The Office Market in Madrid Recovered Somewhat in May but Continues at Low Levels

Enquiries regarding available space gradually increased by up to 40% in May and around 16,500 square metres of office space was leased in the capital.

The office market in Madrid has registered several operations and a gradual increase in demand for conventional and flexible space, even whilst the State of Emergency is still in force, according to the consultancy Savills Aguirre Newman.

Enquiries regarding available space gradually increased by up to 40% in May compared to the average registered between 15 March and 30 April. However, activity still remains at slightly lower levels than in August, the month that usually sees the lowest level of activity of the year, according to the consulting firm’s historical records.

Spain Needs 2 Million Rental Homes

The rental home market is booming, forced by the ever-tougher climate in the purchase market and, now, the crisis generated by Covid-19, which is also pushing property developers to offer properties via the build to rent route.

In Spain, there is a growing imbalance between rental needs and the available supply, with 23% of the population now living in rental properties compared to the EU average of 34%. That translates into the need to build around 2 million homes for rent in the country.

House purchases have basically been supported by the repositioning market in recent years, whilst demand from young people has continued to shrink due to the tightening of access conditions and job insecurity. During the post-coronavirus crisis, this situation is expected to get even tougher.

Demand for Upsizing Remains Stable and Interest in Detached Houses Rises

Although requests for information about new build homes fell by 23% between 15 March and 30 April, sources at Foro Consultores highlight that the decrease is lower than they would have expected.

Although requests for information about new build homes fell by 23% between 15 March and 30 April, compared to the previous 1.5 month period from 1 February to 15 March, sources at the firm Foro Consultores highlight that the decline is lower than they would have expected, and that information about new build products is still being sought.

What are people looking for?

Over the last month and a half, the type of home demanded has been similar to during the previous comparable period. In other words, “around 60% of people make enquiries about 3-bedroom homes, and in those cases, they are looking to upsize. Approximately 25% ask about 2-bedroom units; they are typically first-time buyers. But what has changed is that they are more interested in flats with free spaces: penthouses, ground floor properties with a garden in the case of multi-family houses. More people are also asking for information about housing developments (villas)”, explain the sources at Foro.

The Spanish Hotel Sector will not Return to its Pre-Crisis Levels until 2022

The consultancy CBRE predicts that the markets most exposed to domestic demand, such as the Mediterranean region, will recover sooner, whereas the Balearic Islands and the Canary Islands, which depend more on international tourism, will take longer to recover.

The recovery of the Spanish hotel market following the Covid-19 pandemic will begin next year and the pre-crisis levels could be restored during 2022, according to the report “Spanish Market Outlook Covid-19”, prepared by the real estate consultancy CBRE.

In this sense, the hotel sector could experience a strong upturn in demand in 2021, with the recovery expected to span three different phases: first, domestic demand, then short-term demand, and finally, long-term demand.

Gazeley Acquires 42,200 sqm Site in Pinto (Madrid)

7 January 2020 – Gazeley.com

Gazeley, a leading investor and developer of logistics warehouses and distribution parks, today announces that it has acquired a 42,200 sqm site near Madrid, with plans to build a 19,000 sqm warehouse, G-Park Pinto.

The acquisition represents Gazeley’s fourth investment in Spain since re-opening its office in Madrid last year, and will target logistics, distribution and e-commerce companies in need of a last-mile logistics hub. Construction is expected to begin in 2020.

The warehouse will be built with a highly flexible design, allowing it to be adapted to the specific needs of a future customer. It will also have a BREEAM Very Good certification, reflecting Gazeley’s commitment to developing sustainable spaces across Europe, and smart LED lighting.

The area is a well-known logistics hub located around 20 minutes from Madrid. It has access to the A-4 (Madrid-Córdoba) and A-42 (Madrid-Toledo) highways, the M-50 and M-45 Madrid ring roads and has direct access to R-4 (Madrid-Ocaña Toll).

Savills Aguirre Newman is advising Gazeley on leasing.

Original story: Gazeley.com 

Translation/Summary: Carmel Drake

Increasingly More Flagship Stores Remain Empty in Madrid & Barcelona

7 January 2020 – Eje Prime

There are an increasing number of large, vacant stores on the high streets of Madrid and Barcelona. Preciados 13, Sol 9, Paseo de Gracia 9, and Paseo de Gracia 77, to name just a few.

After several years of high demand for flagship stores in the two cities, when larger spaces become available, they are now standing empty. Operations have come to a standstill and real estate consultants are forecasting a decrease in rents.

Domestic and international retailers alike, particularly those in the fashion industry, such as Inditex, Mango, H&M and Primark, have taken the high street by storm in recent years, in their efforts to offer consumers a comprehensive experience.

In that context, demand has exceeded supply, and large premises have become the most sought-after. As such, prices have been rising and the family offices, which had traditionally owned the properties in the retail sector, were joined by large funds.

But now, the situation has changed. E-commerce is growing rapidly and most of the major operators have now opened flagship stores. With an excess supply in the market and fewer operators demanding large spaces, prices will have to decrease. Real estate investors are proving to be more flexible than opportunistic funds in terms of agreeing reasonable rental prices. Rental prices have not fallen yet, however, according to several sources, it is only a matter of time.

Meanwhile, a few months ago, H&M sent a letter to several of the owners of the premises it occupies in Spain (e.g. on Portal de l’Àngel in Barcelona and Gran Vía in Madrid) terminating their contracts. According to sources in the sector, “they sent those letters knowing that they would be able to stay in the premises paying half the rent”.

Original story: Eje Prime (Pilar Riaño)

Translation/Summary: Carmel Drake

Temprano Capital Partners Acquires a New Site for a Student Residence in Madrid

17 June 2019 – Press Release

The new project, which forms part of the Temprano Student Living (TSL) initiative, will provide 10,000 m2 of premium accommodation for more than 400 students. This project represents Temprano Capital Partners first scheme in Madrid and its eleventh Student Residence development in the Iberian Peninsula.

Temprano Capital Partners has just acquired a new site in Getafe, Madrid. It is the firm’s first student residence project to be developed in Spain’s capital and the eleventh in Temprano Student Living (TSL) Iberian’s  pipeline.

The first TSL project to complete was TSL Marques de Pombal in Lisbon, which opened its doors to students in January 2018 and won the award for “Best in Class for Property Innovation and Sustainability at the Class” given by The Class of 2020 annual awards for its good work in innovation and sustainability.

By adding this new student residence in Madrid, TSL will increase the number of beds in its portfolio to more than 4,000. The city of Madrid has the largest number of students in Spain followed by Barcelona, Valencia and Bilbao, respectively. More than 300,000 students are enrolled in the region in the 2018-2019 academic year, of which 196,400 attend public universities with the remainder at various private educational institutions around Madrid.

The large student population in Madrid includes a large contingency from other regions of Spain (approximately 80,000 according to internal research) and approximately 24,000 international students principally Europeans and from the Americas.

The recently acquired site is located at Calle Ramón Rubial 37, Getafe, which is an 8-minute walk from the main campus of the Carlos III University and a 10-minute walk from the railway station Las Margaritas Universidad.

It is envisaged that the student residence will provide some 400 beds in a combination of cluster, studio and twin room configurations, within a building spanning just over 10,000 m2. The residence will provide other services and amenities, such as a gymnasium, lounge club area, audio visual / cinema rooms, library, study rooms and areas created for group work, dinner party rooms and onsite catering and restaurant facilities. The residence will offer rentals to be fully inclusive with 24/7 concierge service. Rooms will provide kitchens, individual bathrooms, Smart TVs, in addition to desks for in room study needs. High speed Wi-Fi will be provided throughout the project.

Original story: Press Release

Edited by: Carmel Drake

Bank of Spain: Spain’s Housing Market is Not Overvalued

9 June 2019 – Eje Prime

The Bank of Spain does not think that a real estate bubble exists. The institution’s Director General of Economics and Statistics, Óscar Arce, has assured that the bank does not consider that the housing market is “overvalued in general”. Nevertheless, he is following the sector “very closely” given its history.

Arce highlighted several differences between the current climate and the previous cycle including the fact that price rises now are not uniform across all regions or cities. In fact, according to the latest data published by the Bank of Spain, average house prices rose by 6.8% YoY during Q1 2019, driven by Madrid, Barcelona, some parts of the coast and the islands.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Savills: Spain willl have 260,524 m2 of New Innovative Commercial Space in 2019

3 June 2019 – La Vanguardia

According to the latest edition of the Retail Report Spain, compiled by Savills Aguirre Newman, Spain will see the addition of new innovative commercial space spanning 260,524 m2 this year, where 10 new shopping centres are going to be developed.

In addition, the real estate consultancy forecasts that shopping centres worth up to €2.5 billion could be put up for sale, including Intu’s portfolio comprising four shopping centres, which are worth c. €1 billion. The pipeline also includes other non-prime shopping centres and portfolios of supermarkets and hypermarkets.

Nevertheless, the report forecasts that investment levels in 2019 will be lower than in the previous two years, as many overseas investors, particularly those from the UK and USA, adopt a ‘wait and see’ approach to the Spanish market in light of the slow-down in the world economy and the boom in e-commerce.

In this way, demand is expected to focus on small convenience centres, particularly those linked to supermarkets, and prime and secondary retail parks that are not so affected by e-commerce.

Original story: La Vanguardia

Translation/Summary: Carmel Drake

Spain’s Property Developers Glimpse the First Signs of a Moderation in Prices

29 May 2019 – Expansión

Yesterday, several of the largest property developers in Spain met for a Medcap roundtable event moderated by Deloitte to discuss the outlook for the residential market.

Specifically, representatives from Metrovacesa, Aedas, Quabit, Insur and Lar participated in the discussions, during which they observed that house prices in Spain are starting to moderate in some of the more mature markets, although they acknowledged that there are still many secondary cities where the new (growth) cycle is just beginning.

In this context, the representatives identified a number of focuses and challenges facing the sector, namely:

Licences: All of the property developers are pushing for great agility from the public administrations when it comes to the granting of construction permits.

Construction: The labour shortage in the construction sector is pushing up prices and leading to delays in project finishes.

Concentration: Property developers are larger and more professionalised now than before the crisis; they require critical mass to be resilient to real estate cycles.

Industrialisation: Prefabricated homes allow construction periods to be shortened and for greater control over the processes.

Access: Young people are finding it increasingly difficult to afford to buy a home.

Overall, the experts consider that the residential sector is still immersed in the early stages of the new cycle, but only time will tell whether they are right.

Original story: Expansión (by Rebeca Arroyo)

Translation/Summary: Carmel Drake