Tag: Brexit

BNP Paribas: Land Sales Will Soar To €4,076M In 2017

9 November 2017 – Expansión

The blast of property developer activity and the entry of funds into the residential business have caused land purchases to soar in recent months. According to forecasts from BNP Paribas Real Estate, 2017 is set to close with approximately 22,700 land purchase transactions in total, with a combined value of €4,076 million, which represents an increase of 37% compared to 2016.

The consultancy firm explains in a report about the residential market that interest is focused on the more stable markets, such as Madrid and Barcelona. Nevertheless, the scarcity of available buildable land has led to searches for plots in other markets too, such as Sevilla, Málaga and Valencia.

“After overcoming some very tough years for the real estate market, and in particular the land market, with the paralysis of property developer activity, the segment started to recover over the last two years, in line with the improvement in the fundamentals of the market and the good performance of the economy”, explain sources at the consultancy firm.

The report points out that, although there is a lot of available land in Spain, the average time it takes to create buildable land is eight years, due to the administrative processes that are required. “Over the last 10 years, no land has been generated; no one was interested in investing in the market”.

In certain areas of the more established markets, that lack of buildable land is leading to an increase in prices, with rises of up to 30% and even 40% over the last two years. In this way, in markets such as Valdebebas, Montecarmelo and El Cañaveral (in Madrid) have seen significant land price increases, as a result of the fact that the supply of buildable land is very limited.

BNP Paribas Real Estate highlights the change brought about in the sector due to the increased demand and the entry of investment funds eager to back the market.

New players

Property developers such as Neinor, Aedas – both of which are listed – , Vía Célere, Metrovacesa and Aelca are taking advantage of the good times that the sector is enjoying and the upwards cycle, in general, to strengthen their presence and launch new developments.

The report points out that, during the eight months to August, 315,795 house purchase operations were closed. It forecasts that the total number of transactions could reach 530,000 homes in 2017, which would represent a return to the pre-crisis levels. The main international market is the United Kingdom, whose citizens account for 14.9% of transactions by overseas players, despite Brexit. In addition to the Brits, the French, Germans, Belgians, Italians and Nordics are the other main buyers of homes in Spain.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Threat Of Cataluña Independence Hurts Spain’s Largest RE Companies

10 October 2017 – Expansión

One of the sectors that is being hardest hit by the insecurity generated in Cataluña following the referendum on 1 October is real estate. In just one week, the large companies in the sector have seen their stock market valuations decrease by €717 million and how the credit ratings agency Moody’s has issued warnings about the negative effect of the political tension on the growth of rental income, occupancy rates and asset valuations.

The Socimi that is most exposed to Cataluña is Merlin. The real estate giant led by Ismael Clemente owns assets worth almost €1,500 million in Cataluña. The real estate company in which Santander and BBVA own stakes is also one of the companies that has most backed this market over the last year, positioning the Catalan capital, together with Lisbon, as one of its markets for highest growth.

In the context of that strategy, at the beginning of the year, Merlin purchased the iconic skyscraper Torres Glóries – also known as Torre Agbar – for €142 million. The building, which has a gross leasable area of 37,614 m2, is one of the candidates to house the European Medicines Agency (EMA), which will abandon its current location in London due to Brexit. Sources in the sector consider that the events of recent days completely eliminate Barcelona from the running, in favour of its rivals in the bid: Amsterdam, Dublin, Bratislava, Copenhagen and Milan.

Another Socimi with a significant portion of its assets in Cataluña is Colonial. The real estate company, which is headquartered in Barcelona, has almost 10% of its assets in the region. In the office segment alone, it owns assets worth €827 million in Cataluña, making it its third market after Paris, with €6,144 million, and Madrid, with €1,339 million. Yesterday (Monday), Colonial convened an extraordinary meeting of the Board of Directors to consider moving its headquarters (and in the end, approved their move to Madrid).

One of the projects that Colonial has underway was announced at the beginning of the year, in the form of an alliance with the company Inmo, the real estate subsidiary of the Puig family, for the development of Plaza Europa (Barcelona), with an investment of €32 million. The plan to construct a 21-storey building with a surface area of 14,000 m2 will be undertaken on a plot of land owned by the Puigs. Moreover, at the beginning of the year, Colonial started work to build a turnkey office building in the 22@ district, which will involve a total investment of €77 million and which will be ready by the middle of 2018.

In terms of the other Socimis that are listed on the main stock market, Hispana holds assets in Cataluña worth €255 million at the end of June (…). Meanwhile, Axiare owns four assets in the region (…) worth just over €126 million; and two of the assets in Lar’s portfolio are located in Cataluña (…), with a combined value of €116 million.

Amancio Ortega

(…) HNWIs have also been backing the Catalan market and, in particular, Pontegadea’s exposure to the region is significant. Amancio Ortega’s company does not disclose figures by country or autonomous region (…) however, in 2011 alone, it acquired three assets worth €233 million, including BBVA’s headquarters in Plaza Cataluña, for €100 million. It also owns important buildings on Paseo de Gràcia and Plaza Catalunya, and is the owner of the Inditex group’s largest stores.

Original story: Expansión (by R. Arroyo and M. Anglés)

Translation: Carmel Drake

CaixaBank: Consequences Of Brexit For Spain’s RE Sector

11 September 2017 – CaixaBank Research

The real estate sector has started a new bullish cycle, as evidenced by the evolution of house purchases, which have been growing at double-digit figures for two years now. Whilst internal demand has been boosted by the recovery in employment and favourable financing conditions, overseas demand has been by no means negligible: in Q1 2017, it grew by 14% YoY.

Nevertheless, this positive movement in terms of demand from overseas buyers is masking various different trends. On the one hand, most of the purchases are happening on the Mediterranean Coast and in the islands, with foreigners accounting for more than 30% of total purchases in some provinces.

On the other hand, the evolution of these house purchases varies significantly by nationality. In this sense, the uncertainty surrounding Brexit and the depreciation of the pound are leaving their mark on the acquisition of homes by citizens from the United Kingdom, the main cohort of foreign homebuyers in Spain. In Q1 2017, purchases undertaken by British citizens decreased by 13% YoY. Nevertheless, that decrease was more than offset by the uptick in purchases made by French, German, Belgian and Swedish citizens who increased their purchases at rates equal to or more than 20% YoY in Q1 2017.

The different trends observed between international buyers have generated changes in the relative weight of each country in terms of house purchases, at the same time as reducing the degree of concentration amongst certain nationalities. Although the United Kingdom continues to head up the list of overseas buyers, purchases by that cohort have gone from accounting for 21% of the total in 2015 to 15% in Q1 2017.

Looking ahead, house purchases by British citizens may regain some of their buoyancy if the Brexit negotiations evolve favourably and the pound manages to recover some of its strength. Nevertheless, periods of significant uncertainty surrounding Brexit, or a hard Brexit, could tarnish the recovery, given that house purchases by British citizens have historically been very sensitive to economic conditions in their own country. On a more positive note, the good economic outlook for the other main home-buying countries in Spain, together with the continuation of accommodative monetary conditions and the decrease in the political uncertainty in the Eurozone countries, represent an opportunity for the Spanish real estate sector.

On a more positive note, the good economic outlook for the other main overseas buyers of homes in Spain, together with the continuation of loose monetary conditions and the decrease in the political uncertainty in the Eurozone countries, represent an opportunity for the Spanish real estate sector.

Original story: CaixaBank Research

Translation: Carmel Drake

Another RE Bubble? S&P Forecast House Price Rises Until 2020

3 August 2017 – Cinco Días

After years of crisis, the Spanish real estate market is now growing again year after year. That is according to analysis prepared by Standard & Poor’s, which estimates that house prices will rise by 4% in 2017 and by 4.5% in 2018, with respect to the previous year.

The report also forecasts a reduction in inflation. Currently, prices are rising at 1.5% p.a. but that figure is expected to decrease to 1.3% in 2018. Moreover, economic growth in Spain is expected to lead to a reduction in unemployment, down to 15.7%. And that percentage is forecast to fall to 13.6% by 2020.

Despite the positive outlook, the risk measurement entity warns of the risk that Brexit, the United Kingdom’s exit from the European Union, could have, given that currently, Brits account for 19% of foreign house buyers in Spain.

House sales are growing to both domestic and international buyers. In 2016, the total volume of transactions rose by 13.7% to reach 404,000 homes sold in Spain. During the 12 months to April 2017, 416,000 homes were sold, up by 11.8%.

Sales to foreigners grew by 13.8% in 2016. In total, 53,500 of the 404,000 homes purchased were transferred into foreign hands. The main buyers were British, who accounted for 19% of purchases by foreigners; followed by the French (8.05%) and Germans (7.69%). Moreover, the report points out that the so-called golden visas, which grant residence permits to those foreigners who invest more than €500,000 in real estate, excluding taxes, have led to an increase in acquisitions by Russian and Asian citizens.

Standard & Poor’s also expects that the European market will continue to grow. The ratings agency forecasts that house prices will rise in many of the neighbouring countries, such as Germany, where they are expected to increase by 6% next year. Nevertheless, in the main countries that the buyers in Spain come from, in other words, the United Kingdom and France, prices are expected to decrease by 1% or remain stable, respectively.

This growth in sales has meant that house prices have not slowed down. According to the real estate appraisal company Tinsa, house prices rose by 3% during the second quarter of 2017 compared to June last year. Currently, according to the same firm, the average price of homes per square metre in June 2017 amounted to €1,245/m2, well below the peaks of 2007 (€2,047.69/m2).

Sources at Standard & Poor’s expect that the Spanish economy will continue to grow in 2017, by 3% for the third consecutive year. The creation of 2 million jobs since 2013 and the increase in exports are the main drivers of confidence that the firm is using to justify the rise in house prices, although it also warns of the need that Spain has to reduce its deficit, which is one of the highest in the Eurozone.

Ultimately, economic growth will be reflected in real estate growth over the next three years. The slow reduction in the stock of housing accumulated during the years of the bubble and the slow, albeit inexorable, rise in interest rates (the first rise is expected to happen in 2019) will limit the rise in house prices. Standard & Poor’s also questions the effect of Brexit on the real estate market.

Original story: Cinco Días (by Fernando Cardona and Eduardo García)

Translation: Carmel Drake

“Valdebebas Is Ready To Welcome Companies Post-Brexit”

27 June 2017 – Expansión

Valdebebas – one of the largest urban planning projects in the Community of Madrid, with a land surface area of 10.6 million m2 – has fired the starting gun for what is expected to become the city’s “new financial and technological district”.

“We have land spanning more than 1 million m2 (equivalent to the surface area of almost 140 football pitches) available for tertiary use. People talk about Castellana Norte, but there is no development in Spain quite like Valdebebas. It is already ready to welcome companies from London searching for new locations after Brexit and any other multi-national companies”, explains Marcos Sánchez, Managing Director of the Valdebebas Compensation Board, which represents the owners of the land. Market sources indicate that the land owners include Monthisa, Bisbel, Vivienda Económica, Celteo, Coindeco and Inmobiliaria Espacio.

This business park will comprise twenty blocks, with buildabilities ranging between 9,000 m2 and 110,000 m2. It will house buildings that have between five and fourteen storeys.

The director said that, although they have not yet started “to sell” Valdebebas as a destination for companies, international investors, funds and hotel chains have already expressed their interest in the development: “We are still in the preliminary conversation phases. Until now, contact has been made because interested parties have been approaching us”.

For Sánchez, the aim of Valdebebas is to attract fin-tech companies and others relating to that sector. Moreover, it has the capacity to accommodate between three and four hotels and restaurant brands. “We have direct access to the airport and are well connected to the city centre. It is an unbeatable location in Europe and the world”.

