Tag: Deloitte

Barings Acquires Five Office Buildings in Avalon Business Park in Madrid

    

Barings Real Estate has acquired five office buildings within Avalon Business Park, Madrid, Spain, as part of a Pan European value add investment strategy on behalf of an institutional investor. The seller is Meridia Capital. The five office buildings comprise 24,495sqm and are best in class in this submarket. The buildings are 97% occupied with more than 20 tenants mainly from the IT/technology and engineering sectors. Additionally, there are 1,291sqm of retail space and 421 underground parking spaces.

The Avalon Business Park comprises in total nine office buildings with 46,952sqm. The business park is located in Julian Camarillo, a 950,000sqm, consolidated office sub-market within the city of Madrid, one of the largest submarkets in terms of take-up in 2018. Formerly an industrial area, Avalon Business Park has already undergone big changes in the past years. It is in very close proximity to the city centre and the airport (15 minutes by car to each). The metro station is within eight minutes walking distance, and the property is served by several bus lines.

“We are delighted to announce our seventh acquisition in Spain and our first investment in the Madrid office market, where we see significant rental and value growth over the coming years. This is a new milestone in the development of our investment strategy in the Iberian Peninsula after a significant capital deployment in both the retail and the logistic markets. As our local team grows, we continue broadening our investment horizon, not only across different asset classes but also in terms of risk profile, from core product to value-add and opportunistic transactions,” Adolfo Favieres, Country Head Real Estate, Spain at Barings, said.

Barings was advised by Dentons (Legal), Deloitte (Financial), Arcadis (Technical) and Knight Frank (Valuation). Meridia Capital was advised by Garrigues and Savills Aguirre Newman.

Sevilla: The Slow Re-awakening of the Real Estate Sector in the Andalucían Capital

2 August 2018 – Eje Prime

Sevilla, the third largest Spanish city by population, is seeing the first signs of recovery in its residential market (…).

The capital of Andalucía, which is home to almost 690,000 inhabitants, has seen its population decrease on a gradual basis since 2012 when it exceeded 702,000 inhabitants. The slow but progressive decline of the population is probably one of the reasons why house prices have not risen there and why new builds account for an all but residual percentage of the market.

Nevertheless, some of the data does indicate that Sevilla is jumping on the bandwagon in terms of the improvements in the real estate market that are being seen across Spain: a sharp increase in prices in 2017, an on-going rise in sales and, finally, investment in the city by groups of the calibre of Habitat and Ayco.

The city of NO8DO, Sevilla’s traditional motto, saw its population peak at 710,000 inhabitants in 2003, before falling below the 700,000 threshold in 2007. That figure rose above 700,000 again in 2009 before reaching a decade high of 704,000 in 2010, but it has fallen continuously since then to the current figures.

Real estate dynamism

Despite that, the dynamism in terms of house purchases has been considerable in recent years. In 2013, operations in the sector were still registering strong decreases, with a fall that year of 24.4% to just 4,715 house sales. However, the rises have been unwavering since then: up by 12.1% in 2014; 11.3% in 2015; 15.1% in 2016 and 14.1% in 2017, with a total of 7,732 sales.

According to data from the Ministry of Development, during the first quarter of this year, 2,234 house sales were recorded in the city, of which more than 95% corresponded to second-hand homes. With just 98 sales, new homes accounted for just 4.4% of the residential activity during the first quarter.

Nevertheless, and despite this growing activity in terms of sales, residential prices in Sevilla remain stagnant. In recent years, average appraisal prices per square metre in the fourth quarter of each year have decreased steadily, with the exception of 2014 only, when they rose by a measly 0.3% (…).

Currently, house prices amount to €1,468.70/m2 on average (€1,754,40/m2 for new builds and €1,464/m2 for homes aged five years or more). That value is 26.3% lower than the prices in Sevilla in 2012 and 35.9% lower than the peaks of 2007, before the outbreak of the crisis, when the average house price amounted to €2,316.10/m2.

