Pryconsa, Ibosa & Vía Célere Bid for Sought-After Plot in Madrid

7 November 2018 – El Confidencial

It is the most important land auction of the year in Madrid. Not because of its size or its characteristics, but because of its location: just 500 m from the most iconic park in Madrid, the Retiro, in the heart of the Spanish capital.

The star is the Fábrica Nacional de Moneda y Timbre (the National Currency and Stamp Factory), which is the owner of almost 4,500 m2 of buildable land, with a buildability of 9,000 m2, where almost one hundred homes may be built, and whose divestment has been entrusted to the services of the Ministry of Finance.

The minimum price that it expects to obtain for the land is €17 million, nevertheless, given its location, and in light of the huge shortage of buildable land in the centre of the Spanish capital, and therefore, of new build developments, the experts consulted by El Confidencial do not rule out that the final figure could reach twice that.

The plot, which has been in disuse for more than 30 years, has sparked enormous interest from buyers and has generated great excitement in the neighbourhood. According to information gathered by this newspaper, some of the interested parties that have participated in the auction – the deadline for the submission of bids ended on 6 November – include a cooperative managed by Grupo Ibosa, Pryconsa and Vía Célere – all of whom are typical players in this type of auction – although the same sources also talk of at least half a dozen offers. To be able to bid, the interested parties had to submit a bond amounting to €853,000 – equivalent to 5% of the asset value.

For the time being, Grupo Ibosa’s plans for the plot include the construction, on a cooperative basis, of 94 homes with between one and four bedrooms with a swimming pool, padel court, spa, and jacuzzi, as well as a multi-use sports pitch, gym, minibox or crossfit room and a Finnish sauna; all those facilities are lacking in the vast majority of developments in the neighbourhood.

In fact, the project that is constructed on this site will be the only new-build development in the area. Ibosa’s plans include prices of almost €5,500/m2 per home, above the prices that are currently being paid in the area in the second-hand market, which stand at around €4,500/m2. Thus, for example, a new-build home measuring 160 m2 would cost around €828,000.

Both Grupo Ibosa and Pryconsa have starred in some of the most high-profile operations in the capital over the last five years. The most recent, for example, was signed by Pryconsa. The property developer chaired by Marco Colomer, one of the survivors of the crisis with more than five decades of history under his belt, submitted the only bid – amounting to €19.7 million – for the former bus depots of the Municipal Transport Company (Empresa Municipal de Transportes or EMT) of Madrid in the Buenvista neighbourhood (Carabanchel). Moreover, just a year ago, Pryconsa and Realia Business were awarded two plots of land in Madrid by the Ministry of Defence.

Meanwhile, Vía Célere, just two years ago, was awarded a plot by the Ministry of Finance on Avenida Santo Ándel de la Guarda (…).

In this case, the bid envelopes will be opened within the next few days at the Madrid office of the Ministry of the Economy and Finance (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Hermes Properties Buys 2 Plots in Madrid from Sareb for €4M

5 June 2018 – Eje Prime

Hermes Properties is making its debut in Madrid. The company has purchased two plots of tertiary land with a surface area of 4,000 m2 in Madrid from Sareb for €4 million. The operation has been carried out through its second real estate investment vehicle, called Hermes II.

Specifically, the plots are located next to the Islazul Shopping Centre in Madrid, located in the Ensanche de Carabanchel, between the districts of Carabanchel, Latina, the Toledo motorway and the M40 motorway, on the border of Madrid and Leganés.

The plots have been previously leased to two operators, namely, Burger King and Carl’s Jr, who will undertake construction work imminently to open two restaurants in free-standing and unique buildings with drive-thru services.

Original story: Eje Prime

Translation: Carmel Drake

Pryconsa is Awarded the Bus Depot Plot in Madrid for €19.1M

15 January 2018 – Eje Prime

Pryconsa didn’t end up having to put up a fight for the plot in Carabanchel. Rather, the Spanish property developer was awarded the plot that used to house the EMT (Municipal Transport Company) bus depot in Madrid, for which the Town Hall was asking €16.3 million and for which it will end up receiving €19.1 million. In reality, no one else submitted a bid in the auction for this residential-use plot on which around 268 homes may be built and which has an available buildable surface area of 26,820 m2.

The total surface area of the land spans 37,475 m2 and, at the height of the pre-crisis boom, it was worth €75 million, according to El Confidencial. The plot has been put up for sale before, on up to five occasions, without success for the Spanish capital’s Town Hall. Now, and despite the clear decrease in market prices, the EMT has managed to improve the asking price with which it started the auction a month ago by 21%.

Located in the neighbourhood of Buenavista, interest in the plot has changed sharply over the last decade. The first auction for the plot was held in 2006, when besides the company chaired by Marco Colomer (Pryconsa), the EMT also received offers that were significantly higher than the current one from several other large real estate companies, some of which no longer exist. Back then, possible suitors included Colonial, Reyal Urbis, Sacyr, Fadesa and Agofer, the property developer owned at the time by Juan Antonio Gómez Pintado, the current boss of the emerging Vía Célere.

Original story: Eje Prime

Translation: Carmel Drake

 

Town Hall of Madrid Puts Plot up for Auction for €16M

19 December 2017 – Eje Prime

The Town Hall of Madrid is putting a plot of land up for sale. Through the company ‘Empresa Municipal de Transportes’ (EMT or Municipal Transport Company), the Town Hall led by Manuela Carmena has convened an auction for a plot of land measuring 37,475 m2, for which it is asking a minimum price of €16.3 million.

The land, located in the district of Carabanchel and owned by the EMT, is allocated for residential use and has a buildable surface area of 26,820 m2, which means up to 268 homes could be built on the site, according to El Confidencial.

The timing of the operation is no coincidence. It comes as no surprise that Madrid is suffering from a lack of developable land, and so more than a handful of property developers are expected to want to acquire the plot. Significant price rises being seen in the Spanish capital, an area that saw some of the highest price increases in the country during the third quarter of the year, of up to 6.8% YoY.

Until 2006, the land housed the EMT’s bus depot in Buenavista and since then, the transport company of Madrid has tried to sell it on several occasions. The closest it came to awarding the plot was in the same year that it abandoned the site when it was asking €75 million for the plot. The auction will close on 9 January 2018 and the identity of the firm that will take over the ownership of this developable land will be announced on 15 January.

Original story: Eje Prime 

Translation: Carmel Drake

Ferrovial, FCC, Acciona & ACS Are Building Houses Again

25 May 2017 – El Confidencial

A decade after they sold or wrote off their real estate arms, the country’s largest construction companies are now returning to the residential property development sector. Ferrovial, ACS, Acciona and FCC have regained their appetite for property and although they have different paces and strategies in mind, they have all definitively decided to revive their real estate divisions.

In the case of the group chaired by Rafael del Pino, which sold Ferrovial Inmobiliaria to Habitat for €2,200 million at the end of 2006, it will lay the first stone of this new strategic phase in Valdebebas. It owns plot 128A there, in what is one of the most important urban planning developments in the north of Madrid, and it plans to build between 200 and 300 homes on the site.

And that is just the tip of the iceberg, given that as the group’s CEO, Íñigo Meirás, acknowledged to this newspaper, the firm “is willing to become a property developer once again”. (…).

This strategy, combined with the gradual recovery in the real estate sector, has allowed residential construction work to account for 5% of the group’s total building portfolio, having closed last year at €442 million, up by 31.7% YoY. The group aspires to increase those numbers, by resuming its property development activity, which has caused it to analyse land operations in different areas to the north of Madrid.

FCC Real Estate also wants to make a similar move. The division, led for the last year and a half by Xavier Fainé Garriga, has decided to start developing half a million m2 of land that it owns in the Madrilenian town of Tres Cantos. The company has owned the plots for years, and its construction division will also participate in their development, along with the real estate subsidiary Realia, which will collaborate on the marketing side. (…).

Meanwhile, Acciona has a more ambitious plan, after it tried, two years ago, to divest its real estate arm, by listing it on the stock market or selling a stake in it to a fund – it has now ended up deciding to return to development. That was recognised by the firm’s Corporate Development Director, Juan Muro Lara, in March, when he announced the launch of 16 housing developments: 13 in Spain and the rest in Mexico and Poland.

In parallel, the group is finalising the transfer of its rental properties to Merlin, in a deal disclosed by El Confidencial in October, which will see the former’s exit from the real estate business. It also wants to push ahead with the sale of its hotels and office buildings through individual operations.

In the case of ACS, the firm is carrying out its strategy in the development segment through Cogesa, the historical subsidiary of the group, which stands out because it is the owner of the group’s two main corporate headquarters, the office buildings located in Las Tablas and on Avenida Pío XII in Madrid, and for owning sizeable land portfolios in areas such as Montecarmelo, Arroyo Fresno, Las Tablas, Carabanchel and Ensanche de Vallecas.

The turning point for this subsidiary, which is led by the brother of Florentino Pérez, Enrique, came two years ago, when it carried out a capital increase amounting to €44 million and then acquired one of the last plots of residential land in Montecarmelo for €2,200/m2. That figure turned the operation into one of the most onerous since the burst of the bubble, but is now seen in a very different light. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

TH Real Estate Launches €250M Logistics Asset Fund

19 October 2016 – Expansión

The management company TH Real Estate, which owns a dozen properties in Spain, including the Islazul shopping centre, has launched its second investment fund, which will be fully dedicated to the purchase of logistics assets in Spain, France, The Netherlands and Italy.

This fund, known as the EI European Logistics Fund (EIof) has already secured more than €200 million in funding since its launch in March. The objective is to raise €250 million by the end of the year. “Current investors include pension funds, insurance companies and banks, amongst others, which comprise a group of between eight and ten investors”, say sources at the management company.

The objective of EIof is to create a portfolio of around €400 million with assets located in the aforementioned four countries. “Following the close of this new vehicle, we are now active in the Spanish market looking for opportunities in the logistics segment, where we already manage more than 40,000 sqm of space”, said Marta Cladera, the new Director of Business at TH Real Estate for Spain and Portugal, who was appointed on 13 October.

From its office in Madrid, TH Real Estate manages a portfolio in Spain worth more than €1,000 million and the jewel in its crown is the Islazul shopping centre. Located in the neighbourhood of Carabanchel, it is one of the most iconic establishments in the country, with a retail surface area of 90,000 sqm. TH acquired the property in 2014 for €232 million, and whereby starred in one of the operations of the year.

In addition, the management company owns shopping centres in Getafe (Madrid), Sevilla, Fuengirola and Vigo and a logistics platform in Madrid. In August, the firm divested the L’Aljub shopping centre in Elche, which it sold along with two shopping centres in Italy for €250 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Residential Investment: Which Are The Most Profitable Districts?

30 May 2016 – Expansión

Madrid and Barcelona are pulling the real estate wagon. The recovery is happening at two speeds, at least. On the one hand, house prices are rising in the large cities, where sales volumes are also increasing significantly, rental prices are growing, non-residential investment is on the up and there is a shortage of land available for sale.

Most of this improvement in due to underlying macroeconomic trends, but not all of it. The impact of private investors is playing a crucial role in the strengthening of the two large real estate regions, whose central areas are the most sought-after by investors, both businesses and individuals, and Spaniards and foreigners alike.

The prime districts of the Madrid and Barcelona offer the highest rental yields for those looking to buy homes as investments. If we also include the appreciation that these properties are experiencing in terms of price, then the total return on these homes exceeds the 10% threshold.

That is according to a report about rental yields, by district in Madrid and Barcelona, prepared by Fotocasa.

The analysis of the Madrilenian capital concludes that the districts that spark the most interest for rented housing are: Centro, Carabanchel, Tetuán, Puente de Vallecas and Latina. They currently offer an average yield of 6%, almost one percentage point higher than the average return in Spain, which stands at 5.3%. The yields offered from rents in these districts range from 4.9% in Centro to 7.4% in Puente de Vallecas.

In Barcelona, the gross yield from buying a home and putting it up for rent (excluding capital gains) is 5.3%, in line with the national average. The districts that are most sought-after by investors in Barcelona are: L’Eixample, Sant Martí, Ciutat Vella and Gràcia, which are currently generating an average return of 4.7%, i.e. 1.3 points below the yield being offered by an average home in the most sought-after areas of Madrid. In any case, the prime returns range between 4.2% in L’Eixample and 5.3% in Ciutat Vella. (…).

Double-digit price rises

In terms of prices, nine of the 10 districts in the Catalan capital recorded double digit increases in 2015. “Within the last few months, we have seen unheard of increases in rental prices in the city of Barcelona. Whilst historically, the Madrilenian district of Salamanca was the most expensive place to rent a home in Spain, now that ranking is led by the Catalan district of Ciutat Vella, after prices there rose by more than 20% YoY. In fact, Ciutad Vella is currently 11% more expensive than the Madrileñian district of Salamanca”, said Beatriz Toribio.

“The high demand for rental housing in the most central areas of the city, and the limited supply of homes, are combining to cause rental prices in Barcelona to rise to record breaking levels. They are even causing rental prices in less central areas, such as Sant Martí and the district of Horta Guinardó, to see double-digit YoY increases in rental prices”, added Toribio.

The most sought after rental properties in Madrid are smaller than the most sought after properties for purchase. Whilst to buy, the average home measures 80 sqm and has two or three bedrooms; to lease, the average home has a surface area of 57 sqm and two bedrooms. The same thing is happening in Barcelona: the average home to buy measures 80 sqm, and has between two and three bedrooms. Nevertheless, to rent the average house size is 60 sqm with two bedrooms.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Strong Recovery In Madrid’s Market For New Homes

14 July 2015 – Cinco Días

The lack of new housing developments in Madrid in recent years means that the few blocks that have been built are being sold quickly, as the economic environment improves. So much so that the marketing company Foro Consultores has conducted the first comprehensive study of the new build segment, which not only estimates the size of the stock of new homes in the capital, it also calculates when that stock may be depleted if the current strong rate of sales continues.

The study, based on visits to all of the developments currently for sale and simulations of purchases or direct surveys at the sites, has focused on analysing the existing supply in new urban developments (Arroyo del Fresno, Montecarmelo, Las Tablas, Sanchinarro, Valdebebas, El Cañaveral, El Ensanche de Vallecas and Carabanchel), since those are the areas where the new builds are concentrated. Whole new buildings are the exception rather than the rule in the city centre and in the city’s more established neighbourhoods.

Foro Consultores begins its report by highlighting the number of new homes: currently the stock of new homes available for sale in Madrid amounts to 1,770, of which 781 are “free” and 989 are social housing (VPO) homes. That figure represents just 20% of the total number of buildings that have started to be built since 2010. Moreover, we are talking about very small numbers if we take into account that the study has analysed 102 developments in total, containing 4,001 “free” homes and 3,861 social housing homes, almost 8,000 homes, which came onto the market in recent years as turnkey properties or homes sold off-plan.

4.1 homes sold per development per month

The uptake of homes by region is not uniform. More than half of the new homes built in El Cañaveral, in the south of the city – the last development to get underway – have not yet been sold. Meanwhile, in other new neighbourhoods, such as Montecarmelo, less than 5% of the new homes or those under construction remain unsold. Furthermore, in Ensanche de Vallecas in 2007, there were almost 3,000 unsubsidised new homes for sale, but now there are just 166 left.

As well as the scarcity of supply due to the construction paralysis in recent years, one of the keys that explains the fast absorption of the stock is the acceleration in the rate of sales in recent months. Foro Consultores estimates that if no new developments come onto the market, then the excess would be depleted in just six months, at the current sales rate of 4.1 homes per development per month.

The study highlights that these 4.1 homes sold (per development per month) represents the sale of 5.3% of developments every 30 days, an average rhythm that has not been seen since 2003, and for unsubsidised housing, that figure is almost 5 homes per development per month, whereas during the crisis, it never exceeded one unit per month.

The study also shows that 79% of the developments on the market were started between 2010 and 2015, and of those 77% have already been sold.

In terms of prices, the report also highlights that in certain developments in El Cañaveral, the price of unsubsidised homes is lower than the price of VPO homes, which is not very typical in Madrid. “This shows that the social housing pricing model is out of synch with the market and that the promoters of unsubsidised homes have adapted better to the changes in conditions”, explained Foro Consultores.

In the areas analysed, the absolute prices of unsubsidised homes ranges between €77,000 and €657,000, with an average price of €273,021. Meanwhile, the prices of VPO homes range between €38,474 and €382,652, with an average price of €150,721.

Finally, the study concludes that by type of home, three-bedroom houses are in most demand. Meanwhile, the construction of studios and small flats, which were so fashionable during the boom, is now reducing.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Idealista: Rental Prices Rose By 1.8% In Madrid In Q1

8 May 2015 – El Confidencial

The property crisis; the difficulties faced by thousands of citizens when it comes to buying a home; and the havoc wreaked by evictions have all resulted in a significant boost to the (residential) rental market in Spain. Over the last seven years, many citizens and families have been forced out of the property market and, given their need or desire to become independent or start a family, their only exit has been through the home rental market.

Thus, although owned homes still win by a landslide over rented homes – 78% to 22%, i.e. a very similar level to the one seen at the end of the 1980s – the fact is that in recent years, the balance has tipped a little less towards the property side and although, many experts consider that it is unlikely that we will reach the levels seen in other parts of Europe, where rental properties account for 50% of the residential market in some countries, it is clear that something is changing. “The rental market is here to stay and not just as a lifestyle option, but also as an investment”, says Fernando Encinar, Head of Research at idealista.com.

The rental market in the Community of Madrid is showing the first signs of recovery, as too is the sale and purchase market. Similarly, some areas are sparking greater interest than others in terms of demand, which, in turn, is starting to create a certain amount of tension in terms of prices.

The differences between neighbourhoods are clear. It does not cost the same to rent a flat in the centre of the capital or in the neighbourhoods of Chamberí and Salamanca, where the price per square metre is around €14/m2 (€1,120 for an 80m2 flat) as it does in Villaverde, Carabanchel or Puente de Vallecas, where the price per square metre barely exceeds 8€ (640€ for an 80m2 flat).

These price differences are explained, in part, by the location of the homes – clearly, it does not cost the same to live in the centre of the city as it does in the suburbs – but also due to the excess supply, in places such as Carabanchel and Vallecas, and the strong demand, in areas such as Sanchinarro and Las Tablas, where the experts detect a lot of activity due to the presence of Telefónica and the future arrival of BBVA.

(….)

The tension in terms of rental prices is palpable. Madrid ended the winter with a quarterly increase in rental prices of 1.8%, taking the average price per square metre in the capital to €11.60, however, that represents a cumulative decrease of 15.8% from its record high of €13.80/m2 in 2008.

Moreover, during the first three months of the year, the increase in rental prices was generalised, with rises in almost every district in Madrid, with the exception of Villa de Vallecas and the neighbourhood of Salamanca, according to the data from idealista.com, which also reflects significant increases in the districts of Barajas (5.8%), Retiro (4.7%) and Hortaleza (3.6%).

(….)

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

New Investment Formula: Buy-To-Let Cooperatives

5 March 2015 – Expansión

Investing in the Spanish real estate sector has been not only an option, but almost an obligation for large investors in recent years, both Spanish and international. But, what about small savers? Do they have any options left to fall back on?

Away from the real estate companies that are listed on the stock market, there is an investment proposal that involves buying homes to let them out. Nevertheless, this model has not been operated on a professional basis in the past. Now, the Spanish company Alquiler Seguro, which specialises in the management of rental contracts for both tenants and landlords, has decided to launch a cooperative project involving homes intended for rental, which are designed precisely for that purpose from the outset. “Last year, we realised that our most frequent transactions involved clients who were owners of some properties and at the same time, tenants of others”, explains Gustavo Rossi, Chairman of Alquiler Seguro. “A change is happening in the market, whereby young people, who are accessing housing through the rental market, are becoming good savers whilst also being tenants”, adds Antonio Carroza, CEO of the company.

The executives of Alquiler Seguro propose that these tenants use their savings to purchase homes, for an average price of €120,000, which offer investment returns after 18-24 months (the time taken to construct the properties). “These are homes that are designed to be rented out; they are expected to generate returns of between 3.5% and 6% and achieve an investment return within ten years”, says Carroza.

Currently, the company has two developments underway, both located in Madrid, in the neighbourhoods of Carabanchel and López de Hoyos. “We have chosen areas where there is demand from tenants and prices (of the properties) are affordable”.

Both developments offer financial support. “Our model is 50% equity and 50% bank financing. Entities are willing to subsidise some of the land purchase since the properties have (already) been sold to the cooperative members”.

“In the case of these two projects, each investor has acquired one home, but the goal is to move towards a model that does not involve horizontal divisions, but rather one in which many investors buy the whole development. We already have several plots of land in our portfolio that we intend to develop in this way”, says Rossi.

It is not the only buy-to-let investment project that the company is working on. “We are also evaluating the possibility of creating a Socimi, where investors contribute assets instead of capital but, at the moment, that is not a profitable model, due to the expenses associated with municipal gains”.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake