Tag: developable land

Kronos Homes Will Invest €1,300M In Spain Over 3 Years

10 March 2017 – El Economista

Kronos Homes wants to become one of the largest property developers in Spain and to this end, is going to invest around €1,300 million in the country over the next three years.

“We don’t want to be largest (property developer), but we do want to be the firm that offers the best quality and design”, said Majda Labied, Operations Director at Kronos.

To date, the firm has spent €700 million since it arrived in Spain two years ago, of which €200 million went on the purchase of land. As such,  Kronos has managed to accumulate a portfolio with capacity for 3,000 new homes.

“Our aim is to reach €1,000 million in terms of total investment by the end of this year and then to double that figure over the next three years”, explained Manuel Holgado, Partner of the management company Kronos Investment Group, under which the property developer operates.

“From the start, we have focused on buying residential plots of land in Madrid, Barcelona, the Costa del Sol and along the Levante Coast, but now we are open to any location that makes sense from a real estate perspective”, continued the Director. Thus, its new markets include Valencia, Málaga, Sevilla, Córdoba and País Vasco.

For the time being, Kronos Homes has six developments in the sales phase in Madrid, Cataluña, Costa del Sol and Alicante, with 750 homes up for sale in total. Next year, it plans to complete two developments containing around 150 homes.

Kronos expects to finish 2017 with a committed investment of €1,000 million and more than 4,000 homes in its portfolio, which represents an estimated sales value of €1,250 million.

The property developer has financial backing from an international group of investors, primarily from Europe (the majority come from the UK, Switzerland, Finland and France) and the US. Moreover, it also has financing from the main financial institutions in Spain. (…).

In the face of the enormous interest that the sector is generating amongst international funds, the director says that Kronos Homes is not up for sale “nor do we intend to buy any portfolio or platform”. “We acquire land, both developable land and land under development”. Likewise, he assures that the group’s strategy does not involve listing the company on the stock market.

Commitment to quality and design

In order to differentiate its products from those of its competitors, the firm works with renowned architects such as Rafael de la Hoz and Joaquín Torres. In addition, it spends around six months developing the designs for its projects. (…).

The prices of Kronos’ homes range from €150,000 to €2 million. However, the average home costs around €300,000. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

International Funds Reactivate Residential Development Market

7 July 2016 – El Economista

After several years away, cranes are appearing on Spain’s landscape once again. Their return has come thanks to several large international funds, which have managed to reactivate the property developer market in record time and just at the right moment. Thanks to their presence, property developer activity in Spain grew by 30% last year, with 50,000 new construction permits; and the experts are certain that the residential business is now unstoppable.

The financial capacity of the new players is overwhelming in some cases. They have liquidity surpluses that the historical property developers would have envied, but, nevertheless, they do not know the ‘ins and outs’ of the local market, and their experience in terms of land is practically non-existent. For this reason, their entry into the Spanish market has been undertaken through the purchase of property developer platforms and through partnerships with local companies (…).

In light of the high profile partnerships that have been signed in the last two years, involving players such as Lone Star, Värde and Kennedy Wilson, the experts predict that the high level of activity will continue this year with the purchase of plots of land. In fact, they confirm that sales of non-developable land are starting to accelerate and that demand for land purchases will increase, especially those in the final stages of development, due to the high level of competition that has been generated between the key players in the sector – property developers, investment funds and cooperatives.

All of these players have realised that the opportunities that the residential development business is now offering “have yields that are considerably higher than those of other investments”, according to Solvia’s Market View report, which states that transactions have grown by 8.6% and prices have risen by around 4.5%. With these positive indicators, the development figures being talked about now include 150,000 new homes and 50,000 secondary residences per year until 2020.

Most of these homes will come onto the market thanks to Neinor Homes, which is looking to become the largest property developer in Spain. This company will be one of the most active over the next few years, given that according to its own forecasts, it expects to build between 2,500 and 3,000 homes per year. The firm, led by Juan Velayos – the former CEO of Renta Corporación – is the largest residential real estate company created in Spain following seven years of recession.

Its potential was proven last year, since between its creation, in May 2015, and the end of the year, it invested own funds amounting to €800 million on the purchase of land, on which it plans to construct 10,000 homes over the next few years, bringing together the largest bank of high-quality developable land in Spain (…).

But Lone Star is not the only fund that has made a long-term commitment to the Spanish residential market. The US fund has had a major competitor for several weeks now, in the form of Värde, which after acquiring 25% of the real estate arm of San José from Banco Popular, has now created a new property developer.

The company is called dospuntos and its Business Plan for 2016-2012 forecasts an investment of almost €2,000 million in the Spanish real estate market over the next six years, to complete the construction of 2,000 homes per year on average from 2019 onwards. For the time being, the group already owns a sizeable bank of land for the construction of more than 7,000 homes across Spain.

Inmobiliaria Habitat is another company with history in the sector, which in 2015, after finding itself in a very delicate financial situation and incapable of paying its debt, ended up in the hands of a group of funds – Bank of America Merril Lynch, SP101 Finance Ireland, Capstone and Goldman Sachs, amongst others. In this case, although the commitment by the funds has been key, it is nonetheless a temporary measure, given that they plan to exit the group within two or three years.

The latest residential report from the consultancy firm CBRE highlights other partnerships between international funds and domestic developers such as: Grupo Lar and Pimco; Renta Corporación and Kennedy Wilson; Momentum Real Estate and HMC; Aquila Capital and Inmoglaciar; Mina Inmobiliaria and Eurostone; Aelca and Värde; and Q21 Real Estate and Baupost. (…).

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Neinor’s CEO, Juan Velayos, Shares His Views Of RE Market

12 May 2016 – Expansión

Neinor Homes was created in May last year with the aim of leading the property development market in Spain and making a name for itself for quality and customer service. That is still the group’s vision, according to the company’s CEO, Juan Velayos (pictured above), which aspires to be an “industrial, professional and transparent” company. The property developer, created just a year ago from the purchase of the real estate subsidiary of Kutxabank by the US fund Lone Star, owns land worth around €800 million. “This is the largest stock of quality, developable land in Spain, with a surface area that would allow us to construct 8,500 homes”, said Velayos.

The director explained that for years the sector was guilty of a lack of transparency. He insists on the importance of placing the customer at the centre of the business, as well as of relying on new technologies, sustainability and quality standards to lead a transformative change in this industry. “We have to distance ourselves from the image of shady real estate deals”, he said.

In this sense, Velayos believes that the dawn of the Socimis in Spain is “good news”. The director said that, following the crisis, we now need competent institutional fund managers in the property industry.

In terms of the entry of his business into non-developable land, Velayos acknowledged that, “in one way or another, the leading property developer in the country will have to participate in the ‘land factory’. But never as our main business”. The director also pointed out that Neinor has a stock of homes that will last five years.

The company aspires to deliver between 2,500 and 3,000 homes per year. Currently, it has around ten projects in the commercial launch phase and another 21 projects to be launched this year.

The real estate group is currently constructing 300 homes, is about to start building another 300 homes and will start constructing another 800 in Q3 2016.

IPO

Regarding a possible IPO, Velayos explained that it would be a “natural step”, although “at the moment”, it is not something is being considered. “We will debut on the stock exchange if the company’s leadership so demands it and the shareholders require it”, he said.

The Company closed last year with turnover of €340 million and a gross operating profit (EBITDA) of almost €25 million.

More professionalism

To achieve its objective of “putting a rubber stamp” of quality on its services, the company has doubled its workforce, from 80 to around 170 in just one year, and has launched a dedicated communication channel with its clients, Neinor Experience.

Velayos explained that it is an exclusive community for Neinor’s clients, through which the property developer offers advice on all issues, from the point a buyer reserves his home to the hand over of the keys and the subsequent after-sales service.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Speculation Returns To The Market For Land In Madrid & Along The Coast

11 April 2016 – ABC

During the years of the crisis, investors regarded land as one of the least attractive assets. In fact, in the face of scarce demand and the paralysis in the construction sector, land values fell to historic lows. (…).

Sales of urban land, the substratum of real estate developments, are growing again after nine years of consecutive decreases. And they are doing so at a healthy – and on occasion, vertiginous – rate in certain areas of the country where the housing market has already started its recovery, such as the more illustrious areas of major cities, including the north of Madrid and established areas along the coast (Málaga, Palma de Mallorca and the Canary Islands). So much so that a warning is now spreading amongst analysts and agents in the sector: the scarcity of developable land – which does not require land planning approval – in certain areas, and renewed interest from investors is generating a new “overheating” in the price of transactions, something not seen since the burst of the real estate bubble.

The latest “Market Trends” report prepared by Solvia, the real estate arm of Banco Sabadell, warns that the expectation of a strong recovery in value is incubating operations of a speculative nature. “The fact that the supply of well-located land is scarce in areas with demand, that there is widespread liquidity in the market and that there is fierce competition to acquire assets, means that land purchases are being made for speculative purposes, in certain specific cases, for subsequent resale at significantly higher prices”.

In this sense, the study, which does not cite who is behind such transactions, highlights the cases of the Madrilenian neighbourhoods of Valdebebas and Montecarmelo. In the case of the latter, the price of land has risen by between 40% and 60% to €2,400/m2.

Montecarmelo and Valdebebas

Fernando Rodríguez de Acuña, Director General of Operations at the consultancy firm RR de Acuña y Asociados distinguishes between three players in the race for land: the financial entities and large investors, who have put their assets up for sale “in stages” and the small and medium-sized funds, which are more prone to speculative operations given that they seek high short-term yields. The confluence of these players has given rise to a situation in which both the activity and value of these real estate assets have increased significantly, if we exclude the statistical effect of operations carried out by financial entities foreclosing unpaid debt. Thus, the number of transactions carried out by operators in the sector (developers, funds and cooperatives) increased by 37% in 2015 compared with the year before and by 60% in terms of transaction volume. (…).

According to the experts, two operations in particular have caused prices in the land market in the Spanish capital to sky-rocket: firstly, the sale of 14 plots containing more than 93,000 m2 of buildable space, by the Valdebebas Compensation Board to the property developer Pryconsa for more than €55 million and secondly, the acquisition of a plot of land in Montecarmelo by Cogesa, which belongs to the Dragados group, for more than €20 million. (…).

Original story: ABC (by Luis M. Ontoso)

Translation: Carmel Drake

Investment Returns To The Residential Market

11 February 2016 – Expansion

Experts say that this trend is heterogeneous, with regions that need to dispose of their stocks and other in need of developable land.


The residential business – until recently the ugly duckling in the housing sector – emerges again as one of the values on the rise, in part thanks to the return of large reals estate companies to this activity, one of the most affected by the economic crisis. Thus, for the first time since in mid-2007 the gradual deterioration of the housing market situation began, the sector turns its attention to this business, since in 2014 it showed the first signs of improvement, although with a concentrated demand in very well located and high segment product.

Ongoing projects  

Some of the most recent examples are the Socimi Lar-Pimco España, which will soon begin “Lagasca 99 project” on the site at Juan Bravo, 3, Madrid, or Metrovacesa, with “Ciudad del Sur” in Tarifa and the study of new projects in Madrid. Likewise, Realia has residential assets in the Madrid suburb of Valdebebas and Quabit has strongly returned to this activity thanks to the capital increase undertaken last year. At the same time, developing companies like Via Célere, Pryconsa, Aelca, Inmobiliaria del Sur or Neinor Homes are making a move in this segment with the aim of becoming the first residential developer of Spain, as well as cooperatives as Momentum, Domogestora and Ibos. 
The director of the National Residential and Land area of CRBE España, Samuel Población Blanco, emphasizes the “great heterogeneity” in this trend, with differing behaviors. 
Thus Población highlights that while in Madrid there is a great need for developable land, with the risk that in one year the housing demand can be much higher than the existing supply, other regions still need to dispose of their stock. 
Likewise, Población notes that SOCIMIs and asset management companies will be increasingly interested in the residential renting area, coinciding with the change of mentality in Spanish society, the higher functional-geographical mobility and the professionalization in this activity. 
For his part, the Chairman of Armabex, Antonio Fernández, explains that there is a gap between renting demand in Spain and Europe, which tends to shorten due to the new working conditions and the lack of funding. 
”In Madrid, for example, they lack efficient product; no large blocks or buildings dedicated to renting” says Fernández.

Original story: Expansion (by Rebeca Arroyo)

Translation: Aura Ree