In this sense, it is worth remembering that a bridge is being constructed to connect this area with Barajas Airport – T4, with a forecast investment of more than €20 million. “We have already moved earth and started building the foundations on both sides. The work, which was started in February, is going well and will be finished within two years”, he said.

Valdebebas has several advantages over the potential Operación Chamartín: the immediacy – with “windows of opportunity that can be benefitted from now” – its size and location, according to Sánchez. “Castellana Norte is our natural competitor; despite that we want that site to be developed as soon as possible and in the best way possible because we will all end up winning as a result”, he said.

Legal journey

In terms of the legal position, Sánchez acknowledges that, although Valdebebas has always been very judicialised – construction of between 800 and 1,000 homes has been suspended following a ruling by the Supreme Court – almost 100% of the residential property has been sold, the population already stands at 10,000 people and is set to reach 18,000 by the end of the year. In his opinion, it is “perfectly feasible” to reach agreements before the urbanisation is completed. “All of this administrative and judicial chaos will end when the urbanisation is handed over in two years time”, he said.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Madrid Seeks To Attract Companies Leaving UK Post-Brexit

3 May 2017 – Mis Oficinas

Madrid hopes to fill 80,000 m2 of office space following the United Kingdom’s exit from the European Union.

According to eleconomista.es, the capital of Spain is positioning itself as one of the possible destinations for companies deciding to abandon the United Kingdom due to Brexit. To this end, the Spanish real estate sector is optimistic, given that Madrid has available office space amounting to more than 60,000 m2 (thanks to buildings such as BBVA’s former headquarters) and in turn, is planning to increase the volume of office space on Paseo de la Castellana.

Spain offers a significant advantage in terms of the competitiveness of its rents, given that the costs of its offices, as well as its shared expenses, are some of the lowest in Europe, alongside Luxembourg and The Netherlands, which, due to their size, do not have sufficient office space available.

Despite this, many companies argue that Spain needs to improve its administrative arrangements if it wants to attract large businesses. According to them, the Government should accelerate the granting of licences to expedite the construction of offices and increase tax credits to facilitate the launch of companies in the country.

Spain is sixth in the ranking of the most attractive countries in the world to invest large fortunes. The ranking is led by the United Kingdom, the USA and Germany. This is the first time that Spain has featured in the Top Ten, which could influence the decision of these companies.

Original story: Mis Oficinas

Translation: Carmel Drake

BBVA: House Sales Will Rise By 7% In 2017

11 April 2017 – Ok Diario

According to BBVA, the recovery in the real estate sector in Spain “is really taking hold”. The entity forecasts a 7% increase in property sales in 2017 and that investment in homes will grow by 3.2% during the same period. Meanwhile, it predicts that house prices will rise by 2.5%.

These are the most recent forecasts about the sector for 2017 from BBVA, which highlights that the “positive evolution” of the real estate market in 2016 displayed significant geographical heterogeneity, with Madrid, a large part of the Mediterranean Coast and the two island regions leading the recovery.

The entity said that 2017 will be marked by more moderate economic growth forecasts, of 2.7%, compared with 3.2% in 2016, and positive expectations in terms of property price rises.

In this way, the entity expects residential sales to grow by around 7% this year, and for prices to continue their recovery, with an increase of 2.5% YoY.

The revival of the mortgage market in recent years is helping to fuel growth in residential demand, says BBVA. In fact, new loan operations to households to finance the acquisition of a home increased again in 2016 to reach €37,500 million, up by 5% compared to the previous year.

Similarly, construction is continuing to respond positively to the growth in demand and prices, which is why the real estate sector is expected to generate growth for the economy once again. Investment in housing is expected to increase by 3.2%.

Growth with uncertainty

Nevertheless, BBVA warns that a number of risk factors have been building up in recent months, which could limit the scope and speed of the recovery.

Firstly, it warns that uncertainty persists relating to the outcome of Brexit. In addition to this geopolitical factor in Europe, the potential effects of decisions taken by the new administration in the USA and the increase in energy costs should also be taken into account.

Meanwhile, the increase in inflation in the Eurozone may lead to a change in monetary policy. During 2017, the ECB’s stimuli are expected to decrease, which could lead to an increase in interest rates at the end of 2018. “This increase in financial costs represents a risk for the Spanish economy”, said the entity.

In any case, BBVA highlighted that positive financing conditions, and the strong economic outlook, mean that the real estate sector closed 2016 with 460,000 transactions, up by 13.5% compared to 2016 (…).

Last year, the stock of finished housing continued to decline and prices grew by 1.9% on average, which shows that “the industry responded once again to the boost in demand”. Similarly, the number of building permits grew by almost 30% in 2016 to reach 64,000 permits, to record the third consecutive year of recovery. (…).

Original story: Ok Diario

Translation: Carmel Drake

Optimism Abounds Amongst Spain’s Hotel Chains

10 April 2017 – Expansión

Meliá, Barceló, RIU and other groups are hanging the “No vacancy” sign up in top destinations and are increasing their prices, thanks to the pull of the overseas market and the recovery in domestic tourism.

The tourism sector is on a roll and the main Spanish chains – Meliá, Barceló, Iberostar, RIU, Grupo Piñero and Palladium – are getting ready to break records once again. The positive trend in demand, the pull of international tourism in both archipelagos, and the recovery in the domestic market in regions such as Andalucía are allowing the hotel groups to hang the “No vacancy” sign up in some of their destinations, such as in the Canary Islands, and achieve occupancy rates of between 80% and 90% in the Balearic Islands and Andalucía.

Despite the uncertainty generated by Brexit, the British market remains a mainstay for the hotel chains, alongside Germany and Central Europe, in addition to the recovery in domestic demand.

For example, Meliá forecasts growth of more than 6% in its average occupancy rate in vacation hotels in Spain, as well as an improvement in prices with respect to 2016. The markets with the greatest pull for the chain owned by the Escarrer family are the British and Central European, whilst demand from domestic tourists continues its upwards trend.

Meanwhile, Barceló forecasts growth of 6% in its occupancy rate at hotels in the Balearic Islands, with an average occupancy rate of 81% and an average room rate of €110, which represents an increase of 13% with respect to the previous year. In terms of Andalucía, the volume of reservations corresponds to forecast occupancy rates of more than 90% and an improvement of 26% in prices, according to the company.

In the case of Iberostar, the hotel chain owned by the Fluxá family forecasts an occupancy rate of almost 100% over the Easter holidays. Iberostar highlights the good performance of the United Kingdom, Benelux and Germany, compared with countries in Eastern Europe, where demand is “more stagnant”.

In terms of room rates, Iberostar states that prices have improved moderately, by between 2% and 3% on average.

For RIU, the economic situation in the Canary Islands, with very high occupancy rates, means it has little margin for growth, however, there is still scope for increases at the hotels on the Costa del Sol, which have been completely refurbished this season. (…). In terms of the best markets, RIU highlights German tourists, as well as a considerable improvement in the number of reservations from Scandinavian and British clients, plus a 5% increase in domestic tourism.

Meanwhile, Palladium highlights the sweet moment that Ibiza is enjoying. “The season has opened early on the island, with a large volume of tourists visiting in April. This has been made possible by hotels opening early and new flight connections”. Overall, hotel occupancy rates have risen by 4%, whilst prices have increased by 2.5% YoY, for the time being, in line with the annual forecast increase of 7%.

Finally, Grupo Piñero says that its three hotels in Tenerife area already full, with an improvement in prices of between 4% and 8%.

Optimism

And the euphoria of the hotel chains extends beyond Easter. The large hotel groups expect to set new records in 2017. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Bank Of Spain: The Housing Market Is Not Overheating

4 April 2017 – El Mundo

The Bank of Spain (BdE) does not perceive “any signs of overheating” in the housing market, nor does it expect the real estate sector to overheat anytime soon, given that the recovery in the market is happening at the same time as the process to deleverage the economy.

During the presentation of the supervisory body’s macroeconomic forecasts for the Spanish economy (2017-2020), the Director General of Economics and Statistics at the Bank of Spain, Pablo Hernández de Cos, denied that the housing market is showing any signs of overheating.

Hernández de Cos highlighted that the housing market has been enjoying a recovery for several quarters, which is being seen in the number of transactions, the number of new builds started and the trend in prices, although the Bank of Spain does not expect “the market to overheat”.

Despite the fact that the growth rates “may be significant”, the Director of the Bank of Spain said that after a “very significant” adjustment process in the sector in terms of transactions and the correction of prices, the recovery in the market is taking place in parallel to the continuation of the process to deleverage the Spanish economy. “We are not seeing any signs of overheating”, he added.

“Uneven” reactivation

In its forecasts, the supervisory body notes that high-frequency information relating to both the number of new builds started and the number of transactions involving residential properties, indicates a “continuation of the path of gradual improvement in residential investment, whose prolongation during the forecast horizon will be based on the favourable evolution of employment, the expected continuation of propitious financing conditions and the expectation that assets are going to appreciate in value”.

Nevertheless, it forecasts that the recovery will progress in an “uneven” way by region, with the main cities and autonomous regions most focused on tourism experiencing the most intense growth. In any case, it warns that the latter areas may experience a certain moderation in demand as a result of the process for the United Kingdom’s exit from the European Union (EU).

Original story: El Mundo 

Translation: Carmel Drake

Radisson Wants To Grow In Madrid & Barcelona

30 March 2017 – Expansión

Radisson Blu – the hotel chain belonging to the Carlson Rezidor group, which is itself controlled by the Chinese giant HNA – arrived in Spain in 2009, with the opening of the Radisson Blue Hotel Madrid Prado. Three years later, it opened a resort in Gran Canaria, and just a few months ago it inaugurated its newest hotel in the country, the Radisson Blu Resort & Spa, also in Gran Canaria.

Radisson Blu owns almost 300 hotels in 69 countries. Now, the company wants to strengthen its commitment to Spain and to this end, it is analysing Madrid and Barcelona with particular interest, as key destinations for the opening of new establishments under the Blu and Red brands. “Spain represents an opportunity. We perform most of our expansion through management contracts or franchises, which means that we are not interested in leases, however the properties must always be in good locations”, explained Richard Moore, Vice President for Western Europe, the UK and Ireland at Radisson Blu.

HNA Tourism Group completed the purchase of Carlson Hotels last year and so took over control of 51.3% of the Carlson Rezidor Hotel Group, which operates in Europe, the Middle East and Asia, where it competes with NH, in which HNA also holds a stake. (…).

Moore added that the chain has studied options on the Mediterranean coast but that, for the firm to open a hotel, it “has to fit with our brand. We are proud of the way we make our brands fit with the properties and of our relationships with the property owners”.

Specifically, in the case of its most recent hotel in the Canary Islands, the chain has reached an agreement with the Norwegian family group Wenaasgruppen, which owns 24 hotels. It is the second time that the company has worked with the Norwegian group, which also owns the other hotel that Radisson manages in Gran Canaria. (…).

Moore added “There are lots of reasons why we want to have a presence in Spain and, above all, in Gran Canaria”. He said that, in the last twelve months, the number of tourist arrivals in Gran Canaria has grown by 14% and the average revenue per room (RevPar) has risen by 18% – or 15% in the case of luxury hotels -. “25 airlines fly to 142 destinations from Gran Canaria in 25 countries. It is the second most popular destination after Tenerife”, he said.

Brexit

In terms of risks to the business, Moore does not think that Brexit will have a significant impact on tourism in the islands and less so on the hotels that the group manages, which are upscale establishments (five stars) with a very diversified client base. (…).

Original story: Expansión (by Rebecca Arroyo)

Translation: Carmel Drake