Governed by the socialist Juan Espadas since June 2015, the weight of social housing in the city is greater than that of many other Spanish cities, at least based on data for the first quarter of 2018. In this sense, 177 of the purchases recorded in the city between January and March involved social housing properties, which accounted for 7.9% of the total.

New projects

Habitat is one of the companies that has invested in the Sevillan market this year. In July, the property developer announced a €30 million investment in a new development in the Andalucían capital comprising 199 homes. The acquired land is located in Mairena del Aljarafe, one of the fastest growing areas in the local residential market (…).

Another active player in the city is Ayco, which has acquired a batch of buildable plots this year in the municipality of Camas (Sevilla). In total, that company has purchased land spanning 18,000 m2, where it plans to build around 200 homes.

Another emerging business for the city is the office market, which closed 2017 with 919,173 m2 of space leased, up by 4% YoY, and approaching the records of 2013, according to a report by the Sevilla-based consultancy Inerzia (…).

In the commercial sphere, the Torre Sevilla project is the most important in the city at the moment. Six years after inheriting this macro-project, CaixaBank has let 100% of the office space and the shopping centre is on the verge of opening its doors.

Aenor, Deloitte, Everis, Orange and the Chamber of Commerce are some of the entities present in the 18-storey office block, which account for just half of the skyscraper. The rest of the tower is occupied by a hotel managed by Eurostars, belonging to the Hotusa Group.

Original story: Eje Prime (by C. De Angelis)

Translation: Carmel Drake

Deloitte: 173 New Hotels will Open in Spain Between Now and 2021

9 June 2018 – Expansión

The tourist boom and interest in the real estate sector have boosted the hotel segment. So far this year, operations amounting to €2.4 billion have been closed and an acceleration is forecast for the coming months.

Spanish hotels are standing out as one of the most sought-after assets for investors in the real estate market. The tourism boom in Spain, which recorded its fifth consecutive record year in 2017 with the arrival of 82 million international visitors, coupled with the property boom, caused hotel investment to reach maximums in 2017 of almost €3.1 billion. Moreover, the commitment from investors to these assets will allow that figure to double this year.

According to data from the Hotel Property Handbook, compiled by Deloitte, to which Expansión has had access, €3.1 billion was transacted in the segment last year, which represents an increase of 44% YoY and accounts for 22% of all the investment activity undertaken in Europe, placing Spain at the head of the investment ranking behind only the United Kingdom, which accounted for 29%.

During the first five months of this year, more than €2.4 billion has been invested, which will be added to operations currently under negotiation amounting to around €4.2 billion, which are expected to close over the coming months, according to the study.

“So far this year, we have transacted an investment volume almost as high as that signed during the whole of last year. The private equity funds are proving to be the main stars of the activity, which may even double the figure recorded in 2017”, said Javier García-Mateo, Partner at Deloitte Financial Advisory.

Loans

That is in addition to the strong appetite from traditional Spanish credit institutions to finance hotel properties, due to the momentum of the sector. Their financing spans projects under development, including remodellings, repositionings and developments. In this sense, the most active banks in terms of senior lines of credit for these assets are CaixaBank, Santander and Sabadell.

Investors are betting on mega-operations and the creation of large portfolios, which will allow them to have a diversified business and gain bargaining power over tour operators.

This trend comes in addition to the interest from Asian players in hoisting their flags in Spain. For example, the emergence of the Thai group Minor in NH Hotel Group, which has reached an agreement to purchase HNA’s stake in the Spanish hotel chain and is studying a takeover bid for 100% of the company.

In this context, the large hotel groups have taken advantage of the boom years to invest in improvements in their asset portfolios although there is still a long way to go. The opening and renovation of hotels consolidated itself in 2017, with activity involving 74 hotels and 12,500 rooms, reaching cruising speed following a significant recovery in 2015 and 2016, with projects in 120 hotels and almost 17,300 rooms.

Over the next five years, investment in work to adapt the hotel stock is expected to amount to €2.2 billion.

According to the report, 65% of the hotel stock in Spain is obsolete, with an average age of more than nine years, which makes investment in capex the main priority if operators are to handle the competitive pressures and achieve better margins.

“The strong growth in tourism in Spain contrasts with average rates that are still excessively low in the holiday segment. The renovation of obsolete projects, combined with the arrival of international operators, will allow the repositioning of an offer that ought to compete on quality rather than quantity”, explains Viviana Otero, from Deloitte Financial Advisory.

By region, the Canarian archipelago, Andalucía and the Balearic Islands are the regions that require the greatest capex spending, accounting for almost 68% of the total.

This effort has contributed to an improvement in the main performance ratios of hotels. According to Deloitte, revenues per available room (RevPAR), one of the main profitability indicators, grew by 10% last year.

New openings

The strong performance of the sector also accounts for the new promotions and project renovations underway. Over the next four years, 173 hotels are expected to be opened in Spain containing almost 30,000 rooms. “53% of those will be new projects and 47% will be renovations. It is worth highlighting the importance that rebranding is gaining as a defensive strategy against the alternative destinations of Greece, Turkey and Croatia, said Patricia Plana from Deloitte Financial Advisory.

In terms of challenges facing the sector, the report highlights the saturation of certain destinations in the summer and the problems of co-existence alongside local residents in those regions, as well as the recovery of competitor countries in Southern Europe and the rise of holiday rentals boosted by collaborative economy platforms such as Airbnb.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Valencia CF Expects to Receive c. €100M from Sale of Mestalla Plot

4 June 2018 – Expansión

Valencia Football Club (Valencia CF) is making progress with the financing for its new football stadium. Market sources estimate that the club could receive proceeds of more than €100 million from the sale of the land on which its current Mestalla stadium is located, a site between the sought-after avenues of Aragón and Suecia.

The sale of that plot, known as the old Mestalla and with buildability for residential and tertiary use, could materialise before the end of 2018, taking advantage of the good times in the real estate market. The plot measures 12,000 m2 and has a buildable surface area of 70,000 m2.

That amount would allow Valencia CF to partially finance the completion of the construction of its new site, where it has fixed assets in progress worth €115 million, and to reduce the debt that it currently holds with financial institutions and which amounts to around €185 million. It also holds liabilities with the public administrations.

The work on this construction site began in August 2007 but was suspended in February 2009, which means that the project has been paralysed now for almost a decade. Since then, several attempts have been made to restart it, but those efforts have always been postponed due to the need for financing.

The club has decided to accelerate its plans to move to the future Mestalla and push ahead with the reduction in its debt and the clean up of its balance sheet to focus on its sporting efforts. Only the arrival in December 2014 of the Singaporean magnate Peter Lim saved the team from bankruptcy, which has recorded losses of €60.2 million in total over the last three years, in large part due to this real estate expenditure. Losses are also forecast for this year.

In this context, the President of Valencia CF, Anil Murthy, now considers that “the real estate market has evolved enough to meet our objectives”. Thus, the club is going to continue working with the Town Hall to process the amended licences to start the building work.

Inauguration: in 2021

Murthy said that for this process, Valencia CF has engaged Deloitte, which will be its comprehensive advisor in all aspects financial, real estate, technical and economic relating to the entire process necessary to move to the future stadium within the timeframes set out in the Valencia Strategic Territorial Action Plan.

In addition, Deloitte will be responsible for the business plan and sale of the tertiary space in the new stadium, which will have more than 40,000 m2 of buildable space available for commercial use (…).

Original story: Expansión (by E. S. Mazo & R. Arroyo)

Translation: Carmel Drake

Spain’s Property Development Sector Will Continue its Expansive Cycle for the Next 3 Years

30 May 2018 – Eje Empresas

The CEO of Neinor Homes, Juan Velayos, has highlighted that the “healthy and strong bullish cycle” that the property development market is experiencing at the moment, will result in a “positive” performance over the next three years, before reaching “a situation of stability lasting many years”.

The main challenge (facing the market) is to “become more predictable”, in aspects such as the time it takes to obtain licences, a problem that may be resolved because “the market is going to continue helping”, according to Velayos.

The Director of Strategy and Investment at Aedas Homes, Sergio Gálvez, explained that the situation in the property development sector is “unique” given that it is recovering from “a very low level”.

The Executive President of Inmobiliaria del Sur, Ricardo Pumar, agrees that “the macroeconomic forecasts point to a very good situation for the next three years”.

Pumar stressed that the recovery is “widespread” but he has opted to facilitate access to housing for young people to “boost the whole sector”.

The President of Quabit Inmobiliaria, Félix Abánades, predicts that the expansion cycle “will last for six years” and he agreed that there will be “significant increases in prices” over the next three to four years.

The market for property developers is clearly expanding and growing with a very “solid” demand, he added.

Investors back the property development sector

The Partner at the consultancy firm Deloitte, Alberto Valls, highlighted that “investor appetite continues” but is still a long way off the levels seen before the economic crisis.

“There are barriers to entry, such as capital, the lack of available land to build on and the limited production capacity”, he said.

He said that half of the property development market is concentrated in Madrid, Barcelona, Alicante, Málaga and Valencia.

The Spanish sector is more fragmented than those of other European countries, given that the top five property developers account for just 6% of the market, whereas in the UK and France, they represent around 40%.

Nevertheless, Valls pointed out that “the trend is towards corporate concentration and the stock market debut of new players”.

Original story: Eje Empresas

Translation: Carmel Drake

Deloitte: Spain’s Logistics Sector is Hot Property Thanks to the ‘Amazon Effect’

18 May 2018 – Expansión

Investment funds want to take advantage of the collateral effects that the boom in e-commerce is going to have in the real estate market by taking positions in a segment with great potential, namely: the storage of goods and products. The logistics segment has become the “golden girl” of the real estate sector and one of the favourites of investors boosted by strong yields and the expectations of business growth. In this context, Asian investors have placed their focus on the European logistics market.

According to the Logistics Property Handbook compiled by Deloitte, last year, investment in logistics assets in Europe recorded a milestone with €42.5 billion of assets transacted, thanks to mega-operations such as the purchase by China Investment Corporation (CIC) from Blackstone of the Pan-European platform Logicor for €12.2 billion, and the acquisition of the European platform Gazeley by Global Logistic Properties (GLP), headquartered in Singapore, for €2.4 billion.

Mega-operations

In Spain alone, investment in logistics assets amounted to €1.63 billion, which represented a 75% increase compared to the previous year, and a historical record, due to significant transactions involving logistics portfolios. CIC’s purchase of Logicor implied a transaction volume of €652 million in Spain. Meanwhile, P3 Logistic Park – owned by the Singapore sovereign fund, GIC – purchased 11 assets from Green Oak in Spain for €243 million. Those operations boosted investment to historic levels.

Moreover, last year, Mango sold its logistics centre in Palau-Solità I Plegamans (Barcelona) to the fund manager Invesco for €100 million. That transaction was the largest involving a single asset in Spain and the fourth-largest in Europe.

According to the forecasts in the report, operations in the pipeline, which may be closed this year, already amount to €980 million.

“The large institutional funds that aspire to lead the logistics sector in Europe and around the world are bidding hard to accumulate the largest logistics surface area possible during this economic cycle. The location and size of their international logistics platforms are the two key variables for exercising greater negotiation power and whereby obtain the highest rents from operators”, explains Javier García-Matro, Partner in Financial Advisory at Deloitte.

Despite the record investment figure recorded last year, the volume of assets transacted in Spain represents just 4% of the total European market. “This fact is proof of the growth potential of these types of assets in our country. In 2017 alone, 865,000 m2 of logistics space was handed over in Madrid, Cataluña and Valencia. The strong demand of the current cycle is causing logistics promoters to develop more than 2 million m2 of land in these markets, in both turnkey and speculative projects”, says García-Mateo.

One of the major players in the sector is the Socimi Merlin, which has placed logistics asset at the centre of its growth strategy. Merlin’s expansion plan involves the development of land and turnkey construction, a roadmap that has allowed it to become one of the leaders in the sector in just four years.

The main players

Merlin has 2 million m2 of logistics land, both in portfolio and under management, and its plans involve increasing that volume to 3 million m2 before the end of the economic cycle. Specifically, it plans to spend around €250 million on logistics development over the next four years.

Another important player is Logicor, the Pan-European platform, which has been controlled by the Chinese group GIC since last year and which owns 1.2 million m2. Meanwhile, the alliance formed by the real estate manager CBRE GI and its local partner Montepino is going to develop a portfolio of prime assets in the main geographic areas of Spain with a planned investment of around €300 million.

They are joined by the European giants Prologic and the platform P3 Logistic Parks, which own 900,000 m2 and 400,000 m2, respectively, as well as the European investment group VGP, which owns almost 400,000 m2 of logistics space in Spain.

In terms of the types of assets, the Amazon effect has revolutionised the industrial sector and forced logistics operators to reinvent themselves to adapt to the new needs of clients (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Deloitte: Residential Property Developers Set Their Sights on Consolidation

1 March 2018 – Expansión

The residential sector is on a roll. After years of significant declines in property development activity in Spain, the housing industry recorded its best year since the crisis in 2017, with a total of 500,000 transactions, of which almost 85,000 involved new homes, although the evolution of house sales is still light years away from the levels seen in 2007.

In this context, prices also recovered, recording an increase of 6.6% between 2014 and the third quarter of 2017, albeit with significant differences by province. This recovery in prices came after a cumulative decrease of 27.3% between 2008 and 2014, according to data reflected by Deloitte in its report The Residential Development Handbook. According to that analysis, there are currently 2,150 developments underway, with 114,000 homes being built. Of the total new developments, almost 80% are located in just 10 provinces.

This recovery is happening in the context of a favourable macroeconomic evolution with GDP growth of 3.1% in 2017, a reduction in unemployment and a favourable demographic makeup: Spain has 21 million citizens aged between 25 and 55 years, who may become potential buyers.

Moreover, financing is working in favour of house sales as the banks have opened the credit tap once again, although with greater demands on borrowers and more rigorous controls.

Alberto Valls, Partner responsible for Real Estate at Deloitte, explains that there is “growing unmet demand, which extends beyond the 10 main provinces”. In this sense, sources at the Deloitte have identified 272 hotspots where both demand and prices are growing, unemployment is decreasing and the market dynamics are favourable. “One third of those hotspots are not being covered by any property developers”, explains Gonzalo Gallego, Partner at Deloitte in the Financial Advisory Real Estate team.

These hotspots are located in 158 areas of the country. Specifically, Madrid and Barcelona account for more than 35% of them. In this context, funds such as Castlelake, Cerberus, Blackstone and Värde saw an opportunity in the wake of the recovery and have set up shop in the country. Others, such as Lone Star, have already completed their cycles, and with the sale of its entire stake in Neinor, which has been listed for less than a year, has collected its gains.

For Valls, the Spanish market continues to offer opportunities for investors to create value. “They are continuing to invest through alternative structures: alliances in projects, purchases of property developers and development of platforms for their subsequent debuts on the stock market”, he says.

The Partner responsible for Real Estate at Deloitte also recalls that, despite the creation of new players, the residential market in Spain is “highly fragmented”. And he predicts: “The market for real estate property developers is going to become more concentrated”.

Specifically, the five largest property developers in Spain account for just 6% of the market in terms of units handed over and 12% of the units under development. If we compare those figures with other more mature markets, the Top 5 British property developers account for 39% of the total units handed over, whilst the top five French developers account for 42%, according to data from Deloitte.

