Tag: European Commission

Is Málaga the Silicon Valley of the South? Its Offices Generate Yields of 7.25%

7 January 2019 – Eje Prime

Málaga is positioning itself as the possible Silicon Valley of the south of Spain. The second most populated city in Andalucía and the only Spanish city in the Top 10 for the best quality of life in Europe, according to Eurobarómetro, has attracted several technology giants in recent years. The interest from these companies in moving to the area and the lack of available space have driven up prime yields in the office market in Málaga to 7.25%, making it the most profitable place to own an office in Spain, according to data from CBRE.

The international consultancy highlights that Málaga is “consolidating its position as a city of reference in Spain in the development of the technology sector”. Oracle, Accenture, Microsoft, Huawei, Ericsson, Indra, Atos and Cisco, amongst others, have all opened offices in the city. The meeting point for these companies is the Andalucía Technology Park (PTA), recently included in the catalogue of European Digital Innovation Hubs, compiled by the European Commission, and which recorded a turnover of €1.9 billion in 2019, up by 8%.

In addition, the province is home to other smaller clusters, such as Málaga SmartCity and the ‘Polo de Contenidos Digitales de Málaga’, the first hub with those characteristics in Spain and which aims to accelerate projects and companies related to the digital sector.

The increase in demand for offices in the city also comes in response to the future forecasts for growth in the region. In fact, Oxford Economists names Málaga as the city where the economy is going to grow by the most in Spain over the next decade. The good connectivity of the province abroad and tourism are some of the factors driving those predictions.

In recent years, Málaga has enjoyed a facelift in recent years with improvements in its infrastructures, and the airport and port as anchors for tourism and business. In addition, the population has increased to 570,000 inhabitants in recent years and there are now more than 40,000 companies, of which 87.1% specialise in services.

These drivers have reactivated the office market, which has taken advantage of the boost in demand, on the rise since 2015. Rentals cost €17/m2/month in the city’s best buildings and the occupancy rate in the prime area exceeds 90%.

The shortage of competitive products in terms of location, finishes and facilities, has driven the increase in yields. In comparison with Madrid and Barcelona, the variation in prime yields is great, improving the yields of 3.25% and 4% that were being registered in the two major Spanish capitals at the end of the third quarter 2018.

Moreover, the office market in Málaga also generates higher yields than the market in Bilbao, although it is not far behind with average yields of 7%, as well as those in Sevilla and Palma, which do not exceed 6.75%. The yields in Valencia and Zaragoza amounted to 5.25% and 6%, respectively, in September last year (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Bankia Signs Property Developer Loans Worth €450M in 2018

2 January 2019 – Eje Prime

Bankia is consolidating its return to the property development sector. The bank signed loans worth €450 million for the construction of homes during 2018, its first year back in the real estate business after the restrictions imposed by the European Commission, as a condition for saving the company from bankruptcy, came to an end.

During the year that just ended, Bankia signed several financing operations with real estate developers to construct 2,200 homes in total in Madrid, Cataluña, the Community of Valencia, Andalucía and the Balearic Islands. With these figures, the bank doubled the expectations that it had set itself when it re-launched in the real estate sector, according to reports from the entity in a statement.

Following the results of the first year, the entity chaired by José Ignacio Goiriogolzarri says that it is carrying out its activity “in accordance with the new standards of prudence in the real estate sector, which includes a requirement for adequate marketing stages and the comprehensive control of the development of projects”.

The €450 million financed in 2018 forms part of Bankia’s strategy to try to re-conquer the property developer sector and achieve a market share of 8% by 2020.

Bankia was rescued in 2012 with public aid and sanctioned by Brussels to refrain from participating in the real estate market for five years as a condition for receiving some of the capital that was used to rescue it from financial crisis.

Original story: Eje Prime

Translation: Carmel Drake

Brussels Approves the Sale of CaixaBank’s RE Arm to Lone Star

11 October 2018 – La Vanguardia

Today, the European Commission (EC) has given the green light for CaixaBank to sell 80% of its real estate business to the US fund Lone Star after verifying that it will not harm competition due to its “limited impact on the market structure”.

