgians, Dutch, French, Norwegians, Germans and Russians will be the most active house buyers in 2018. People from up to 125 different countries are now buying homes in the province of Alicante.

Moreover, Brexit is not only affecting house purchases, it is also being felt in that more and more British citizens are putting their properties up for sale in the province of Alicante. In summary, more than 90% of the Real Estate Agents that work with foreigners have already felt the effects of Brexit on their operations and are convinced that the trend may yet intensify further during the course of next year.

Prices on the rise

Another conclusion from this study is that “nine out of every ten APIs interviewed are convinced that house prices in the province of Alicante will continue to rise in 2018, with increases that could range between 3% and 10%, depending on the area and type of home”. The average forecast increase in house prices amounts to around 5% in the province of Alicante as a whole.

The Real Estate Agents are also convinced that, after a year marked by the recovery of the sector, 2018 is going to be a year in which house purchases will continue to rise. “The second-hand market is going to continue to perform well, but 2018 will probably be the year in which new builds start to take off again, in towns where there is still land available”, explained Marife Esteso, President of the API College of Alicante.

In 2018, the worrying upward trend in the rental market is also expected to continue, where the gap between high demand and scarce supply, together with the diversion of homes to holiday lets, means that prices are going to keep rising. In this sense, many real estate agents indicate that the rise in holiday rentals is being driven not only by the higher returns on offer but also because holiday lets allow owners to avoid the problems of non-payment and property damage that are typically caused by long-term tenants.

Original story: El Boletín (by E.B.)

Translation: Carmel Drake

Hammerson Set to Buy Intu, Owner of Xanadú & Puerto Venecia

6 December 2017 – Expansión

The Boards of Directors of Hammerson and Intu Properties, two of Great Britain’s largest property developers, have reached an agreement regarding their merger, which will result in the creation of a group with assets worth GBP 21 billion (€23.7 billion, in euros), mostly comprising shopping centres in the United Kingdom, France and Spain. The operation will be instrumented through a public takeover bid (OPA) of Hammerson’s shares for Intu’s, valuing the share capital of that company at GBP 3.4 billion (€3.85 billion). Intu’s shareholders will receive 0.475 newly issued Hammerson shares for each current share they own.

If the deal goes ahead, it will have a significant effect on the Spanish market, as it would see a change in the owner of the country’s three largest shopping centres. Intu controls 50% of Xanadú (Madrid), Puerto Venecia (Zaragoza) and Parque Principado (Asturias). Funds from Canada and the USA are the company’s partners in those centres. Moreover, Intu has plans underway to develop other leisure and shopping complexes in Málaga, Valencia and Vigo, for a combined investment of more than €1 billion.

Hammerson, meanwhile, holds stakes in Value Retail and Via Outlets, which operate luxury brand outlet centres such as Las Rozas Village (Madrid), La Roca (Barcelona), Mallorca Fashion and Sevilla Fashion.

According to a statement from Hammerson issued today when it announced the purchase “the incorporation of Intu’s portfolio in Spain fits with our strategy of placing our focus on consumer growth markets as it involves adding three of the country’s largest shopping centres. It will also allow our commercial partners to have exposure to a new European market”.

This British company is committed to developing Intu’s projects in Spain. It says that the group resulting from the merger “will be in the best position” to undertake those investments. Following the integration, the group plans to sell some of its centres in the United Kingdom for around GBP 2 billion, which will give it “the financial flexibility it needs to invest in more profitable opportunities in Spain and Ireland, as well as in the outlet centre segment”. The combined debt of the new Hammerson group will amount to GBP 8.2 billion.

The property developer hopes to generate annual savings of GBP 25 million as a result of joining forces with Intu.

Intu’s share price on the London Stock Exchange rose by 20% (after the deal was announced), taking the company’s market capitalisation to GBP 3.2 billion, whilst Hammerson’s share price fell by 2%, taking its market capitalisation to GBP 4.15 billion.

Analysts are interpreting the operation as a defensive move by the two companies to protect themselves from the possible impact of Brexit, which is slowing down consumption in the United Kingdom and which may harm the value of their shopping centres. “The merger represents a coalition of two weak businesses, which will result in an amalgam of assets without any great possibilities for generating incremental profits”, argues Mike Prew, from Jefferies. “The interesting areas of growth are Intu’s Spanish business and Hammerson’s outlet centres”.

The merger still needs to be approved by the shareholders of the two companies and by the British competition authorities, which means that it could take a year to complete. Peel Holding, the investment company owned by John Whittaker, which is Intu’s largest shareholder, has already agreed to approve the takeover. Following the operation, it will hold a 15% stake in the resulting group.

The banks Deutsche Bank, JPMorgan and Lazard have advised Hammerson. Meanwhile, Intu’s managers have engaged the services of Bank of America Merrill Lynch, Rothschild and UBS.

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake