Telefónica to Close & Sell Off 650 Telephone Exchanges between 2018 & 2020

16 March 2018 – Cinco Días

Telefónica is continuing its intense level of activity in the management and disposal of its assets (…). In this way, the telco has recorded an impact on Operating Income Before Depreciation and Amortisation (OIBDA) of gains from the sale properties in Spain of almost €180 million over the last three years. This maximisation in the value of these assets has generated a positive impact on the profitability of the company during a period marked by strong competitive pressure. In other words, these sales have helped to improve the results on firm’s income statement.

According to the company, in the accounts for the last three years, the impact of gains from the sale of properties in Spain exceeded €35 million in 2017 (…), €71 million in 2016 and €73 million in 2015.

In recent times, Telefónica has focused a large part of its real estate activity on adapting its infrastructure to the real needs of the business. In this sense, the most recent drive has been motivated by the process to shut down copper exchanges, accelerated by the migration of clients from that traditional technology to new fibre optic networks, which the company has rolled out right across Spain. With this change, those facilities are no longer necessary for the operations.

And this process is going to continue to the extent that more copper exchanges are closed, in accordance with the company’s plans. Thus, the operation may accelerate the sale of these facilities, which in many cases are located in important buildings in central areas of provincial capitals and other cities.

Overall, Telefónica plans to close 650 copper exchanges in total right across Spain between 2018 and 2020, as part of its program to modernise its infrastructure and shut down the ageing networks, according to explanations provided by the group at the recent presentation of its results for 2017.

For example, the telco has put up for sale the exchange that it owns in Gijón, in the heart of the shopping district of the Asturian city, for a price that could reach €12 million, according to reports in the local press.

In any case, its sales in recent times have affected different types of buildings. According to sources in the sector, in recent years, Telefónica has sold iconic buildings in cities such as Madrid, Barcelona, Valencia, Bilbao, Santander, Tarragona and Zaragoza.

Sources in the sector also indicate that the gains (from future sales) may be high given that in many cases the buildings are old, and were acquired or constructed by the company a long time ago.

Amongst other movements in the real estate segment, in 2016, the operator sold several buildings in Madrid, Barcelona, Santander and Zaragoza to Beach Bienes Inmuebles for almost €50 million.

In turn, at the beginning of 2017, Telefónica sold a building in the Argüelles neighbourhood of Madrid to the British real estate group Princeton Investments for almost €25 million (…).

Original story: Cinco Días (by Santiago Millán Alonso)

Translation: Carmel Drake

Ministry Of Development: Urban Land Prices Rose By 6.6% In Q2

16 September 2016 – Expansión

The market for urban land is starting to show signs of recovery. The price of plots of land rose by 6.6% during the second quarter of the year, to amount to €163.4/sqm. It is the best figure since Q4 2012, although it is still light years away from the peak recorded in 2007, at the height of the real estate boom, when prices reached €285/sqm.

One of the main conclusions coming out of the statistics published yesterday by the Ministry of Development is that, thanks to the real estate pull in the capital and Barcelona, the Community of Madrid and Cataluña account for almost half of the market for urban land. Specifically, they accounted for a total sales volume of €351.9 million, i.e. 47% of the total volume for Spain (€751.1 million). This most recent figure is 21.7% higher than a year ago. The total surface area sold in Spain amounted to 5.6 million sqm, up by 7.7%.

The total value of land sold soared by 85% in Barcelona and by 11% in Madrid.

The number of transactions grew by 16% YoY across Spain. In April, May and June, 4,435 plots of land were sold, compared to 3,819 during Q2 2015. The most significant increase was recorded in municipalities with more than 50,000 inhabitants, where sales rose by 20%. In towns with between 10,000 and 50,000 inhabitants, there were 1,580 transactions, up by 24.6%.

In municipalities with more than 50,000 inhabitants, the highest average prices were reported in the provinces of Barcelona (€485/sqm, equivalent to triple the average for Spain), Madrid (€456/sqm) and the Balearic Islands (€373/sqm). The lowest prices were recorded in Guadalajara (€72.6/sqm, less than half the national average), Cádiz (€100/sqm) and Tarragona (€101.4/sqm).

Prices rose by just 0.1% in the cities, given that Madrid pushed down the statistics with a decrease of 14%. According to the real estate consultant, José Luis Ruiz Bartolomé, that is a result of the comparison with data from 2015, when “there was very little urban land available in Madrid, and investors sought refuge in plots of land in the most solvent areas, whilst this year land sales have spread across the whole city and are no longer limited to just the central areas”.

In Barcelona, the increase in land prices amounted to 3.5% during Q2 2016.

The Ministry of Development also published statistics yesterday about the appraisal value of unsubsidised homes, which rose by 2% YoY to €1,506.4/sqm in Q2 2016.

After 26 quarters of YoY decreases in house prices, which began at the end of 2008, “this data represents the fifth consecutive quarter of nominal price increases”, said the Ministry. In real terms, in other words, accounting for the effect of inflation, the increase amounted to 2.9%.

Ten autonomous regions reported YoY increases, led by the Balearic Islands (+5.9%), Madrid (+4.8%), Cataluña (+4.6%), the Canary Islands (+2.9%), Extremadura (+2.4%), Ceuta and Melilla (+2.3%) and Galicia (+1.4%). By contrast, the other regions reported YoY decreases – in appraisal prices, not in sales prices – led by Navarra (with a decrease of -2.2%), Aragón (-1.9%), País Vasco (-1.7%) and Cantabria (-1.3%).

House values are now 28.3% lower than their maximum levels, reached during Q1 2008. (…).

Original story: Expansión (by Juanma Lamet)

Translation Carmel Drake

Real Estate Invesment In Madrid Tripled In 2014 To €3,600M

16 March 2015 – Yahoo Finance

Real estate investment in Madrid tripled in 2014, to reach €3,600 million, compared with €976 million in the previous year, according to a study conducted by BNP Paribas Real Estate.

In addition, office rentals in the capital have risen for the first time since 2008, with an increase of 10% with respect to the previous year, due (mainly) to “prime” income, which reached €312/m2 per year at the end of the year.

In the meantime, investment in Barcelona also increased, although to a lesser extent (by +9%), to amount to €1,300 million in 2014. Similarly, the city registered record office rental figures, exceeding the levels achieved in 2007 by 18 basis points.

In this line, the study highlights the recovery in the markets that were hit the hardest by the crisis: in Dublin and Madrid, for example, investment increased by 120% and 278%, respectively (last year). London, which recorded a slight decrease with respect to 2013, attracted the highest volume of investment in Europe, with almost €30,000 million, followed by Paris, where investment amounted to €17,000 million.

(Across Europe), investment in non-residential real estate increased to €108,000 million, of which €74,000 million related to offices, a volume that made last year the best year since 2007.

Office leases increased by 10% in Europe

Office leases in Europe increased to reach 11.7 million square metres in 2014, i.e. 10% higher than in the previous year, driven by growth in Paris, Berlin and Brussels.

The study reflects that the improvement in economic conditions and the labour market in 2014 had a positive affect on the office market in Europe. In this way, the return of large transactions has contributed to good results in most markets.

As in previous contexts, the main drivers of demand were reductions in costs and rationalisation; similary, users maintained their preference for new buildings in good locations.

Despite the significant increase in office leases, the average vacancy rate in the 35 cities analysed decreased by 10 basis points only and is still above the threshold of 10%. These levels are possible because the reduction in available space was in partly offset by a higher volume of new developments and the freeing up of second hand space as users relocated, according to the real estate consultant.

However, the lack of supply in central areas has kept rents under pressure in the case of ‘prime’ category buildings. As a result, average ‘prime’ (rental) income increased by 3%, driven by increased activity in rising markets, such as London and Dublin.

By contrast, rentals in peripheral districts evolved in the opposite direction, as they continued to suffer from high vacancy rates, which forced owners to offer incentives to prevent price decreases.

Original story: Yahoo Finance

Translation: Carmel Drake