Tag: demand

Massimo Dutti, H&M & Uniqlo Seek Premises On Passeig De Gracia

22 June 2015 – Expansión

Rental prices are soaring on Barcelona’s Golden Mile / The three fashion chains have been negotiating with the owners of premises on the street for months to open mega-stores.

Barcelona’s Passeig de Gracia is one Spain’s most important retail streets, and store rental prices there have increased significantly in recent years. The luxury boulevard of the Catalan capital was the Spanish street where prices rose the most in 2014 (by 6.4%) to €215/m2/month, according to data from the retail-specialist consulting firm Ascana.

The tourism boom in Barcelona is continuing to drive demand in this street, and it is still one of the areas where international brands “must” have a presence. And the shortage of available stores means that prices are continuing to rise. All of this, despite the fact that the retail surface area on Passeig de Gracia has increased in recent years, since the first floors of many buildings have been incorporated into the stores. “And despite the fact that large premises mean lower average rental prices”, explains Eduardo Rivero, Managing Partner at Ascana.

Negotiations

As a result, rental agreements are taking longer to finalise. That is the case of the three mega-deals that have been under negotiation for months and which have not yet been agreed. The Japanese firm Uniqlo has been trying to lease premises on Passeig de Gracia for several years and has been negotiating with the owners of number 18 for months.

Massimo Dutti’s negotiations to lease the store that Vinçon will vacate, at number 96, have also been going on for months. And the other mega-store, created by sacrificing office space at number 11, is where H&M has been trying to open its flagship store since last year.

The volume of transactions on Passeig de Gracia, both in terms of investment and rental, has slowed down in recent months. According to Rivero, the number of retail property purchases has decreased for two reasons: the fall in profitability for the purchaser and, above all, the shortage of assets for sale. (…). The same is happening in the rental market. (…).

New brands are still arriving on the street, although to a lesser extent than a few years ago. In 2014, a total of 23 transactions were signed and 15 new brands arrived, most of them fashion industry names.

New stores

The upper end of the Paseo de Gracia is the real golden mile of the city. There, twelve deals were closed last year, all of them involving luxury brands such as Dior, Versace, Rabat, Frey Wille, Carmina Shoemaker and Wolford.

The extension of the time to close operations has driven the proliferation of temporary shops, known as pop-up stores, such as those run by Brandy Melville, Levi’s and Twin-Set. According to Ascana, these temporary incursions allow companies to verify the degree of consumer interest in a brand and evaluate the success of any possible permanent facilities. And whilst they all continue to look for space, rental prices continue to rise.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

INE: Q1 2015 – House Sales Up By 9.4%, Prices Up By 1.5%

9 June 2015 – Bloomberg Business

Spanish house prices are failing to keep up with the surge in transactions, as a lingering glut of empty homes takes it toll on the market.

Values rose by 1.5%  during the first quarter from a year earlier, however purchases increased by 9.4%, according to data published today by the National Statistics Institute (INE). Prices fell by 0.6% during the period compared with the last quarter of 2014.

“Challenging supply-demand fundamentals in the sector are likely to weigh down on the pace of recovery in house prices for the remainder of 2015 and 2016,” said Raj Badiani, an economist at IHS Global Insight in London. “The slower rate of increase in house prices during the first quarter of 2015 was disappointing.”

Spanish house prices fell about 40% from peak to trough following the property industry’s implosion in 2007. Though the economy is set grow by 3.1% this year and 2.5% in 2016, an excess of empty homes and lack of first-time buyers will continue to weigh down price growth going forward, Badiani said.

Spain’s housing market faces long-term challenges as the number of people between 25 and 35 years old, a typical source of first-time home buyers, will decline by 35% over the next decade, according to the Statistics Institute. The country has an estimated one million empty homes and also has the second-highest unemployment rate in the euro area at 23%.

“Demand for housing continues to battle against some harsh fundamentals, characterised by households still wary of poor labour market conditions, implying the glut of unsold new properties will continue to linger,” Badiani said.

Original story: Bloomberg Business (by Sharon Smyth)

Edited by: Carmel Drake

IESE: Demand For New Homes In Madrid Will Reach 20,000 In 2019

2 June 2015 – El Mundo

At a conference organised by the College of Civil Engineers before the local elections, Manuela Carmena, who will become the mayoress of the capital provided Esperanza Aguirre does not stand in her way, ruled out Operación Chamartín as a significant objective: “I do not think that we need 17,500 homes, we will talk about that again in 2017 or 2018, but not now”.

Her comments are interesting because just a few days later, professor José Luis Suárez, of IESE, has claimed that, during 2015 and 2016, demand for new housing in the metropolitan area of Madrid will reach 14,000 units and in 2017 alone, it will reach 13,000. Suárez is one of the foremost experts in the Spanish real estate market and during the annual symposium of the Center for International Finance (CIF), he presented the preliminary results of a study about the evolution of demand for new homes in Spain until 2028.

Suárez and his team of researchers are building a model to allow them to predict the demand for new homes in nine large Spanish urban areas. The model is driven by several factors, including the reduction in the number of people per household; financing; the rate of obsolescence of homes in use; the demand for replacement; the acquisition of second homes; employment; investment in housing; the preference for new housing; renovations; the declining population; the over-stock of housing; and rentals.

Although Spain’s “demographic winter” may lead us to expect a decrease in the number of homes, as well as in their average size, the calculations performed by Suárez for the Madrid area show that demand for new homes will reach 20,000 units in 2019. This quantity would mean demand returning to the levels last seen in 2009-2010, years when the trend lines between the purchase of new homes and the supply of new homes intersected. At the height of the bubble, in 2006, more than 40,000 new homes were sold in Madrid and during that same year, more than 60,000 units were constructed.

In fact, the excess stock of housing in Madrid is practically non-existent now. There is still excess supply in Spain, but not in places where demand is high.

Urban planning is one of the areas that the local politicians enjoy the most and where Carmena is undertaking a detailed program. She is committed to renovating and supporting operations in deprived neighbourhoods, such as the so called Operación Campamento, which is sponsored by Chinese capital. Although critics accuse the plans of being neoliberal since they serve individual interests, the fact is that urban planning is anti-liberal by definition and is fertile territory for commercialism.

(…)

Original story: El Mundo (by John Müller)

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

CBRE: Madrid Is 6th Most Attractive City For RE Investment

19 May 2015 – Expansión

Madrid is the sixth most attractive city in the world for real estate investors, behind London, Tokyo, San Francisco, Sydney and New York, according to the Global Investors Intentions Survey, compiled by the real estate consultancy CBRE, based on responses from 700 international investors.

Thus, the Spanish capital is more attractive that most other major cities, including Paris and Los Angeles, thanks to a 98% increase in the volume of real estate investment in 2014 with respect to the previous year; the second highest increase after San Francisco, which rose by 126%.

The study notes that optimism has returned to the international investment market thanks to improvements in the economic outlook and in confidence, although it underlines the intense competition that exists when it comes to acquiring assets and the doubts that still exist about the weakness of the economy.

Thus, 53% of international investors expect to increase their exposure to the real estate sector.

Moreover, it seems that demand exceeds supply and that there is significant interest in trans-regional transactions, with Western Europe being the most favoured region, followed by Asia Pacific.

By sector, offices are the assets of choice for 33% of investors, whilst retail sales have experienced the largest decrease.

It also notes the increased interest in logistics warehouses, up from 14% last year to 17% in 2015.

The acquisition of real estate debt is another option that investors are seeking, as well as student accommodation (halls of residence), assets relating to the health sector and retirement homes.

International investors seem to be willing to take on increasingly more risk, in search of higher returns. 51% of those surveyed said that this year they will focus on opportunistic and value added assets, whereas last year only 43% were interested in such assets.

This increase has been observed above all in the United States and in the regions of Europe, the Middle East and Africa. By contrast, there seems to be greater interest in prime assets in Asia-Pacific.

Original story: Expansión

Translation: Carmel Drake

Investment In “Locales” Reached €1,330M In 2014

14 May 2015 – Expansión

It is not just shopping centres that are attracting interest from investors. High street shops (or “locales”) are also in demand. This is evidenced by the investment made in such premises last year, which amounted to €1,330 million, i.e. €330 million more than in 2013, according to Aguirre Newman.

The main investors were family offices, followed by investment funds. This year, new purchasers such as Socimis and funds specialising in retail premises are expected to enter the market. “There will be a change in terms of demand towards locations outside of the large cities and main high streets”, say sources at the consultancy firm.

Original story: Expansión

Translation: Carmel Drake

Merlin Properties Completes Its €614M Capital Increase

8 May 2015 – Expansión

Merlin Properties has completed a capital increase amounting to €613.75 million following the subscription of 64.6 million shares in the listed real estate investment company.

The company will use the funds raised to finance new investment projects.

During the preferential subscription period, which ended on 2 May 2015, 64.5 million shares in Merlin were subscribed, representing 99.8% of the number offered, according to the company’s submission to Spain’s National Securities Market Commission (CNMV).

Moreover, during the period for assigning additional shares, 787 million additional shares in Merlin were requested, despite the fact that only 124,901 shares were available for placement.

In total, the shares subscribed during the preferential subscription period and the additional shares requested show that demand exceeded supply (the number of shares offered during the capital increase) by 13.2x.

The new shares, which will start trading on 12 May, represent 50% of the share capital of the company before the share increase and 33.3% of the share capital following the increase.

Merlin’s CEO, Ismael Clemente, highlighted the outstanding response to the capital increase and the great interest (sparked) amongst institutional investors in Spain.

On 15 April, the Board of Directors of Merlin Properties agreed to increase its share capital by €613.8 million.

At the time, it stressed that the shares issued would have a nominal issue value of one euro plus a premium of €8.50 per shares, which would result in the payment in cash of €9.50 for each new share.

Original story: Expansión

Translation: Carmel Drake

Hispania Completes €337M Capital Increase

28 April 2015 – Hispania Press Release

Hispania has completed the investment of the funds raised in its IPO in March 2014, including its leveraging capacity.

Investors placed orders for shares amounting to more than €844 million at the offer price of €12.25 per share, which implied an excess over demand of 2.5 times vs. the number of shares offered.

Hispania Activos Inmobiliarios, S.A. has successfully closed the €337 million capital increase it announced yesterday, which was aimed at institutional investors. The capital increase was carried out by means of an accelerated private placement and the strong demand allowed the Socimi to close the deal in just 3 hours.

Total demand surpassed €844 million at the offer price of €12.25 per share, which represents a 4.7% discount vs. yesterday’s closing price of €12.86 per share.

The new shares represent 50% of the company’s share capital before the capital increase and 33% of its share capital after the capital increase.

“The excellent response from investors to our capital increase shows how much the market trusts Hispania and its capacity to generate more value within its asset portfolio. Hispania is currently analysing a pipeline of opportunities worth around €2,400 million. For this reason, it is vital that we have equity available so as to be able to take advantage of the opportunities in the market”, said Concha Osácar (pictured above), Board Member of Hispania.

Hispania is the first of the so-called Socimis in the Spanish market to have completed the investment of almost all of the equity raised through its IPO, as well as its leveraging capacity, reaching a total committed investment of c.€880 million. Its asset portfolio comprises 46 assets (including the assets that Bay will acquire by virtue of the Investment Agreement signed with the Grupo Barceló). It is expected that, after the acquisition of the assets by Bay and once the repositioning capex has been invested in the current portfolio and in the assets to be acquired by Bay, 57% of the value of the assets in the portfolio will correspond to hotel assets, 27% to office assets and the remaining 16% to residential assets. These figures include the capex investment expected for 2015.

Hispania foresees significant investments to improve and reposition the assets that currently form part of the portfolio, including Bay, amounting to c.€50 million in 2015- on a consolidated basis.

Original press release: Hispania

Edited by: Carmel Drake

Tinsa: House Prices Decreased By 3.67% In February

12 March 2015 – 20 Minutos

House prices have recorded an average cumulative decrease of 42.6% since the end of 2007.

Homes on the Mediterranean Coast have lost more than half their value.

Prices may bottom out in the next few months.

In areas with low demand and significant stock, further price decreases are expected.

A change in the real estate cycle has begun; but since it is a cycle, the changes will not happen overnight. In this way, although prices are now rising in some areas of Spain, in many others, they are still declining and those areas are, for the moment, in the majority.

According to data published by Tinsa, house prices fell by 3.67% in February with respect to the same month in 2014. On the Mediterranean Coast, homes have lost more than half of their value due to the crisis, but prices may bottom out in the next few months.

With respect to the peak prices recorded at the end of 2007, house prices have recorded a cumulative decrease of 42.6%, according to the index prepared by Tinsa. On the Mediterranean Coast, the decrease has been much more pronounced, according to the appraisal company, which highlights that in this region, the cumulative decrease during the crisis has amounted to 51.1%.

In February, house prices decreased by 4.9% and 4.4%, respectively, in large cities and metropolitan areas. Since the peak of the cycle, capitals and large cities have recorded a cumulative decrease of 46.5%, whilst metropolitan areas have experienced a cumulative reduction of 45.5%.

By contrast, the Balearic Islands and Canary Islands recorded a year-on-year increase of 0.7% (in Feburary), whilst on the Mediterranean Coast, the decrease was 4.7%. From the peak levels recorded before the crisis, house prices on the islands have decreased by 32.4%.

In the towns included within “other municipalities”, the decrease in February with respect to the same month in 2014 was 2.1% and since the peak, was 36.1%.

Optimistic forecasts?

Tinsa notes that average house prices began a stabilisation process in 2013, characterised by a moderation in the rate of decline in average prices. “If the optimistic forecasts that various official bodies are predicting for economic growth and employment are fulfilled, then average prices in Spain may bottom out in the next few months”, says the company.

However, it warns that this forecast does not exclude the fact that in localised markets, where demand is particularly weak and there are significant levels of stock, (downwards) adjustments are still expected and there may yet be significant year-on-year decreases.

Original story: 20 Minutos

Translation: Carmel Drake

Bankinter: House Prices To Grow By 1.5% In 2015 And By 5% In 2016

18 February 2015 – El Mundo

Bankinter expects the volume of house sales to reach 450,000 by 2016.

The large ‘stock’ (in poor locations) will not prevent the recovery in construction.

GDP is forecast to grow by 2.2% in 2015, which will significantly boost the real estate market.

Demand for housing in Spain will increase again in 2015, with a 15% increase in the volume of transactions, which will drive up property prices by 1.5% on average and by a further 5% in 2016, according to the half-yearly report about the real estate market in Spain, prepared by Bankinter.

The financial institution states that, given the heterogeneity of the Spanish real estate market, prices in most provincial capitals and in the towns furthest from the large cities will remain stable and may even decrease slightly over the next few months. Meanwhile, in the most sought after areas (prime) of the main cities and in the best locations of tourist centres, prices will increase and may even grow by more than 3% in 2015 and by 5% in 2016.

Bankinter explained that this improvement in the outlook for the real estate sector is due to the economic recovery – GDP is forecast to grow by 2.2% this year – which will lead to a better climate for employment, increased confidence and greater access to finance. However, the financial institution warns that it does not expect the recovery of the sector to be fast or sufficiently profound to generate a return to the pre-crisis position, either in terms of transaction volumes or price increases.

The report states that unemployment will remain above 20% over the next two years; the financial effort required to make a purchase will continue to be high due to the decrease in disposable household wealth; the size of the Spanish population will decline (with the consequent negative knock-on effect on demand); and homes foreclosed by banks will continue to come onto the market with big discounts.

Recovery in new build sales

In terms of demand, the report expects an increase to 400,000 homes in 2015 and to 450,000 homes in 2016. A significant part of this growth will be driven by a recovery in the sale of new homes and by the maintenance of demand from foreigners. This increase will cause (new) house sales to break through the psychological barrier of 100,000 transactions in 2016.

In the case of supply, Bankinter points out that Spain still has a stock of between 650,000 and 700,000 empty homes, based on data published by the Ministry of Development and Sareb. Nevertheless, it considers that “this will not prevent the reactivation of the construction sector, given the mismatch between the location of the surplus (stock and demand)”.

In this sense, it warns that around 100,000 homes may never be sold unless huge discounts are applied to compensate for their challenging locations. Whereas, in the prime areas, there is a shortage of supply, according to the entity, which will be covered through renovations and new developments over the next few quarters.

Original story: El Mundo

Translation: Carmel Drake