The EU Executive reported its approval of the operation, which was announced by CaixaBank on 28 June and which will involve the sale to Lone Star of a portfolio comprising the real estate assets available for sale as at 31 October 2017 and the real estate company Servihabitat.

The package is worth around €7 billion in its entirety.

CaixaBank is planning to close the sale at the end of this year or the beginning of next year and estimates that it will result in cost savings of €550 million over the next three years, between 2019 and 2021.

Moreover, it will allow it to clean up its balance sheet of foreclosed assets proceeding from the crisis and improve its returns, according to the bank.

The Competition Department of the European Commission analysed the operation using the simplified procedure for reviewing mergers, which is used for those deals that, a priori, will generate the fewest problems.

Original story: La Vanguardia

Translation: Carmel Drake

Bankia’s Return to Financing Developers: €180 Million in First Semester 2018

20 August 2018

In the year to June, the Spanish bank signed ten financing operations, nine lines of guarantees, as well as seven comfort letters, worth fifty million euros, on its return to the development business after the European Commission.

Bankia has returned to the development business in a big way. The Spanish bank financed real estate projects in the amount of 180 million euros in the first half of the year in its return to the sector, after freeing itself of the restrictions imposed by Brussels five years ago as a condition for receiving lines of capital that saved the institution from bankruptcy.

From January to June, the institution signed ten financing operations, nine lines of guarantees, and seven comfort letters worth almost 50 million euros, as reported by the company on Monday.

In its return to the real estate business, Bankia created a development management team at the end of last year, in line with its plan to loan 400 million euros per year to the sector and capture a market share of 8% by 2020.

Bankia’s re-appearance in the area of developer loans began with a loan to the Basque group Amenabar, one of the country’s most promising developers, for the construction of 150 homes in Las Rozas (Madrid).

Alberto Manrique, director of ​​Bankia’s development team, this line of business is “one of the bank’s levers” in a new phase of growth that began this year.

Original Story: EjePrime

Translation: Richard Turner

 

Brussels Authorises Creation of Real Estate JV By Sabadell and Oaktree

11 June 2018 – Europa Press

On Friday, the European Commission approved the creation of a joint venture in the real estate sector by Bitarte, a company belonging to the Banco Sabadell group, and the US company Oaktree Capital Group Holdings.

The creation of this joint venture, which will be dedicated to the identification, acquisition, development and commercialisation of residential plots in Spain, does not represent a problem for the competition authorities due to its limited impact on the structure of the market, according to a statement issued by Brussels.

In this way, the operation has been approved by virtue of the European rules governing concentrations and has been examined under the framework of simplified control procedures, which is used by the EU executive in less complex competition cases.

Bitarte owns real estate assets under development, whilst Oaktree Capital Group is a global company specialising in management and specifically in loan and financing strategies.

Original story: Europa Press

Translation: Carmel Drake

Bankia To Start Financing Property Developers Again as EC Restrictions End

2 January 2018 – Inmodiario

From 1 January 2018, Bankia will be able to launch new lines of activity after the restrictions, established by the Restructuring Plan that the entity signed with the European Commission five years ago, were lifted. These activities will represent the levers for commercial development in the new growth phase that the entity is now embarking on.

José Ignacio Goirigolzarri, President of Bankia, has confirmed that “we are starting a new phase of growth after leaving behind a successful restructuring phase that we have now completed”. And he added that “the lifting of the restrictions imposed by the Restructuring Plan opens up new business opportunities for us and places us alongside our competitors once again”.

Over the last five years, and as a result of the commitments taken on to enable it to sign the Restructuring Plan (which allowed it to receive aid), Bankia was not allowed to operate in certain activities, such as financing real estate developments or companies with access to capital markets.

With the new objectives in mind, the entity has incorporated a Property Development Division into its new organisation, which was approved recently. It has appointed Alberto Manrique to lead that business and he will report directly to the Business Banking Division, led by Gonzalo Alcubilla.

Manrique joined the group in 1988. Since then, the industrial engineer, who holds a degree in ‘ETS de Ingenieros’ from ICAI, has taken on several positions of responsibility. Most recently, he has carried out different tasks within the Business Banking sphere, such as the corporate management of the business branch network in the centre of Spain, the management of the Structured Finance and Syndicated Loan product teams and taking responsibility for the online business channels.

The new management team will be responsible for developing financing for property developers at a point when the cycle is recovering, “with growth expected for at least three or four years, during which time we expect that around 150,000 new homes per year will be built”, says Manrique.

One of the other new lines of activity that Bankia will develop from 1 January 2018 onwards will be to grant long-term financing to large corporations with access to capital markets, inside and outside of Spain, as well as to finance projects and acquisitions, activities that have been limited in recent years.

In addition to these new lines of activity for the coming year, the growth phase that Bankia is now starting will be marked by its ability to take advantage of the enormous growth opportunities that result from the increase in the client base that the entity has experienced in recent years and as a result of the process to integrate BMN, which consolidates the resulting entity’s position as the fourth-largest bank by assets in Spain.

Original story: Inmodiario 

Translation: Carmel Drake

EU: House Prices In Spain Will Rise By 6% Before 2017 YE

23 February 2016 – El Economista

Spain and Ireland, two of the European countries that suffered the most from the burst of the housing bubble, will see their property prices rise again over the next few years.

That is according to the winter forecasts published by the European Commission, which expects real house prices to increase by 6.5% until 2017 in the case of Ireland and by 6% in the case of Spain during the same period. Malta, where prices are also expected to increase by 6%, completes the podium.

Although house prices are expected to recover, the EU notes that loans taken out to purchase homes continued to decrease (in Spain) in 2015, as well as in Latvia, Hungary, Portgual, Ireland and Greece. In the case of Spain, the decrease amounted to 4% in 2015, below only Latvia and Hungary.

At the other end of the spectrum is Greece, where the EU expects house prices to fall further, in that case by 1.5%. According to the Commission’s report, Greece was the only country not to experience improvements in the financing conditions for homes, which were seen across Europe in 2015. According to the EU, the improvements in financing conditions lie behind the recovery in property prices and only Greece remains at the side-lines. In most countries, the improvement began back in 2014, apart from in Croatia, Lithuania and Italy, which all relaxed their financing conditions in 2015.

Where will prices fall?

Besides Greece, the EU predicts that house prices will fall in three other countries, namely in: Belgium, France and Bulgaria.

The Commission says that the ratio of house prices to disposable income in Spain amounted to 10.1 in 2014, well below the figure of 15.6 recorded in 2007, when the ratio peaked and also significantly above the figure of 8.6 registered in 2000. Ireland has experienced a similar evolution to Spain; there, house prices represented 13x income in 2000, increased to a peak of 16.8x income in 2007, before decreasing to 11x income in 2014.

In 2014 in Portugal, house prices stood at their lowest level since 2000: then they represented 11.2x income, compared with 9x income in 2014. And Germany has also experienced a similar trend – house prices there have decreased from representing 8.6x income to 7.2x income in 15 years.

The property sector in Spain has changed

The reality is that the housing market in Spain has changed (significantly), not only in terms of the decrease in the income requirement to pay for a home, but also in other aspects. The first is the decrease in the number of operations being closed each year: According to INE, 354,132 transactions were closed in 2015, which represents a similar level to 2011. However, that figure represents less than half the number recorded in 2007 (when 775,300 homes were sold).

Another aspect that has changed significantly is the size of the mortgages being granted. In absolute terms, they have decreased from almost €300,000 million in 2006 and 2007, to just over €41,000 million in 2014. On average, the size of mortgages granted has also plummeted, by 37%, to €106,655 in November 2015.

Original story: El Economista (by Inés Calderón)

Translation: Carmel Drake