Large listed companies

Placing the focus on the large listed property developers, Metrovacesa, Aedas and Neinor, which have a combined stock market capitalisation of €5.2 billion, together, they own a portfolio of land with capacity for the development of 61,500 homes. Their French counterparts Nexity and Kaufman Broad, which have a combined market value of €3.3 billion, own land for the development of 72,100 homes. Meanwhile, the eight largest property developers in the UK, including Persimmon, Taylor Wimpey and Barratt, which have a combined market capitalisation of €37 billion, have potential land for around 300,000 homes.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Corpfin Appoints Ana Granado as New CEO

27 February 2018 – Eje Prime

Corpfin Capital Real Estate has opted for an expert in corporate finance to lead the three investment vehicles that it has in place. The Spanish Socimi has hired Ana Granado (pictured below) as the new CEO of the company.

Granado previously held positions of responsibility at Aguirre Newman and Deloitte. At the real estate company, the director led the corporate finance team for six years and at the consultancy firm, she served for five years as a director of financial advisory in the real estate sector. Moreover, the executive previously worked as an analyst at Santander Investment in the corporate finance department.

Granado is a RICS member and holds a degree in Business Administration and Management, as well as a Masters in Management Skills, both from the Universidad Comercial de Deusto. Moreover, she has completed the Advanced Program in Corporate Finance at the IE Business School.

Corpfin finished 2017 by making new asset purchases for its portfolio. In December, through its vehicles Corpfin Capital Prime Retail II Socimi and Corpfin Capital Prime Retail III Socimi, it acquired two commercial premises, located in Madrid and Vitoria, as reported by Eje Prime. The company is going to invest in up to fifteen more assets and thus plans to spend €100 million between the two vehicles.

Moreover, the company also operates in the real estate business with its vehicle CCPR Retail Parks. That fund targets retail products, primarily medium-sized spaces, with a high management component. According to the group, for that fund, the estimated diversified investment will involve between 12 and 14 operations with an average investment volume of €3 million for each operation, including land, capex, acquisition and marketing costs. Until now, the fund has committed half of its planned investment.

Original story: Eje Prime

Translation: Carmel Drake

Sabadell Considers Selling €1.8 bn Portfolio Whilst it Negotiates with FGD

1 February 2018 – Voz Pópuli

Banco Sabadell is preparing an artillery of divestments over the coming months. The entity chaired by Josep Oliu (pictured above) has been sounding out the market for several weeks now regarding the launch of what would be its largest sale of problem assets to date, worth €1.8 billion, according to financial sources consulted by Vozpópuli.

This operation, which still needs to be approved by the bank’s Board of Directors, would be the precursor to a mega-operation amounting to €12 billion that the entity is considering launching over the next few months, according to Expansión. Sabadell has three mandates granted to launch these divestments in 2018 with Deloitte, KPMG and Alantra.

Nevertheless, these sales have been held up by the Management Committee of the Deposit Guarantee Fund (FGD). The €12 billion that Sabadell wants to sell are precisely those covered by the Asset Protection Scheme (EPA) granted by the semi-public fund during the sale of CAM.

The Management Committee, whose members include bankers from some of Sabadell’s competitor firms, is questioning the sale of the €12 billion because of the hole it would cause in its own accounts. The FGD held equity funds of €1.6 billion at the end of 2016. The same thing is happening with BBVA. In that case, the FGD is considering whether to approve the accelerated sale of assets proceeding from Unnim’s EPA.

Two positions

This story is about two very different positions. On the one hand, Sabadell and BBVA want to bulk sell all of the problem assets that they inherited from the purchases of CAM and Unnim, respectively, in one go. In terms of the danger posed by the end of the EPA, they know that, like happened to Liberbank, when the guarantees end, the unsold assets will affect their capital ratios, by raising the denominator (APRs).

Meanwhile, the FGD is studying the impact that these operations may have and whether the contracts signed at the time allow such accelerated divestments.

Sabadell was one of the most active entities in the sale of problem portfolios last year, with the sale of Project Normandy to Oaktree and Project Voyager to the largest pension fund in Canada.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Experts: Foreign Investors will Continue to Back the Spanish RE Sector in 2018

11 January 2018 – Expansión

The experts believe that the residential sector is going to be the main protagonist of 2018, in terms of both development and investment. The banks are expected to continue their balance sheet clean-ups with more portfolio sales.

The real estate sector is expected to continue to constitute a mainstay of the Spanish economy in 2018 thanks to the growth of residential property development and the commitment from international investors to Spanish property as a safe haven for their investments, according to the experts consulted by Expansión.

For Adolfo Ramírez-Escudero, President of CBRE España, property developers will be some of the most dynamic investors in 2018. “Last year, they underwent an expansionary cycle and, through specialisation and the sophistication of their product, they will continue to increase their prominence in the sector”, he explains.

The CEO of JLL España, Enrique Losantos, forecasts that 2018 will maintain the positive rhythm of recent years and that figures will remain in line with 2017, with a total investment volume of around €13 billion. Losantos also expects that portfolio operations, which were the major stars of 2017, thanks to the sale of assets by Banco Popular and BBVA, will continue to strengthen their position in 2018 (…).

Rents

For Santiago Aguirre, President of the Board of Directors of Savills Aguirre Newman, “we are entering a year of consolidation in terms of the upward cycle that we have been immersed in since 2014. Several segments, such as offices and logistics, have reached maximum leasing levels, nevertheless, we still see potential for rents to reach the maximum levels seen in the previous cycle”.

In terms of investment in tertiary assets, Oriol Barrachina, CEO at Cushman & Wakefield, explains that there is a perception that there will be more liquidity than product, despite caution being erred in light of the local and international uncertainty. “The main difference with respect to the last two years is that one group of buyers, the Socimis, are now also going to be selling assets. For years, they have purchased lots of assets and after generating value from them, they are going to put them up for sale, a fact that will also help to bridge the gap between supply and demand”, adds Barrachina.

Sandra Daza, Director General at Gesvalt, thinks that this year those investors who entered the cycle during the opportunistic period, between 2013 and 2015, will be replaced by long-term investors, such as insurance companies and pension funds.

In terms of trends, Mikel Echavarren, CEO at Irea, considers that residential development will continue to generate news this year, both in terms of land transactions, as well as price rises and the recovery of secondary markets (…).

Humphrey White, Director General at Knight Frank, highlights that Spain is currently at the beginning of an expansion period, with forecast demand of between 120,000 and 150,000 new homes per year, even though it closed 2017 with just 47,500 new home transactions (…).

No sign of a bubble

White considers that the growth in the sector in Spain rests on “some very firm foundations in terms of the law of supply and demand, whereby moving firmly away from a possible real estate bubble”.

For Gonzalo Gallego, Partner in Financial Advisory at Deloitte, buildable land will be one of the major challenges in the property development sector.

In terms of the rental market, Ramírez-Escudero explains that in 2018, we will see “quite a lot” of activity in the market from institutional investors backing rental homes. Over the last decade, the number of rental homes has increased significantly to reach 22.5%. Nevertheless, Spain still has major potential given that the average in the EU is 33% (…).

Javier López-Torres, Partner in Real Estate at KPMG, agrees. He considers that the rental segment will continue to gain weight due to the difficulties involved in accessing credit, mobility and cultural change (…).

Asset types

By sector, Thierry Bougeard, Director General at BNP Paribas Real Estate, says that demand for office space will continue its strong performance (seen in 2017), above all in Madrid, where leasing volumes are expected to increase to around 600,000 m2.

Meanwhile, in the logistics market, e-commerce will continue to be the main motor of demand, whilst in retail, many owners are betting on improving the quality of their centres, boosting leisure areas and the quality of them, with the aim of encouraging customers to stay longer, he explains.

The experts also agree in highlighting the high level of interest expected in alternative real estate assets, such as student halls and nursing homes.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake