Madrid Nuevo Norte will Generate €13.2bn of Business for the RE Sector

12 October 2018 – Eje Prime

Madrid Nuevo Norte represents good news for the Spanish real estate sector. The Town Hall led by Manuela Carmena expects the project, which received the green light at the end of September, to generate €13.2 billion of business for the real estate sector.

The urban development project, to the north of Chamartín train station, is going to house 10,485 new homes, as well as 1.5 million m2 of offices and another 103,119 m2 of commercial space. The acquisition of the plots will involve a total cost of €3.74 billion and the construction costs will exceed €2.78 billion.

The Town Hall of Madrid has confirmed that the tertiary assets will contribute the bulk of the income for the property developers that participate in the construction of Madrid Nuevo Norte. Together, the sales price of those properties will amount to €10.2 billion. In the case of the development of new homes, the business will amount to €2.98 billion, according to reports from Cinco Días.

The results of an economic study for the project show a range of returns of between 11.2% and 16.4%, although the Town Hall warns that the margin will depend heavily on factors such as the evolution of the real estate market and the acquisition price of the land. In terms of the latter, an orientative cost of €2,899.47/m2 is forecast for private housing located in the financial centre.

Following several adjustments, the total buildability of Madrid Nuevo Norte has decreased by 21%, down from 3.37 million m2 according to the initial plan to €2.66 million m2 under the current plan. In addition, the district has been divided into four areas: Chamartín station, the business centre, Fuencarral-San Roque-Tres Olivos and Fuencarral-Las Tablas. Each area will have its own construction timetable and urbanisation costs.

The project will have to be financed almost in its entirety by the landowners, who will disburse €1.2 billion on average. The Town Hall of Madrid is going to spend €307.89 million with the aim of covering the urbanisation costs, which will be added to €24.78 million from the Community of Madrid and €220.49 million from Adif, the concessionaire of the rights.

Original story: Eje Prime

Translation: Carmel Drake

Paraguayan Magnate Buys Luxury Development on c/General Oráa 9

8 April 2018 – El Confidencial

A new Latin American investor has entered Spain’s luxury residential market. The person in question is Carlos Gill Ramírez, a businessman who was born in Paraguay and who also has Venezuelan citizenship. He has just purchased the high-end development at c/General Oráa 9 in Madrid from Platinum Estates, according to sources.

This sale is the first divestment that the Asian fund has carried out in Spain and forms part of the asset rotation policy that it has launched for its first Spanish fund, to focus on raising and investing €500 million in its new vehicle.

For Gill, this acquisition represents the first step in his growth plans in the country, where he has constituted the company Sari Holdco with a view to continuing to star in operations that will allow him to create his own real estate empire. Uría has represented the Latin American businessman in the purchase of General Oráa and Garrigues has represented Platinum, whilst Engel & Volkers has acted as the advisor.

Having obtained all of the necessary authorisations from the Town Hall of Madrid, construction of this luxury development is almost 70% complete. It will allow the transformation of this building, dating back to 1926, into 10 high-end homes, measuring between 348 m2 and 409 m2 each, plus two penthouses measuring 500 m2, with 250 m2 dedicated to a solarium and private swimming pool. The sales prices range between €3.6 million and €10 million per home.

Since Platinum acquired this development from the Catalan firm Renta, four years ago, it has always been said that it would be aimed at Latin American buyers interesting in owning a home in the Salamanca neighbourhood. Nevertheless, nobody imagined that a businessman from the other side of the Atlantic would also end up taking over the entire project, with the objective of finishing the construction work and putting it on the market.

Industrial wealth

Born in Paraguay, in July 1956, aged just six, Carlos Gill moved with his family to Venezuela, where he ended up being an honorary counsel for his native country. After studying Dentistry at the Central University of Venezuela, the businessman participated in important restructurings such as those of Banco Unión, Mercedes-Benz Venezuela, Grupo Corimón, Banco Capital, Banco Canarias de Venezuela and Bancentro Banco Comercial.

He is currently the President of Grupo Corimón, a Venezuelan corporation that operates in the paint, chemical product and flexible packaging sectors. The firm claims to be the largest conglomerate of its kind on the entire sub-continent and its shares are listed on the Caracas Stock Exchange.

Moreover, four years ago, Gill purchased a controlling share of Ferroviaria Oriental, the company that operates the railways in the east of Bolivia and, months later, he did the same with the country’s western network, by acquiring Ferroviaria Andina from the Chilean firm Luksic. Recent operations include his purchase of Bridgestone Firestone Venezuela.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Land Use In Espai Vila-Real May Be Modified

20 October 2017 – El Periódico Mediterráneo

“Clearly, times have changed”. With that phrase, José Benlloch, the mayor of Vila-real, acknowledged that the plots of land in Espai Vila-real may be reclassified (in terms of their use), now that the Government has decided that the intermodal station will not be constructed in Castellón.

One door closes, but others open, and the Town Hall wants to be prepared not to waste its opportunities. It is for that reason that Benlloch is planning to meet the owners of the land, spanning 1 million m2, which comprises this Comprehensive Action Plan (PAI), to find out “what options are being considered in terms of its ownership and to inform them about the current possibilities”.

The mayor seems willing to modify the uses of the land if necessary and to “change the terms of the program, provided there are expectations on the part of the owners”. The one option the municipal corporation has ruled out is the large shopping centre that the Popular Government’s team, led by Juan José Rubert, planned in 2007. That plan included, amongst other matters, the arrival of the Swedish multinational Ikea in the town.

Mediterranean Corridor

One of the options that is gaining strength at the moment is the conversion of these plots, located opposite Porcelanosa, into a logistics hub, linked to the construction of the third strand of the Mediterranean Corridor. Such infrastructure is being demanded not only by the Regional Government but also by most of Valencia’s businesses. “We are aware that if this goes ahead, users will need places for storing goods temporarily, and we think that these plots are perfect for that, given that they are located in the heart of a very industrial district, La Plana Baixa”, explained the mayor.

Even though this idea will be on the table at the meeting between the Town Hall and the landowners, Benlloch is convinced that this question may be “compatible” with other proposals linked to the installation of new industries and projects relating to services, as well as the business that may be negotiated over the next few months. That said, the mayor wants to begin the new phase that is been opened by drawing “a roadmap that is shared” with the owners.

Original story: El Periódico Mediterráneo (by Xavi Prera)

Translation: Carmel Drake

Engel & Völkers’ Sales In Spain Soared By 45% In H1

28 July 2016 – Expansión

The German real estate company Engel & Völkers, which specialises in the sale of luxury assets, increased its (global) turnover by 41% during the first half of the year. In Spain, its revenues soared by 45.1%, to reach €690.9 million. This growth was driven by operations in both the sales and rental markets.

The company, which plans to open nine new outlets in Spain, attributed this “good progress” to strong demand for premium properties in holiday areas such as Mallorca, a fundamental market where its business grew by 79% during H1, as well as in large cities, where it has a presence through the Metropolitan Market (MMC).

At the global level, the group increased its revenues from commission by 26.2%, to €229.4 million.

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Opposition Parties Force Carmena To Reduce Business IBI

1 October 2015 – Expansión

The opposition parties in the Town Hall of Madrid (namely, the Partido Popular, PSOE and Ciudadanos) have put paid to the plans of the mayoress, Manuela Carmena, to increase the IBI rate for businesses and companies to 10%. In fact, they forced an agreement for it to be decreased by 2%. (Earlier in the week), all of the political parties, including Ahora Madrid, approved a 7% reduction in the residential IBI rate, and now, the opposition parties have forced a 2% decrease in the business rate.

The agreement by the plenary session represents an overall decrease of 100% for residential properties, as well as for the vast majority of non-residential properties. The 7% reduction in the property tax, will decrease the tax from its current rate of 0.548% to 0.51%.

Moreover, the majority – the result of the vote went against Ahora Madrid – approved a commitment to continue to reduce the rate of IBI for residential properties to 0.4%, the minimum rate set by law, “respecting the payment of expenses approved by the government, as well as sustainability”.

Meanwhile, the PP congratulated itself after some of the proposals it had presented to the plenary session were approved, including: zero taxes for entrepreneurs for the first two years (…).

In the same way, it indicated that large companies should not have to pay taxes for having “larger” buildings since “the rate of IBI is progressive and so it does not make sense for smaller clinics to pay a lower rate of IBI than public hospitals”.

Begoña Villacís, from Ciudadanos, said that the Town Hall should have a “single discourse” regarding the payment of debt, and the tourist tax. Moreover, she said that her party proposes a reduction in taxes and that the Town Hall should support the cadastral review plan.

The socialist Ransés Pérez Boga pointed out that on 22 July the plenary session approved a decrease in the rate of IBI, after it had been proposed by his party. He advocated a decrease in the rate of business IBI “to maintain the social progressive nature of the tax charge”. In his judgement, the reduction will allow companies to retain their employees.

Original story: Expansión (by Mercedes Serraller).

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