GreenOak Puts Las Mercedes Business Park on the Market 3 Years After Buying it

16 April 2019 – El Confidencial

GreenOak has engaged the real estate consultancy firm CBRE to coordinate the sale of Las Mercedes Business Park, one of the main office complexes in Madrid.

The aim of the fund, led in Spain by Javier Zarrabeitia, is to receive offers for the asset between May and June, with a view to closing the sale before the summer. The US fund has set an asking price of more than €200 million, which would represent a capital gain of 40% in just 3 years after it purchased the property for €140 million in 2016 from Standard Life.

Since acquiring the asset, GreenOak has worked on repositioning it, increasing its occupancy rate from 65% to 90% and negotiating rent increases.

The complex comprises nine office buildings, spanning a surface area of 80,000 m2 and is located in the northeast of Madrid, alongside the A-2 motorway. It is home to the offices of companies such as Altran, Applus, the Spanish Medicines Agency, Enaire and Carrefour.

Original story: El Confidencial (by Ruth Ugalde)

Translation/Summary: Carmel Drake

Bank of Spain: Rental Yields Soar to 9.8%

7 December 2017 – Expansión

According to the Bank of Spain, buy-to-let homes yield a return from rental income of 4.2% p.a. If to that figure, we add the appreciation in value of the underlying property, the total return amounts to almost 10%, on average. That figure is similar to those recorded during the real estate boom.

Buying a home to put it up for rent offers a much higher return than those generated by other financial assets, such as debt and deposits. Moreover, house prices are still much lower than they were ten years ago and still have the potential to rise. These factors, combined with the gradual recovery in employment and the enormous demand for rental properties, have created a very fertile scenario for investors, both for individuals as well as for Socimis and funds. For this reason, the major indicator of the residential sector is no longer just price – although that is important – but instead yield.

Homes now generate an average annual return of 9.8%, according to the Bank of Spain, which takes into account not only the rental yield but also the appreciation in the property value over 12 months. In other words, the yield is now 1.6 percentage points higher than it was a year ago, to bring it in line with the figures seen at the end of 2007, at the peak of the real estate boom.

This rise in returns is due to the increase in house prices and the rental boom. Increasingly more buyers are opting to acquire homes as a business, in the hope that those properties appreciate in value and generate more than 4% in the rental market (the average is 4.2%).

According to the latest study from Fotocasa – which Expansión revealed last Saturday – 24% of the people who have participated in the residential property market in the last year are investors. That figure exceeds 30% in the large cities, above all in Valencia (44%), Barcelona (36%) and Madrid (35%), according to data from Tecnocasa and the Universitat Pompeu Fabra.

“Now is a good time to buy to let, both for the long-term as well as for second home properties, given that both formulae are generating returns that, in the current context of low interest rates, cannot be found in any financial products or on the stock market”, says Beatriz Toribio, Head of Research at Fotocasa (…).

What’s more, the appearance of new real estate business models has spurred profits along in the large cities, in such a way that 20% of investors now use their homes as tourist rental properties. That high percentage is due to the new short-term let platforms, such as Airbnb, which allow them to obtain even higher returns than from the traditional rental market.

Nevertheless, 65% of investors still prefer the stability of having a long-term tenant. The remaining 15% buy homes not to put them up for rent, but rather to wait for them to appreciate in value and to sell them at a profit.

Market leaders

Madrid and Barcelona are spearheading this new property fever. In the Spanish capital, buying a home to let it out generates a gross annual return of 11.8% (from rental income and capital gains); that figure amounts to no less than 23.1% in the Catalan capital, almost twice as much (…).

The central areas of Madrid and Barcelona are experiencing a genuine profitability boom. In the Catalan capital, the Sants-Montjuic district stands out, with a gross annual return of no less than 32.9% (5.3 points from rental income and 27.6 due to price rises). It is followed by Eixample (26.8%), Gràcia (25.9%), Sant Martí (25.6%), Horta-Guinardó (24.9%) and Nou Barris (21%, although the latter is the most profitable district excluding price rises: 6.6%), which all exceed 20%. The centre (Ciutat Vella) generates 19% and the exclusive district of Sarrià-Sant Gervasi yields 13.2%

In Madrid, the Centro district comes close to 20% (19.7%); it is followed by Salamanca (19.2%) and Chamberí (18.8%) (…).

Something similar is happening along the coast. The highest returns in the beach areas are located in the Balearic Islands, Barcelona, Las Palmas, Huelva and Almería, where rental yields exceed 5.5%, and overall yields exceed 10% if we include the capital gains. The high combined return along the Malaga coast (17.9%) is particularly noteworthy.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Investors Are Buying More Homes Than Ever

12 September 2017 – El Mundo

House and rental prices are experiencing a robust increase, which means a perfect combination for the yield on homes to grow and the residential market to attract investors. In this context, according to the XXV Housing Market Report prepared by the Tecnocasa Group and the Universidad Pompeu Fabra (UPF), 28.7% of the second-hand house purchases closed during the first quarter of 2017 were made for investment purposes.

In fact, the volume of investors buying homes is higher than ever recorded by Tecnocasa and has almost doubled since 2013 (16.3%). “Investors are still finding good opportunities, as well as generating high returns from renting homes out”, says the study.

Tecnocasa took the opportunity to perform a detailed analysis of the investor profile. The first noteworthy fact is that this buoyant demand is coming from people who are older than those typically buying their first home. Specifically, more than half of the investor buyers are aged 45 years old or above. In terms of their employment status, 37.38% are self-employed, 36.18% have permanent contracts and 14.66% are pensioners. The self-employed and pensioner cohorts are both purchasing more for investment purposes than for their primary residence (11.96% and 10.28%, respectively). In terms of the nationality of the residential investors, Spaniards exceed foreigners hands down (85.9% vs. 14.1%).

The large increase in investors, to record levels, is not complaining at the sight of the juicy returns that homes are generating in comparison to financial products, given that the price of money is fixed at 0% and shows no sign of rising. Meanwhile, according to the Bank of Spainthe average home in Spain generates a return of 9.5% – a percentage that reaches the double digits only for tourist properties in certain areas of large cities. Of that gross figure of 9.5%, 4.3% comes from the rent itself and the remainder represents the gain from increasing sales prices.

That is because second-hand house prices rose by 8.24% YoY during the first half of the year, according to the study by Tecnocasa, which works with real prices of sales completed by the company itself. Moreover, the market has entered a positive spiral, which has seen second-hand house prices rise for six consecutive 6-month periods. Above all, in large cities such as Barcelona and Madrid, where second-hand properties are the most expensive in the country, costing €2,754/m2 and €1,970/m2, on average, respectively.

According to Tecnocasa, the significant presence of investors in the market is positive. “If it is true (as some people say) that a new bubble is starting to grow, it will be very different to the previous one (and much less harmful) given that it will not be based on loans, but rather on savings”, says the firm. In this sense, the real estate company stresses that 33.1% of primary residence purchases are paid for in cash, a figure that soars to 78.4% in the case of investors (…).

Moreover, the market for second-hand homes seems to have significant upwards potential, given that prices are currently 48.1% below the peaks of 2007, when the average price per square metre exceeded €3,500/m2.

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

‘Housers’: Spain’s First RE Crowdfunding Platform Is Launched

20 August 2015 – Cinco Días

Crowdfunding is breaking into the Spanish real estate market; and small investors seem to be thriving in a space that was, until now, controlled by large fortunes and stratospheric projects. It is now possible to make an investment with just €500 in your pocket, through Housers, which describes itself as “the first online real estate crowdfunding platform in Spain”.

With the aim of creating a property investment fund opene to everyone, and based on the success that such platforms have been having in countries such as the USA and UK, Antonio Brusola and Álvaro Luna decided to launch a project that already has 800 users and is only one month old.

The platform, which has been adapted to reflect the new Crowdfunding Law that was ratified in April 2015, is aimed primarily at the purchase of homes. With a minimum investment of €500 in four different projects or €2,000 in just one, individuals can buy a stake in a home and receive monthly rental income, plus a capital gain when the property is sold. Similarly, the funds may be used to finance short-term real estate projects, such as construction and the renovation of buildings, in order to achieve “low risk investment products that generate high returns from rental and sale”, explains the company.

Housers offers homes and retail premises on its website for the moment, but the company is also looking to acquire industrial warehouses, depending on “how each asset performs in the market”. “Homes have the most upside potential, but retail premises have lower maintenance costs. They are two quite different products”, says Brusola, one of the co-founders. That is why the company expects to generate gross returns of more than 7% p.a. and that its properties will appreciate in value by 35% by the time they are sold.

“We try to purchase between 10% and 20% below the market price, so that we can sell them for 35% more with just a small increase”, says Brusola. He also confirms that the security of the investment is “quite high because it is a physical product and the loss is very limited”. “It is always possible that prices will not increase – for example, there could be a 10% decrease in house prices over the next few years, however, the rental income from the property will offset that potential decrease”, he says.

With this initiative, Housers expects to purchase more than 1,500 homes and obtain €300 million from around 10,000 investors in three years. In addition, the company is considering a capital increase in October, a month after the final launch of the platform, in September. And even though the idea was first floated in December last year and the web went live a month ago, the new Law resulted in delays to the project, which had to be adapted to the reflect the new processes required.

The new legislation establishes investment limits of €3,000 per project and a maximum investment of €10,000 in a 12 month period for non-accredited investors. Moreover, it forces platforms to collaborate with payment entities, or with the Bank of Spain, to ensure that segregated accounts are used and investors do not deposit their money directly in the platforms. For this reason, Housers has joined forces with LemonWay, a European payment entity that operates internationally, which affords it access to overseas investors, especially in the USA, UK and Germany, countries in which this property crowdfunding formula is more developed.

Original story: Cinco Días (by Asun Infante & Alfonso Simón Ruiz)

Translation: Carmel Drake