Barcelona City Hall Suspends Tourist Licences For 1 Year

3 July 2015 – Cinco Días

The mayoress of Barcelona, Ada Colau, has fulfilled one of the promises she made during the election campaign for the municipal elections with the launch of a one-year moratorium for the granting of tourist licences in the city. “Tourism is one of the city’s main assets and we have to take care of it and make it sustainable”, she said.

Colau’s announcement had been expected by the market, since it had been one of her main promises during the election campaign, but it did not take shape until yesterday. Barcelona’s City Council, governed by Barcelona en Comú, has taken the decision to freeze licences for at least one year. The town council’s aim is to submit a Special Plan for the Regulation of Tourist Accommodation during the first quarter of next year, although it does not rule out extending that period by another year.

Some of the most iconic hotel projects being carried out in Barcelona include the conversions of Torre Agbar, the Deutsche Bank tower and the Henkel building. But, according to Janet Sanz, deputy mayoress of ecology, urban development and mobility, the actual list is longer and includes around thirty properties. “We are not saying that none of these projects will go ahead, simply that we are beginning a process of reflection on our tourism model”.

This moratorium, which comes in addition to the one that already exists in the neighbourhood of Ciutat Vella, is intended to allow time for an in-depth analysis of the stock of tourist accommodation in the city, so that the existing supply and the economic and social impact of tourism can be evaluated and diagnosed. The freeze will affect all establishments, from luxury hotels to hostels, so that a “calm debate” can be held about the situation in the city. Plans are afoot at the Deutsche Bank tower, which KKH purchased  last year, to build a five star Four Seasons hotel, costing €150 million, and the plan is to open a Grand Hyatt hotel in the Torre Agbar, which Emin Capital acquired in 2013. Others, such as the property being renovated by the construction company owned by Josep Lluís Núñez, the former President of FC Barcelona, will be excused from the moratorium.

In terms of Spanish hotel chains, the moratorium may affect Barceló, which is planning to open two new establishments in the city: one on Avenida Diagonal, 414 with views of the Casa de les Punxes, and the other, the conversion of the former headquarters of Nubiola Pigmentos, on the corner of Pau Claris and Gran Vía, which is still in its early phases. Nearby, one of Melia’s ME hotels, with 173 rooms, on the corner of Calle Casp and Paseo de Gracia may be affected. (…). Iberostar, Room Mate and Praktik Hotels could also be affected. (…).

The market regards the moratorium as a sign of insecurity for the entry of new investors. “The decision creates legal and administrative insecurity and leaves investors interested in entering the city on stand by”, says Inmaculada Ranero, CEO of Christie + Co for Spain and Portugal. (…).

Original story: Cinco Días

Translation: Carmel Drake

Election Fallout: Large Investors Rethink Their Strategies For Spain

2 June 2015 – Expansión

Election fallout / International funds are worried about the impact that the new (political) environment will have on their purchases of: social housing, problem mortgages and portfolios of homes from banks.

The rise of Podemos in the municipal and regional elections could clog the bank’s real estate drain once again. After years of provisions and foreclosures, the financial sector had started to sign large transactions in recent months, and whereby reduce the high burden of property on their balance sheets. Transactions worth more than €10,000 million are currently underway. However, some potential investors have begun to rethink their strategies and fully expecting that the projects that are already underway will be affected, at least in terms of price.

(….)

The fears of the larger international funds revolve around what might happen in three specific segments: subsidised social housing (VPO homes), where Blackstone and Goldman Sachs have been very active; the suspension of evictions; and the possibility that new measures will be taken to deal with vacant homes.

Subsidised social housing

Subsidised homes were one of the assets that the funds that first arrived in Spain expressed interest in. Blackstone and Goldman purchased more than 8,000 homes of this kind between 2013 and 2014 from the Community of Madrid, the Town Hall of Madrid, FCC, Sareb and Bankia.

Now, after a couple of years managing these real estate portfolios, the funds fear that the expected arrival of Ahora Madrid in the Town Hall will change the rules of the game and may even cause them to reverse their purchases (i.e. exit their investments) (…).

Mortgage portfolios

The second wave of concerns relates to mortgage portfolios, which were expected to generate a large volume of transactions during 2015. A priori, financial sources indicate that it would be easier if there was no legislative change until the general elections, in case Podemos gains strength as an alternative Government. However, the mere uncertainty in this regard means that funds are going to really take care with the purchase of any portfolio.

Blackstone is again the fund that is most exposed to these assets, since in 2014 it purchased a portfolio of problem mortgages from Catalunya Banc amounting to €6,400 million. This acquisition involved around 50,000 mortgage contracts, of which 57% were overdue or non-performing; and more than half were located in the province of Barcelona, where the possible arrival of BComú – which groups together Podemos, Esquerra Unida and other left-wing parties – generates real real amongst international investors.

Following this transaction, agreed in 2014, Bankia and BMN have put their own problem mortgage portfolios up for sale.

Sources close to the funds explain that eviction is the last resort used for this type of portfolio, and that the main objective is to reduce the debt so that loans become more affordable or “daciones en pago” in exchange for holding onto the home. But, they add, that the legal concept of eviction helps them to put pressure on certain delinquent borrowers, something they would have to stop doing based on the election promises of some of the political parties.

Tax on vacant homes

Given the uncertainty surrounding the general elections, a more immediate fear is the new taxes that local councils in the major regional capital cities may introduce: such as the tax on vacant homes. That would certainly have an effect of some of the loan portfolios that the banks have put on the market in recent months. (…)

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake