Town Hall of Barcelona Buys a Building in the City Centre for Social Housing Use

7 June 2018 – Eje Prime

Ada Colau is continuing with her plan to increase the portfolio of residential property owned by the Town Hall of Barcelona for social housing purposes. In this case, the Town Hall is going to invest €2 million in the purchase and renovation of a building in the centre of the Catalan capital.

The property, located in El Eixample, at number 317 Calle Aragó, has been acquired through a right of first refusal arrangement, a preferential purchase that the Town Hall of Barcelona is allowed to exercise by law. The building contains eleven homes, four of which are empty. Moreover, the asset has a commercial premise on the ground floor, which will be allocated for “residents’ use”, according to comments from municipal sources.

The councillor for El Eixample and spokesman for the Town Hall, Gerardo Pisarello, explained that the goal of the purchase is, in addition to increasing the stock of social housing rental properties as Colau promised during her election campaign, “to avoid residents from ending up in the hands of financial institutions and vulture funds that want to acquire properties for speculative purposes”. Since becoming the mayor of Barcelona, Colau has purchased 500 flats that have been subsequently destined to rent.

At the beginning of 2018, the municipal government announced that it would invest up to €36 million in the purchase of seven private plots for the construction of public housing developments, primarily for social housing purposes, which are in constant demand in light of the rising rental prices in Barcelona, which increased by 18% in 2017.

Original story: Eje Prime 

Translation: Carmel Drake

Elix Vintage Residencial Buys 4 Buildings for €3M

5 December 2017 – Eje Prime

The Socimi owned by Altamar, the property developer Elix and KKR has purchased its first assets. The company Elix Vintage Residencial has injected €3 million for the purchase of four buildings, located in Barcelona and Madrid, according to explanations given by sources at the company to Eje Prime.

According to the Official Gazette of the Mercantile Registry, the firm has carried out a capital increase amounting to €3 million in the company Elix Vintage Residencial Socimi. In this way, the company’s subscribed capital has increased to €3.06 million. According to the company, the first purchases that have been carried out involve four residential assets, in Barcelona and Madrid, although sources at Elix declined to give more details about the properties.

KKR and Altamar Capital Partners joined forces in July to invest in the Spanish market for the renovation and leasing of homes. The two funds signed an agreement with one of the property developers with the greatest amount of experience in the sector, Elix, to launch a Socimi that will invest more than €200 million in the purchase of properties in Barcelona and Madrid. The objective of both funds is to debut the investment vehicle on the stock market once it has carried out the bulk of its investments.

This company, which is headquartered in Barcelona, was created with share capital of €100 million. That capital was mostly contributed by KKR and a group of international and domestic investors, including Altamar and Deutsche Finance Group. The rest of the shares are owned by Jaime Lacasa and Jorge Benjumeda, founders of Elix.

The idea is that this capital contribution could be doubled with indebtedness. The plan involves purchasing around four buildings over three years and subjecting them to complete renovations before putting them on the market as rental homes once they have been refurbished. That rental income will feed the Socimi, which plans to rotate its asset portfolio every three years.

Elix will be the company responsible for converting the properties, and so it is acting as an industrial partner. With this vehicle, the company will be able to scale up its business model, which until now had been very concentrated in the El Eixample district of Barcelona. The company, founded in 2003, expanded its activity to Madrid last year (…).

New recruit

In parallel to its Socimi, Elix is pushing ahead with its business, to which end it has hired a new director to strengthen its real estate area. The company has recruited Rafael Vázquez to lead the management of its property portfolio.

The company’s newest member will lead an area that handles around 1,000 properties and which is expected to include another forty new buildings (to be renovated) thanks to the more than €200 million of funding that the Socimi Elix Vintage Residencial has available to spend on assets in the Spanish and Catalan capitals.

Vázquez, who has more than fifteen years of experience in the sector, joined the firm from Encore Captial Group, a company for which he carried out asset recovery services in Spain. The executive holds a degree in Architecture and an MBA from the IE business school.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Optimum RE Looks Set To Buy 3 Assets In Barcelona For €7M

21 June 2017 – Eje Prime

The real estate investment vehicle manager BMB Investment Management and the US fund Bluemountain are continuing their shopping spree in Spain, through their Socimi. Optimum Real Estate will spend €7 million on the acquisition of three new assets in Barcelona, according to sources at the group. Optimum’s objective is to close the year with a portfolio of properties worth more than €70 million.

To this end, the second Socimi to be promoted and managed by BMB, is currently studying the acquisition of three assets in the Catalan capital, the city where the majority of the properties controlled by the group are located. The first is located at the junction of Calle Girona and Calle Aragón and has a surface area of 825 m2. For this residential asset, Optimum is looking at spending €2 million.

The second property for which Optimum is bidding is located on Calle Cartagena, also in Barcelona. Located in the El Eixample neighbourhood, this residential property measures 837 m2 and would require an investment of €1.8 million for the Socimi.

The last asset that Optimum is interested in incorporating into its pipeline is located at the junction of Calle Nápoles and Diagonal. It would be the most expensive of the three, given that the Socimi could end up paying almost €3 million for it – it would also be the largest, with a surface area of 1,091 m2. If Optimum were to complete these three purchases, it would end the year fulfilling its objective of owning a portfolio of assets worth more than €70 million.

“Nevertheless, although the negotiations are in an advanced stage, we are not ruling out the possibility of changing our plans and acquiring other assets over the next few months instead, whereby exceeding our objective”, explain sources at Optimum.

Currently, the asset portfolio owned by the Socimi, which was created following the success of two vehicles constituted in 2007 to buy residential buildings in Berlin (Germany), comprises fifteen assets located in Barcelona, in central areas such as El Eixample, Gran Vía, El Born and Ramblas, as well as one in Madrid, located at number 8 on Calle San Bernadino.  Optimum’s portfolio is currently worth €63.7 million.

Optimum III

In order to take advantage of the falling prices in the real estate market in Barcelona, BMB launched its third fund, Euro Re Optimum III Barcelona, focusing its experience on the residential market in the Catalan capital (…). This is a tailor-made fund aimed at private investors and family offices (…).

BMB’s intention is to invest €100 million in total with the new vehicle, through acquisitions and improvements. In this way, the portfolio of Optimum III will comprise more than twenty buildings.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

CBRE: A Third Of Barcelona’s New Homes In 2017 Will Be Luxury Properties

20 December 2016 – La Información

One third of the 764 new homes that are going to be built the city of Barcelona in 2017 will be luxury, according to data from the real estate consultancy CBRE, which reveals that most of the property development activity in the city will be centred around: El Eixample (439 homes), Sants-Montjüic (126) and Sant Martí (100). The consultancy also forecasts a gradual increase in prices.

The Director of the CBRE office in Barcelona, Anna Esteban (pictured above), explained at a press conference on Monday that the new luxury homes are not only being constructed in the upper area of the city, but also in the centre and along the sea front, in line with the significant demand from international investors.

The Vice President of CBRE in Spain, Enrique Martínez Lagun, noted that this demand for high standing homes is linked to the attraction of international companies, which consider that Barcelona offers a very good price-quality relationship.

Esteban revealed that “several large multinational companies will announce that they are moving some of their operations to Barcelona” in 2017, although she pointed out that they will have trouble finding the large spaces that they need. As such, she predicts that there will be some major renovation projects in the Catalan capital to meet demand, given that there are insufficient plots of land available to build from scratch.

The city is planning to build around 200,000 m2 of office space over the next few years, although 100,000 m2 of that space has already been committed to clients, which means that the other half is still available. The area that is expected to see the most significant growth is the 22@ district, where 65,000 m2 of space is under construction, one project is due to be started and four others are being assessed. The current stock of office space there is practically full and rents are similar to those charged in the city centre. (…).

Essential renovations along La Diagonal

Esteban also said that Paseo de Gràcia has lost 80,000 m2 of office space over the last few years, due to changes in the use of properties towards more profitable activities, such as retail, residential and hotels. She calculates that more than 60% of the office buildings on the Avenda Diagonal thoroughfare require major renovations to adapt them to current demand and ensure that they do not become obsolete. She also predicts that the Plaza Europa and Almeda Park area will see higher occupancy rates and rents once the 22@ area has become more established.

The lack of supply to meet the high demand for offices has meant that Barcelona has seen the highest increase in rental income in Spain in recent years, up by 21% since 2014. Rents are forecast to grow by a further 7% in 2017, making it the second European market in terms of forecast rental growth, behind Madrid.

For the Catalan logistics sector, CBRE forecasts a 5% increase in rents in 2017, following growth of 8% since 2014, making it the highest ranking European market in terms of rental growth in this segment. (…).

Original story: La Información

Translation: Carmel Drake

Tinsa: House Prices Rise By Most In Madrid & Barcelona

18 July 2016 – Expansión

The Balearic and Canary Islands are featuring in the housing recovery, but Madrid and Barcelona are leading the way; there, the number of transactions has picked up pace and prices are growing strongly once again. Most of these increases are due to the economic recovery, but the savings factor is also playing a major part.

In fact, the influence of private investors is still playing a crucial role in the strengthening of the two major real estate regions, whose central districts are the most sought-after by companies and individuals, both Spanish and foreign.

It is precisely the influence of these investors that boosted property prices in both capitals in the first place, firing the starting gun for the reactivation of the sector, as they committed to the prime areas before anyone else. These central districts, which are well-connected and offer good services, used to offer a certain degree of security for investors, and a great deal of potential for appreciation, even when everyone in the market was still searching for land.

Both cities were amongst the leaders of the increase in house prices during the second quarter of the year, according to data from the appraisal company Tinsa, published recently. Nevertheless, these increases were concentrated in some of the most expensive areas, as shown by the analysis by district of the local markets. Specifically, many of the neighbourhoods where prices stand at around €3,000/sqm in Madrid and Barcelona are also those where prices have risen by the most in the last year, whereas prices in those neighbourhoods that fall below the average have grown more moderately.

For example, prices in the Madrilenian neighbourhood of Salamanca have risen by 9.8% in the last year, whilst in Chamberí they have increased by 8.9%. Meanwhile, in Barcelona, the following districts stand out: Gràcia (where prices have risen by 12.7%), El Eixample (10.9%) and Les Corts (8.1%). These statistics show that the prime areas are recovering better than the rest. They are central, well-connected areas with very solvent demand, where returns are high and there is significant retail activity, which means they have significant potential for appreciation both for those buying to invest as well as those looking to put their properties up for rent. As with everything, there are notable exceptions, such as the Retiro area in Madrid and Sarrià-Sant Gervasi in Barcelona, which are increasing by below the average.

Other areas

Nevertheless, the real estate expert José Luis Ruiz Bartolomé indicates that the real estate market has now entered a new phase, in which the recovery is spreading to more and more areas. “Before, properties were only being sold in the best districts, but now the increases have spread to the most popular areas, as supply is limited and there are increasingly more buyers looking for homes to live in, rather than to buy as investments”, he explains.

For this reason, the most popular neighbourhoods have become more attractive with the recovery of the labour market and the opening of the bank financing tap. In this way, house prices in the Madrilenian neighbourhood of San Blas have risen by 9.9%, making it the second highest price rise district in the capital; meanwhile, Sant Andreu is also boosting prices in Cataluña, with an increase of 8.2%. Similarly, prices in all of the districts of Madrid that cost less than €2,000/sqm have increased by more than the average, with the exception of Villaverde, the cheapest of all, where prices have remained stable. Something similar is happening in Barcelona where the most popular areas, such as Nou Barris and Sants-Montjuïc, also grew by more than average. (…).

Moreover, Tasaciones CBRE indicates that the profile of investments funds “has evolved rapidly from being opportunistic to value-added, choosing instead to back development, the renovation of properties and, given that they have perceived the potential for refurbishments, they will gradually start managing plots of land in urban areas, with the aim of obtaining higher returns”. With this, the increase in demand and prices will increasingly move to more remote areas. (…).

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake