The Bank of Spain Warns that the Economy will Contract by Between 6.6% and 13.6%

The Bank of Spain forecasts a decrease in the growth of the Spanish economy that is unprecedented in recent history, with a decline that has already reached 9%.

The Bank of Spain forecasts a decrease in the growth of the Spanish economy that is unprecedented in recent history, with a decline that has already reached 9%. In a document published on Monday, the body calculates that activity in Spain registered a quarterly decrease of 4.7% between January and March.

For the year as a whole, the Bank of Spain has established three scenarios. Two of them are based on the lockdown lasting eight weeks – at the moment, the Government has proposed a third extension, which is pending approval, until 9 May – and the third where the State of Emergency goes on for three months.

JLL: Investment in Offices in Barcelona Amounted to €611M in 2018

21 March 2019 – Eje Prime

According to the consultancy firm JLL, direct investment in the office sector in Barcelona amounted to €611 million in 2018. That figure represented 24.4% of the total investment in office spaces across Spain, which amounted to €2.6 billion. Direct investment in offices in Madrid reached €1.9 billion last year.

In Barcelona, the largest operation of the year in the office segment saw Blackstone acquire the Planeta building for €210 million.

Meanwhile, 356,000 m2 of office space was leased in the Catalan capital, up by 8%. The real estate firm forecasts an upwards trend with the leasing of office space amounting to 360,000 m2 in 2019, 368,000 m2 in 2020 and 370,000 m2 in 2021.

In terms of rental prices, prime rents grew by 8.6% in 2018 to reach €25.25/m2/month on average. JLL forecast that rents will rise by 5% p.a. until 2021 to €30.34/m2/month within five years.

Original story: Eje Prime 

Translation: Carmel Drake

Aena Mobilises Mega-Investments in Barajas & El Prat Amounting to €4.2bn

29 November 2018 – El Confidencial

The largest property developer in Spain is not a real estate company, it is AENA, a company that does not depend on the real estate sector for its business, on the contrary. It has started a race, together with external partners, to mobilise investments worth more than €4.2 billion focused on two projects: the urban development of Barajas and El Prat, annexes of the airports in Madrid and Barcelona. Together they represent the largest real estate project in Spain, and they are very focused on logistics due to the proximity to both airport centres, but also on offices. In office space, alone, the firm wants to promote almost 1 million m2 across the two urban areas.

This contradiction that the largest property developer is not an agent of the real estate sector is due to the fact that AENA is a very large landowner. For years, all of its plots have aged as if they were wine. The airport city in Barcelona, for example, was projected more than 14 years ago. But only now has Deloitte been engaged to look for international funds to mobilise that investment and Garrigues been contracted for legal advice about the monumental project.

And it is a long-term project. In the case of Barcelona, the most advanced of the two, it plans go out 20 years. In Barajas, the proposal is twice as long, 40 years. Moreover, according to sources in the sector, of the 622 hectares of net plots in Barajas, 396 hectares are awaiting development.

Given that the blocks of land are so close to the airports of the two capitals, logistics is the fundamental basis of the proposals. According to the latest report from Jones Lang Lasalle, logistics assets are generating yields of between 6% and 7%, a high rate when interest rates are so low. In the case of Barajas, for example, the planned logistics development represents the bulk of the project, 1.2 million m2 of constructed space, which will be the largest logistics centre in Spain, with the added synergy of connecting the current airport cargo area with the so-called Corredor del Henares.

In terms of office space, the plans also involve enormous dimensions. At El Prat, 362,000 m2 of constructed space is planned, almost as much as in the whole of the 22@ district promoted to date (…). And in the case of Madrid, it is even larger. At Barajas, the volume of planned offices is triple that figure, although it will have to be constructed over four decades.

In addition, there will be hangars, commercial areas, hotels and cargo services for aeroplanes. In practice, it will be like building two new cities, one in Barajas and the other in El Prat.

The immediate plans

The closest projects are the phases that have been planned for the next five to eight years. At the airport in Barcelona, the phase that AENA has called “catalysing” spans the first five years, during which time €387 million will be invested in total to promote almost 400,000 m2 in different types of urban planning projects.

These investments will run in parallel to the airport projects that have already been approved. In this way, AENA has already committed investments amounting to €690 million in El Prat, which include a new satellite terminal (…), to be carried out over the next four years.

This phase is longer at Barajas. It will last for eight years and will involve a forecast investment of €953 million, according to the Adolfo Suárez Madrid-Barajas Real Estate Plan. During this phase, more than 500,000 m2 will be constructed (…).

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake

Japanese Firm Fanuc to Invest €15M in New Spanish HQ in Barcelona

5 October 2018 – Eje Prime

New corporate operation on the outskirts of Barcelona. The Iberian subsidiary of Fanuc has purchased two plots of land from Institut Català del Sòl (Incasòl) in Sant Cugat del Vallès in order to locate its new headquarters in the town. The total investment will amount to €15 million, according to a statement issued by the company.

The subsidiary of the Japanese multinational of the same name specialises in the manufacture of robotic solutions. Fanuc Iberia will locate its new central offices in Spain in Sant Cugat del Vallès.

The complex, which will be located on the Can Sant Joan business park, will comprise two plots with a combined surface area of 14,237 m2. The new plant will be located on the financial axis of the B-30/AP-7 motorway. According to Fanuc Iberia’s forecasts, the building work will start at the beginning of 2019 and will be completed by the end of 2020.

Original story: Eje Prime

Translation: Carmel Drake

Dextra Corporate Launches Residential Fund Focusing on Galicia

2 March 2018 – Eje Prime

The Barcelona-based corporate finance firm has created a fund manager, Swan Real Estate Management, whose first vehicle aims to acquire, renovate and sell on up to ten residential buildings in Galicia.

Dextra Corporate is throwing itself into the housing market. The Barcelona-based finance firm, led by former Deloitte employees Iker Zabalza and Stephan Koen, has created Swan Real Estate Management, a fund manager to invest in the Spanish residential market. Its first investment vehicle, Seagull Real Estate, will get going shortly with €14 million to spend and will travel exclusively to Galicia where it plans to buy up to ten buildings. For this company, Dextra has been supported by Andbank: 90% of the investment is going to proceed from Galician customers of the Andorran bank.

The aim of the project, in which the manager AKM, led by Xavier González, is also involved, is to look for assets in second-tier cities in Spain, which are still in the recovery phase. The plan is to renovate the buildings and sell them on on a home by home basis.

Seagull will focus mainly on properties in central areas of A Coruña and Vigo, which may be of interest to customers with a medium-high purchasing power, according to Expansión. The manager’s forecast is to purchase between five and ten residential buildings.

Although it is going to start off with €14.4 million, Swan hopes to increase the investment figure of its Galician vehicle to €25 million. With the addition of bank financing, the spending capacity of the fund could rise to €50 million.

For Project Seagull, Dextra has teamed up with local businessman Manuel Corbal, who has extensive experience in the Galician real estate sector, in the areas of construction and promotion.

Original story: Eje Prime

Translation: Carmel Drake

Forcadell: RE Investment Fell by 3.5% in 2017 to €13.5bn

27 February 2018 – Eje Prime

Investment in real estate continued to perform well last year but actually fell with respect to 2016. In total, €13.5 billion was invested in the domestic real estate market in 2017, which represents a decrease of 3.5% compared to the €14 billion that was registered during the previous year, according to data from the consultancy firm Forcadell.

Spain was the fourth-ranked country in Europe in terms of the most money received in the sector, behind only Germany, France and the United Kingdom, in that order. Moreover, Madrid and Barcelona were the two cities that received the most demand, accounting for 85% of the total capital invested in the domestic real estate market last year.

The office market was the sector that stood out the most in terms of investment volumes. And within that sector, Madrid and Barcelona, which together captured €2.455 billion of investment, were the main drivers of the segment, accounting for 95% of the total. In those two cities, prime rents reached 4.25% in Madrid and 5% in Barcelona.

On the other hand, the good performance of the housing sector also allowed an upturn in the residential sector, which saw investment of €3 billion in 2017, a level of activity not seen in that market since 2008, according to the consultancy firm. Besides the two major capitals, Valencia, Sevilla and Bilbao were the three cities that saw a significant increase in the field of residential development.

The logistics sector was the most profitable

One of the areas that is growing by the most at the moment in the Spanish real estate market is the logistics sector. Despite having the lowest rents per m2, the segment offers great returns from the point of view of real estate investment. The strong leasing figures and scarce supply close to large cities are generating interest from funds, primarily international players, who want to build new large industrial spaces measuring between 3,000 m2 and 50,000 m2, to rent them out.

Retail, on the other hand, continued its record figures from 2016 throughout last year with an investment volume that reached €4 billion. Moreover, land became very sought-after once again in the real estate sector, which had great demand, above all, in the residential market.

Looking ahead to 2018, Spain is expected to continue to represent a country of great interest for real estate investors, both domestic and international. Moreover, Forcadell forecasts that fundraising will increase significantly, both in terms of the number of players involved and the volume disbursed.

Original story: Eje Prime

Translation: Carmel Drake

Savills Aguirre Newman: Tertiary RE Transactions Soar in January to Reach €910M

6 February 2018 – Eje Prime

The sales of the Parque Corredor shopping centre in Madrid and the 16 Inditex stores in Spain and Portugal have boosted the sector, which has already registered 40% of the total amount invested during the first quarter of 2017.

Operations in the retail segment have stepped up a gear. The Parque Corredor shopping centre in Madrid, and the portfolio of stores that Inditex put up for sale in Spain, represented a boost for the investor boom in the sector during the first month of the year. In total, those two operations accounted for €660 million of the €910 million that was spent on the sale and purchase of non-residential real estate assets in Spain during the month of January.

For the Inditex portfolio, which contained 16 stores located across Spain (14) and Portugal, the German fund Deka paid more than €500 million. That transaction was followed by another major retail deal, specifically, the purchase by the joint venture between Ares and Redevco of 70% of Parque Corredor, whereby absorbing the 40% stake in the centre that Sareb held, for €140 million.

Thanks to those two sales and others that were closed during the first month of 2018, the investment quota for the year has already reached 40% of the total figure spent during the whole of the first quarter last year, according to data from Savills Aguirre Newman.

Following a month of considerable activity, the forecast for the rest of 2018 is optimistic. Sources at the consultancy firm predict a year of “significant investment”. In this way, the volume of operations forecast for the office sector could exceed €2.0 billion, after investment in that segment amounted to €210 million in January.

Original story: Eje Prime

Translation: Carmel Drake

Spain Overtakes US to Become 2nd Most-Visited Country in the World

12 January 2018 – El País

Spain’s tourism sector is on a roll, and it looks like the good times will continue into 2018.

Last year, industry activity grew by 4.4% on the back of historic highs, both in terms of international visitors and tourist spending. This year, the business lobby Alliance for Excellence in Tourism (Exceltur) is expecting a further rise of 3.3%.

This industry leader has also estimated the impact of the Catalan crisis on tourism to be in the range of €319 million. If the crisis were to persist, the growth forecast for 2018 would shrink to 2.8%

Even though the secessionist bid shaved three-tenths of a percentage point from tourism activity in 2017, it was still a record year for Spain: over 82 million international visitors, an 8.9% leap from 2016, and a 1.5% increase in average spending per tourist, according to tourism ministry estimates released this week.

This makes Spain the world’s second-most popular tourist destination, behind France and ahead of the United States.

The tourism industry’s share of GDP has increased to 11.5%, representing €134 billion. And industry growth resulted in 77,501 new jobs in 2017, said Exceltur.

Political instability in the last quarter of the year, following the illegal independence referendum of October 1, negatively affected international tourism, particularly in geographically close markets like France, where visitor numbers were down 19.7% year on year in the October–November period. German visitor numbers fell 14% and the UK’s retreated 8%. Asian markets sent fewer visitors as well. However, tourists from the Americas grew notably in number, particularly those from Argentina (a 74% rise) and the United States (18.2%).

Slower growth in 2018

Exceltur said that 2018 “will be another excellent year” and predicted 3.3% growth for the tourism sector, higher than the forecast for the Spanish economy as a whole but lower than in the last two years – and that is without factoring in the potential effects of a protracted crisis in Cataluña.

The lower growth figure can be partially explained by a gradual recovery of alternative destinations that compete directly with Spain, such as Turkey, where terrorist attacks have driven tourism down.

“The challenge for the tourism industry now is to ensure sustainable growth with a view to the future,” said José Luis Zoreda, executive vice-president of Exceltur, at a news conference.

Despite the optimistic forecast, Exceltur is warning about a drop in revenues in early 2018: 10% for hotels, 6.8% for car rental companies, and 3.5% for transportation firms. The business association said “there will be staff adjustments” to make up for these losses.

Original story: El País (by Nahiara S. Alonso)

Edited by: Carmel Drake

ST: Lack of Skilled Workers Starts to Limit Construction & Threaten House Prices

18 January 2018 – Cinco Días

Without exception, all of the studies currently being published about trends in the real estate market indicate that 2018 is going to be better than the previous year. Nevertheless, the experts are warning that certain risks may lie in wait for the sector.

On Thursday, the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, presented a report compiled by his company, which forecasts that: house prices will rise by 5.5% on average this year, sales will improve by 14.1% and mortgages will increase by 9.4%.

Based on those figures, it seems that the sector is set to close the year with all of its variables growing at a strong rate. And, what’s more, with no need to talk about the generation of a new bubble, for the time being, at least. Nevertheless, Fernández-Aceytuno warns that we should not lose sight of certain indicators and concrete facts that are already starting to emerge and that may be early signs of situations from the past that nobody wants to see a repeat of.

One such circumstance is the lack of skilled personnel for construction projects that is being seen now that property development has taken off again. The CEO of Sociedad de Tasación revealed that work at some sites has been suspended due to a lack of labour, which is not only going to result in delays in the hand over of certain homes, but which may also end up leading to an increase in house prices. “Most of the best professionals that were working in the previous boom cycle have retired or retrained in other areas, which is why property developers are finding it hard to find qualified personnel for their jobs”, he explained (…).

Another risk that may lead to distortions in the proper operation of the market is the paralysis of too many urban development plans, which, in turn, leads to a shortage of buildable land for the construction of new homes. “All restrictions on the supply side end up resulting in a bubble”, said Fernández-Aceytuno. For that reason, he recommends that to the extent possible and where it is clear that demand for housing exists, it is desirable that the urban development processing times be made as streamlined as possible (…).

Regarding the current situation in the residential rental market, the report from Sociedad de Tasación warns that it is possible that the high returns that are being recorded at the moment constitute an “ephemeral” bubble, given that in some areas, we are starting to see the rise in rental prices tail off, since rent is very volatile to certain factors.

One of those is the limitation on rental prices being demanded by some of the political parties, to reflect what is happening in other European cities. “We consider that in the rental market, the path to follow cannot involve imposing limits. Each owner must be free to lease his home at the price he wants to and then comply with the law and pay the taxes that he ought to”, he said. In this sense, he defended his point that with more rental properties, Spain would be a richer country, because rental favours labour mobility and constitutes a more liquid market. However, he did demand the legal security be professionalised and guaranteed so that increasingly more companies want to invest (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Neinor Homes Considers Buying Land in Canary Islands

27 December 2017 – El Periódico de Canarias

Neinor Homes is considering entering the real estate market in the Canary Islands in 2018, according to its CEO Juan VelayosIt is also planning to generate profits and start buying land in Cataluña again, despite the political instability. Finally, Velayos forecasts that house prices will continue to rise at a rate of 5% over the next two years.

“House prices will continue to rise at a rate of 5% due to the gap between supply and demand. Then, prices will stabilise and grow at a rate of between 1% and 1.5% per year”, he explained to Efe.

In his opinion, 500,000 homes should be sold per year in Spain and 30% of those should be new build properties, equivalent to around 150,000, compared with the 80,000 that are currently being sold. The difference between those two figures shows that there is still a great deal of potential in the real estate development sector.

In terms of the performance of his company, which made its stock market debut in March, Velayos explained that this year will end with a positive EBITDA and with almost 100 developments “launched”, of which 33 are already under construction (around 2,500 homes).

In total, the company owns a buildable land bank on which it can construct 12,300 homes, of which 8,000 correspond to developments already underway.

“We want to always have two thirds of our land working”, said Velayos, who explained that his firm will continue buying land, primarily in Madrid, Barcelona, País Vasco and Valencia, at the same time as looking at entering new markets such as the Balearic Islands, Canary Islands, Galicia and Lisbon (Portugal).

From 2019 onwards, the purchases will be financed using the recurrent cash flow that Neinor expects to generate, according to Velayos, who added that, if necessary, the company may also resort to capital and/or debt increases.

In Cataluña, which currently accounts for 22% of the value of Neinor’s total housing portfolio, the real estate developer’s commercial activity has not been affected by the political uncertainty.

“We have sold everything and we only have four plots left to launch. I want to buy more land there”, said the executive, who, nevertheless, warned that he worries that Cataluña will be “impoverished” if the instability continues.

“If the situation continues, Cataluña will go from being one of the main drivers of the company to being replaced by another region, but I hope that someone can bring coherence. In the short-term, regardless of what happens, we are going to buy more land”, said Velayos. The CEO added that the company is fulfilling its plans and so will start making profits in 2018. Moreover, it will reach its “cruising speed” by 2020, with the handover of 3,500 homes per year, a turnover of €1 billion, an EBITDA of €0.2 billion and a profit of between €0.13 billion and €0.14 billion.

In terms of the composition of its shareholders, Velayos expects that Lone Star, the founder of the company, will block sell the 12.5% stake that it still holds in Neinor in the short term, after the lock-up period that it signed up to has ended, on 15 December.

Original story: El Periódico de Canarias

Translation: Carmel Drake