Tag: economic recovery

Ghost Towns Still Haunt Spain in Property Rebound a Decade After

25 November 2018 – Bloomberg

Juan Velayos’s biggest headache these days is getting licenses fast enough to hand over new homes such as the upscale condos his company is building in the northern suburbs of Madrid.

Less than 60 miles away, Ricardo Alba’s neighborhood tells a different story about Spain’s property market. The fencing instructor is one of only two occupants at a block of apartments whose development was frozen in its tracks when banks pulled the plug on credit.

“The real estate sector’s recovery in Spain is developing at two clearly different speeds,” said Fernando Rodriguez de Acuna, director of Madrid-based real-estate consultancy R.R. de Acuna & Asociados. “While one part of the country is consolidating the recovery of the sector and even expanding, another part of the country is stagnating and is showing few signs of returning to pre-crisis levels in the medium- and long-term.”

A decade after the financial crisis hit, Spain’s real estate recovery is a tale of two markets. Key cities and tourism hot spots are enjoying a fresh boom, fueled by interest rates that are still near historic lows, an economic recovery and a banking system that’s finally cleaning up its act. Private equity firms such as Blackstone Group LP are picking up once-toxic assets worth tens of billions of dollars and parsing out what’s still of value, often using their playbook from the U.S. real estate recovery to convert properties into rentals.

But travel a little beyond the bustling centers, to the outskirts of smaller villages, and ghost towns still litter the landscape — once ambitious developments, often started on agricultural land that was converted into building lots just before the crisis hit. They still stand half-finished, unable to find a buyer.

The “Bioclimatic City La Encina” where Alba began renting an apartment two months ago is one such development. Situated on the edge of the village of Bernuy de Porreros, about 10 kilometers (6 miles) from Segovia, it promised to be Spain’s first environmentally-friendly town, providing solar energy and recycled water for 267 homes, comprised of two-, three-, and four-bedroom chalets and apartments. A faded billboard speaks of the dreams that were sold, including communal swimming pools and gardens for residents who would “live… naturally.”

Today, only about a dozen of the homes are occupied. One street has finished homes but half have their windows bricked up to discourage break-ins, locals said. Alba does have solar panels heating his water, but his electricity comes from the local network. On the far side of the development, trees sprout out of the middle of a street that was never paved. Brightly-colored pipes and cables protrude from the ground. Bags of plaster on a pallet have long hardened.

Spain’s housing crash was fueled by a speculative frenzy combined with loose restrictions and corruption that allowed plots of farmland in rural villages to be converted to feed a demand for homes that never truly existed, said Velayos, who is chief executive officer of Neinor Homes. At the height of the boom in 2006, authorities approved 865,561 new home licenses when even in an economic boom demand is no greater than 250,000 homes, he says.

Banks were handing out loans to developers who had little to lose if a project didn’t find a buyer because the money wasn’t theirs. The result was an almost total collapse of the market and close to $200 billion of soured assets.

About half of them were bought in 2012 by Sareb, a bad bank set up by the government to help lenders. Sareb spent about 50 billion euros to acquire assets that were once valued at twice that amount, mostly loans to developers and real estate. Among the latter are also 97 of the 267 properties at La Encina. None of them are currently for sale as Sareb works through legal issues and construction of many isn’t finished.

Other assets were picked up by deep-pocketed investors such as Blackstone, which has 25 billion euros invested in Spain, according to Claudio Boada, a senior adviser at the firm. The New York-based company — the world’s largest private markets investor — is doing what it did at home after the financial crisis: renting out homes instead of selling them in a bid that fewer people can afford to own. Spain had a relatively high home ownership rate before the crisis but it has since come down.

Blackstone’s Bet

“We’re holding most of what we own and looking to rent it out for the foreseeable future,” said James Seppala, head of real estate for Europe at Blackstone. “There’s a meaningful increase in demand for rental residential around the world, including in Spain, driven by home ownership rates coming down.”

Private equity investors also backed a new breed of real estate developers that are bringing a different rigor to the industry. Companies such as Neinor and Aedas Homes S.A.U. are more tech-savvy when assessing markets, and emphasize industrial production techniques to improve efficiency. They’re behind a surge in licenses for new homes to 12,172 new homes in July, the highest monthly total in a decade.

But demand is uneven: Madrid is enjoying its most robust year of home construction since 2008 with an average of 2,151 licenses awarded per month in the first seven months of the year. In Segovia, just 27 minutes from Madrid on the state-run bullet train, an average of 25 homes licenses have been approved per month in 2018, compared with an average of 180 homes a decade earlier.

The volume of residential mortgages sold in Spain peaked in late 2005 before hitting a low in 2013. Since then they have gradually picked up, with 28,755 sold in August, a seven percent annual increase.

Velayos, chief executive officer at Neinor, said business is starting to pick up beyond Madrid and Barcelona to smaller cities and the coast. His company plans to hand over 4,000 homes by 2021, more than 12 times as many as in 2017. The biggest challenge has been getting licenses approved on time. Velayos had to cut his delivery target for 2019 by a third as often understaffed local councils cause bottlenecks in the production process.

More significantly, Spain’s real estate is now funded by investor’s equity and not credit, said Velayos. Neinor was bought by private equity firm Lonestar Capital Management LLC from Kutxabank SA in 2014 and went public in March 2017. Aedas is backed by Castlelake, another private equity investor, and was floated the same year. Metrovacesa SA, owned by Spain’s biggest banks, held an initial public offering earlier this year.

Shares of all three developers have declined this year at more than twice the rate of the local stock index, a reminder that the market’s recovery remains fragile, with higher interest rates and an economic slowdown on the horizon.

For the Bioclimatic City La Encina, that means it may take longer still until Alba gets new neighbors. Prices for half-finished chalets were slashed by half, according to residents. Some now sell for as little as 16,700 euros, half the cost of a mid-range car.

Alba doubts such cuts will lure buyers. Then again, that may not be a bad thing, he says in summing up the development’s advantages: “It’s very peaceful.”

Original story: Bloomberg (by Charlie Devereux)

Edited by: Carmel Drake

Podemos & the Tax Authorities Negotiate a Stricter Fiscal Framework for Socimis

11 September 2018 – Expansión

Podemos and the Government are studying measures to put a stop to the “rental bubble in Spain’s largest cities”, which Pablo Iglesias argues is being caused by the tax advantages being afforded to the Socimis.

The Tax Authorities and Podemos are negotiating a stricter fiscal framework for Socimis. That is according to sources at the negotiations, and to an announcement made by the leader of Podemos, Pablo Iglesias (pictured above, right), after his meeting with the President of the Government, Pedro Sánchez (pictured above, left), on Thursday.

Iglesias spoke of an “understanding” on this point and of advances in the negotiations. Although the fiscal framework of these real estate investment companies has always been under Podemos’s spotlight, it did not mention it in the document that it sent to the Tax Authorities in August detailing its requests, in exchange for its support of the Budgets. But, that was not a question of “limited demands”, according to sources at Podemos, who are now negotiating measures with the Executive to put a stop to the “rental bubble in Spain’s largest cities”. And, in Podemos’s opinion, the beneficial legislation afforded to Socimis explains this bubble, and it needs to be addressed urgently. Iglesias will spend tomorrow questioning Sánchez in the control session of the Government in Congress regarding the “measures that the Executive plans to adopt to put an end to the rental housing bubble”.

“We need to discourage the promotion of these types of companies, which foster the bubble model, undermine the public coffers and represent an affront to competition. We think that the special framework for Socimis, whose main feature consists of a Corporation Tax rate of 0%, needs to be reversed”, said Podemos recently in a document (…).

In this latest document, Podemos therefor, therefore, to put an end to this zero tax rate for Socimis, compared with the nominal tax rate of 25% (…). The negotiations with the Tax Authorities are based on the premise that Podemos wants to bring the tax rates for Socimis in line with those applicable to other companies. However, it does not rule out that the measures agreed will be aimed at having more control over their tax framework.

Zapatero’s Government created Socimis in 2009 in an attempt to revitalise the real estate market, inspired by the REITs (Real Estate Investment Trust) from the Anglo-Saxon world. They enjoy a very beneficial tax framework. Their Corporation Tax rate is 0%, provided they fulfil certain requirements: the minimum share capital must amount to at least €5 million (…); the funds must be invested in properties; a minimum of 80% of the profits obtained from rental must be distributed as dividends; and at least 80% of the value of the assets in urban buildings must be leased for at least three years.

Unlike the Sicavs, there is no requirement for Socimis to have a minimum number of shareholders, but their shares must be admitted for trading on a regulated market (…).

Following the economic recovery and the boom in the real estate market since 2013, the Socimis are enjoying a golden period (….).

Original story: Expansión (by Mercedes Serraller)

Translation: Carmel Drake

Junta de Andalucía Sells 45,000 m2 of Land in Jaén for €3.8M

8 January 2018 – La Vanguardia

The four offers that were submitted relating to the sale of the properties owned by the Junta de Andalucía, which the Ministry of Development and Housing convened in 2017 through the Agency for Housing and Rehabilitation in Andalucía (AVRA), have allowed it to award plots with a total surface area of 45,780 m2 for a value of €3.89 million in the province of Jaén.

The Minister for Development and Housing, Felipe López, stressed that most of the public land that has been sold in the province has been assigned for industrial use. “This is allowing us to contribute to boosting the economy and to creating jobs in the towns in which the plots are located, through the companies that are opening facilities on those plots”, he said on Monday in a statement.

He underlined the importance of this initiative, promoted by the Junta, with the aim of placing public assets at the disposal of the business community to boost the development of new projects and business initiatives that foster economic activity and employment.

The industrial plots sold in the province of Jaén during 2017 are mainly located in the towns of Alcalá la Real, whose Los Llanos del Mazuelo industrial estate recorded a significant increase in activity last year, and Martos, on the Cañada de la Fuente industrial estate.

Plots were also disposed of in the ZI-2 production area of Torredonjimeno, on the industrial estate on the Carretera de Los Arquillos, in Villacarrillo; in Los Rubiales (Linares) and on the Los Retiros industrial estate, in Huelma.

Moreover, other premises, parking spaces and storerooms were awarded in several towns in the province of Jaén, including in Andújar, Cazorla and Jaén, which generated revenues amounting to €385,061.

Most of the plots of land sold were owned by the Agency for Housing and Rehabilitation in Andalucía, which, according to López took the decision to make land sales one of its strategic lines at the beginning of this legislature, after that activity had slowed down in previous years, during the toughest period of the crisis.

By contrast, some of the awarded plots belonged to the Junta de Andalucía, which engaged AVRA to manage its assets.

The Board said that the decision to recover this activity was taken in light of the fact that the markets are starting to show signs of recovery in terms of real estate activity and “with the aim of obtaining revenues to allow us to resume other activities pertinent to the Agency, such as the promotion of social housing for families with housing needs and scarce or no possibilities of accessing a home in the private rental market” (…).

The land sale activity resumed by AVRA at the beginning of this legislature has permitted the award of almost 300,000 m2 of land allocated to different uses for a total amount of €50.7 million over the last 3 years (…).

Original story: La Vanguardia

Translation: Carmel Drake

Spain’s Residential Rental Sector Continues to Thrive

6 January 2018 – Cinco Días

The current rental market in Spain has nothing or very little to do with the one that existed in the noughties (2000-2009), when being a tenant was almost equivalent to being a second-class citizen, as Gustavo Rossi, President of Alquiler Seguro, recalls. A study compiled by Idealista maintains that whilst in 2000, homes offered for rent represented just 9% of the market, by the end of 2017, Madrid was the third-placed city in the ranking of places with the most rental homes in Europe, whilst Barcelona was ranked sixth.

That increase in supply has been driven by an exponential growth in demand for rental homes and by the boom in tourist rentals. During the first few years of the crisis, demand switched to the rental market, above all due to necessity. Faced with the impossibility of buying a home due to the high prices or the closure of the credit tap by the banks, or even both factors, families had to resort to renting as their plan B.

Nevertheless, and as the economic and employment recovery has been gaining momentum, although the majority of those who rent still aspire to become homeowners, increasingly more households are opting to lease regardless of their economic capacity or solvency level. They are the new tenants by conviction. “The impact that the no-credit-generation (those who are not willing to get into debt and who prefer to pay to use a home) is having on the market is considerable”, explains Rossi.

One way or another, the percentage of households that rent their homes has gone from just 11% in 2001 to almost double that figure, more than 20% in 2017, according to figures from the sector. That progression is even more marked in the large cities since it is estimated that in Madrid and Barcelona, more than 30% of families rent their homes, which brings Spain closer to the European parameters, where the average number of rental homes exceeds that 30% threshold (…).

Sources at Fotocasa are convinced that this year (2018) there will be a lot of talk about the rental market once again. “The high returns that investors are seeking, the boom in tourist apartments and the change in mentality (towards renting) are going to continue putting upward pressure on rental prices, above all in the large cities”, says the firm’s Head of Research, Beatriz Toribio. In this sense, the table published by the Bank of Spain comparing yields on rental homes with those on the stock market (Ibex 35) and fixed income securities leaves little room for doubt. The latest data reveals a gross profit from rental properties of 4.2% p.a., which soars to 10.9% if we add the gain that can be obtained when a property is sold (capital appreciation) (…).

The experts offer two pieces of advice. Before choosing between traditional rental and tourist lets, investors should analyse all of the variables because it is not always more attractive for a property to be let for very short stays (refer to the comparative graph). And the Administrations are demanding that investors bet more on the rental segment, in the form of direct subsidies and tax reliefs, to encourage owners to put empty homes onto the market and that will allow them to reach maturity. “The rental market is here to stay”, says Eduard Mendiluce, CEO at Anticipa Real Estate.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Moody’s: House Prices Will Rise By 8.6% Over Next 3 Years

3 November 2017 – El Economista

An increase in the proportion of the active young population and the greater affordability of housing will boost house prices in Spain by 8.6% over the next three years, according to forecasts from the ratings agency Moody’s, which has analysed the impact of demographic trends on prices in the residential real estate sectors of seven large European markets.

In the case of Spain, the risk rating agency forecasts a rise in house prices of around 5.6% in 2018, but then limits that increase to 1.4% per annum in each of the following years, until 2020.

“Low interest rates, an improvement in economic conditions and the higher proportion of the active young population will serve to boost the housing market”, says Greg Davies, analyst at Moody’s, adding that in the last decade, the proportion of young workers has increased by 8%.

The agency indicates that the current environment of low interest rates and the economic recovery, which is reducing the still high level of youth unemployment, are contributing to the affordability of housing in Spain, although it says that salary growth is still low, which is preventing some young professionals from buying a home, something that Moody’s expects to improve over the next few years.

In this sense, the agency points out that in 2014, around 14% of full-time workers in Spain earned less than 2/3 of the median income, compared with just 7% in Italy and 9% in France.

On the other hand, Moody’s underlined that Spain has experienced a decline in the demand for new build homes, whereas there has been a lot of activity in the second-hand market. Construction activity in the country currently represents just 40% of the volume recorded in 2007, reflecting, amongst other factors, the sovereign deleveraging, including the banking sector, which has led to a substantial reduction in residential investment.

Original story: El Economista

Translation: Carmel Drake

Inv’t In Industrial & Logistics Land In Valencia Already Exceeds 2016 Total

30 October 2017 – El Economista

Demand for industrial and logistics land is growing fast in the province of Valencia. Sale and purchase operations involving this type of land have already exceeded the total volume of space (in square metres) sold during 2016 as a whole, by 30% at least, when operations spanning 585,000 m2 of space were signed – 130% more than during the previous year.

Information from specialist consultants and other data provided by public managers indicates that more than 750,000 m2 of land has been acquired, with a significant percentage of the operations being closed in Ribaroja, Cheste and Sagunto –almost half of the square metres purchased are located in Parc Sagunt, which has experienced a boom since the arrival, in December, of Mercadona, which plans to construct its largest logistics platform there (…).

This increase in demand comes in response to a combination of factors, including: the consolidation of the economic recovery, supported both by internal demand and the export of products and services, which has boosted projects to expand production capacity and storage by industrial groups; the positive outlook for the next few years; improvements in terms of the access to and conditions of financing; projects to improve the communications network – above all, the railways; the growing interest from investors – corporate and institutional, in particular – looking for options to generate higher returns than those found in the financial and securities markets; and the growing demand for modern, high-quality, large assets, in good locations, which have been underserved in recent years due to the total stoppage of new development projects in this field, as a result of the economic crisis (…).

Aguirre Newman adds another element that has benefitted the Valencian market: “The shortage of supply in the main markets in Spain – Madrid and Barcelona – has boosted interest in secondary markets, in particular, in Zaragoza, Valencia and Sevilla”. And this trend could be reinforced in the coming months due to the instability in Cataluña, which is leading to the departure of companies and the suspension of investments.

This confluence of factors has contributed to an increase in the presence of investment funds, Socimis and specialist property developers as the main players participating in sale and purchase operations, above all in the last year and a half (…).

In terms of rental prices, in the prime areas of Valencia, maximums amount to €4.25/m2/month in the Centre Axis of Ribaroja, whilst in the Southern Axis (…), rents have stabilised at €4/m2/month.

In terms of the profitability of logistics rental spaces, whilst in Madrid and Barcelona, yields amount to between 5% and 6%, in the areas with the highest demand in the Community of Madrid, they range between 7% and 9%, according to the consultants (…).

Meanwhile, the Port Authority of Valencia (APV) expects that the Logistics Activity Area (ZAL) will become operational during the first half of 2018, after two decades of delays (…).

Original story: El Economista (by Olivia Fontanillo)

Translation: Carmel Drake

Santander Engages Morgan Stanley To Execute Express Sale Of Popular’s Property

29 June 2017 – Voz Pópuli

Banco Santander does not want to waste any time with its sale of Popular’s properties. The entity chaired by Ana Botín has engaged Morgan Stanley to execute an express plan to get rid of the problem assets that it has inherited from its subsidiary, according to financial sources consulted by Vozpópuli. Sources at Santander declined to comment.

According to the same sources, the mandate does not outline the sale of specific assets, but rather it defines which would be the best solution: the rapid transfer of assets in large batches; the reactivation of Ángel Ron’s old idea of creating a bad bank (Project Sunrise); the transfer of assets to Testa and Metrovacesa; or taking things more slowly to benefit from the economic recovery.

It is about putting the real estate balance sheet in order and defining the best path for each asset type. But Morgan Stanley’s work, which is being led by its CEO, Juan González Pedrol, will not focus only on resolving Popular’s existing property puzzle. It is also meeting investors to get them to analyse assets and prepare bids.

The fact that Santander has already committed to a mandate of this calibre shows that it is not afraid of reducing the volume of problem assets, which amount to almost €50,000 million after the merger. That is something that investors would penalise in the event that those assets stagnated on the bank’s balance sheet. In that context, a few weeks ago, Botín committed to cutting Popular’s real estate exposure in half by 2019.

The person responsible for this task at Santander is Javier García Carranza, Deputy General Manager of the group and Head of Restructuring, Real Estate, Investments and Venture Capital. García Carranza joined Santander from Morgan Stanley, where he used to be responsible for Real Estate in London.

The mandate given to his former entity is one of the most sought-after in the investment banking sector, alongside the capital increase, from which Morgan Stanley has been ruled out. Names still in the running for that €7,000 million-operation include Citigroup and UBS, as global coordinators, and Credit Suisse, Deutsche Bank, Barclays, BBVA, HSBC and CaixaBank, according to Bloomberg (…).

Saracho’s plan suspended

One of the first measures introduced by Santander after it took control of Popular was to suspend the operations that Saracho’s team had set in motion. The former management team had at least two portfolios on the market (…).

Sources in the market expect Santander and Morgan Stanley to bring a large portfolio onto the market before the end of the year, given that there is a lot of demand from large international funds. The clean-up conducted during the merger, of almost €8,000 million, means that the group is ready for these operations.

Following the merger, Santander has accumulated problem assets amounting to €48,417 million, according to the latest official figures. Of those, €36,800 million come from Popular, with a coverage after extraordinary provisions of 66%, and €11,600 million from Santander, which before the merger held a coverage of 57%. That means that the new Santander-Popular entity has more assets than Sareb.

In addition, the group holds other investments, such as its stakes in Metrovacesa, Sareb and Testa Residencial, which, in the case of Santander alone, amount to €5,300 million.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Schroders Buys The Metromar Shopping Centre For €52.5M

25 May 2017 – Expansión

Schroder European Real Estate Trust has announced its first investment in Spain, after signing an agreement to acquire the Metromar shopping centre in Sevilla from UBS Asset Management.

The transaction price amounted to €52.5 million, which implies a future annual return of 6.2%, according to Schroders, based on the rental income generated by the property. The shopping centre’s tenants include Mercadona, Zara, Mango, Cortefiel and H&M. In total, Metromar’s rental income amounts to €4 million per year.

In terms of the structure of the deal, Schroder’s fund has directly acquired a 50% stake and has purchased the other 50% through Inmobilien Europa Direkt, a Swiss investor who is advised by the British manager.

UBS put the Metromar centre up for sale last year after acquiring it for €100 million in 2007, just before the outbreak of the real estate crisis.

According to the new owners of the shopping centre, which has a surface area of 23,500 m2, “Sevilla is expected to exceed the national average in terms of economic and consumer growth over the next five years”.

The operation has been partially financed using a loan amounting to €23.4 million.

This is the ninth acquisition by this Schroders real estate fund. Until now, the fund has focused its operations in France and Germany. Since its launch in 2015, the fund has made investments of €212 million.

“Commerce may be a key beneficiary of the economic recovery in Spain, which means that this acquisition represents a welcome addition to the portfolio, offering significant diversification for investors, as well as increasing our dividend yield”, said Tony Smedley, manager at Schroder European Real Estate Trust.

In recent months, overseas firms have been accelerating their purchases of shopping centres in Spain. For example, the British property developer Intu acquired Xanadú in Madrid; and yesterday, the French firm Klépierre announced its purchase of the Nueva Condomina shopping centre in Murcia for €233 million.

Retail Partners, EY and Gleeds have advised the British manager in its acquisition of Metromar. UBS has been advised by Cushman & Wakefield, Novasa and Ashurst

Original story: Expansión (by Roberto Casado)

Translation: Carmel Drake

Gov’t To Extend Suspension Of Evictions For Vulnerable Families

6 February 2017 – RTVE

Last Wednesday, the Minister for the Economy, Luis de Guindos, announced that the Government will extend the moratorium that prevents families in vulnerable situations from being evicted from their primary residences. The moratorium was due to expire on 15 May this year and its extension had also been requested by the Socialist Party.

“Yes, we will do so again now (extend the moratorium), like we did in 2015. We are open to negotiations”, said De Guindos, after confirming that 24,000 families have now benefitted from this measures, which favours certain groups.

The Minister was responding to questions from the Socialist congresswoman María del Mar Rominguera (…), who asked him about the Government’s intention to extend the deadline for the suspension of evictions of the most vulnerable families from their homes.

De Guindos said that the Government has protected the people who have suffered the most during the economic crisis and pointed out that some of the measures undertaken in this regard, such as the Code of Good Practice and the Social Housing Fund, approved by the Government, have benefitted more than 76,000 vulnerable families.

Evictions from primary residences have decreased by almost 30%

De Guindos said that the Government is willing to continue with these actions because they are having a “positive” effect, although he pointed out that the most recent statistics indicate that evictions from primary residences have decreased by around 30% “and that is a result of the economic recovery”.

De Guindos insisted that the creation of employment is what will confirm the economic recovery, given that “it is not only a matter of establishing palliative measures, although they are also important”.

“If employment improves in Spain, if there are increasingly more possibilities, if we increasingly see that house prices are not collapsing, we will see how situations involving evicted families will become increasingly marginal”, he said.

The PSOE supports the extension

Meanwhile, the Socialist congresswoman said she appreciated the fact that the Government has extended the moratorium for anti-evictions, which was due to expire in May (…).

The PSOE had requested an extension of the moratorium, four years after it first came into force. Nevertheless, De Guindos did not specify how long the moratorium would be extended for. (…).

Original story: RTVE 

Translation: Carmel Drake

C&W: RE Inv’t In Retail Sector Exceeded €4,300M In 2016

2 February 2017 – Finanzas

Real estate investment in the retail sector – commercial assets – in Spain exceeded €4,300 million in 2016, up by 22% compared to the previous year, thanks to the completion of 45 operations, according to the Marketbeat Retail España report, compiled by the real estate consultancy firm Cushman & Wakefield.

The study indicates that much of this investment came from overseas investors, particularly in the case of shopping centres.

Nevertheless, overall, domestic capital increased to account for 67% of financing in 2016, compared to 8% in 2007, due to the rise of the Socimis.

The CEO of Cushman & Wakefield in Spain, Oriol Barrachina, said that retail is one of the “clearest” indications that the market has become globalised.

Moreover, Barrachina commented on the need to increase “transformation” and “diversification” to generate wealth “in other neighbourhoods”.

In relation to retail complexes, the report indicated that they covered a total surface area of 16.8 million m2 – 66% of the total “stock” – spread across 672 locations.

More specifically, shopping centres covered a surface area of more than 11 million m2, with the addition of 175,000 m2 in 2016.

Regarding this year, the Director of Retail Leasing at Cushman & Wakefield in Spain, Cristina Pérez, highlighted the “positive trend” expected in the sector, thanks to the construction of another 100,000 m2 of space, with two centres in Madrid (Sambil and Plaza Río 2) and another one in Barcelona (phase 2 of Glòries).

In terms of retail parks in Spain, the supply now exceeds the European average, with a total surface area of 2.8 million m2.

In terms of high street premises, the head of the area, Robert Travers, explained that it has reached “historical highs”, thanks to the improvement in the economy, growth in tourism and rising consumer confidence.

Moreover, Travers noted that the luxury sector is suffering from a “major” change, following “eight years of euphoria”, due to the effect if terrorism, concerns over the Asian markets and a rise in taxes in China.

In this sense, the Head of High Street confirmed that the growth in luxury stores in Spain is going to be “moderate”.

Cushman & Wakefield’s report also contains information about the boom in e-commerce – which has grown globally by30% since 2007 – and its effect on the real estate sector.

Pérez underlined that it is now necessary “to offer a different social experience” to get “people out of the house” and visiting shopping centres in person.

The Head of Retail Leasing acknowledged that 77% of Spain’s shopping centres “need some kind of improvement”, including modifications to bring them closer to the e-commerce segment.

Original story: Finanzas

Translation: Carmel Drake