Large Overseas RE Funds Are Building Homes In Spain

10 April 2017 – Expansión

Large international funds such as Invesco, Harbert, Activum SG and Stoneweg are developing residential projects in Spain in search of high returns.

Following their arrival in Spain at the end of 2013, the international investment funds have become the players to watch in the Spanish real estate market. Attracted by the decrease in prices following the burst of the bubble, the funds entered the market looking for opportunities in the tertiary sector (primarily, in the office and commercial segments). Nevertheless, the price rises of these properties and the improvement in the macroeconomic situation in the country have led them to place their focus on a new type of investment: residential assets.

“The main advantage of investing in residential assets is the return. Currently, the returns on residential investments is greater – by between 13% and 20% – than those generated by other assets (be they commercial, logistics, etc.), which have been cut recently, as the upwards trends have been reduced by increasingly higher competition, due to the shortage of products in good locations and the rise in land prices”, said Gonzalo Gallego, Partner in Financial Advisory at Deloitte.

“We have seen many international funds and players investing in the residential sector: Kennedy Wilson, Lone Star, Greenoak, Grosvenor, Autonomy Capital, Invesco, as well as family offices and representatives of large equity firms such as Shaftesbury, the Capriles family, Stoneweg and Dazia, amongst others. In general, they promote to sell, but we are also awaiting the imminent arrival of international giants such as Greystar and Round Hill and Allianz, in the residential rental business, where they see an important niche for the professionalisation and institutionalisation of this sector”, explains Humphrey White, CEO at Knight Frank in Spain.

One of the most active funds is the German fund Activum SG Capital Management. Currently, that investor, through its Spanish subsidiary ASG Iberia, is working on the construction of 2,000 homes in six developments, such as in San Juan (Alicante), Alcalá de Henares (Madrid) and Málaga.

Another international fund that has decided to back the residential sector in Spain is Invesco. “We are trying to avoid or assume urban planning risk in our residential investments, with the aim of not exceeding our investment schedule. For this reason, we only invest in buildable land and in properties that do not need special urban planning procedures to change their use or buildability”, explain sources from the fund’s residential department in Spain. Its projects include the development of 30 homes on Paseo de la Habana in Madrid, another one on c/Serrano, also in the capital, and the transformation of an office building into 58 homes close to Calle Colón in Valencia.

Meanwhile, Harbert Management Corporation (HMC) has decided to invest in the Spanish residential sector through a local partner, the management company Momentum. “In 2008, partners that have experience working with funds founded Momentum. In 2012, we started to see opportunities for those investors in the residential sector and, in 2014, we purchased our first plot of land in Aravaca from La Caixa”, explained Gabriel Fernández de Gamboa, Founding Partner at Momentum. Alongside this management company, HMC has invested in six plots of land in Madrid and another one in Málaga for the development of more than 600 homes and is searching for new opportunities in the market.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

French Fund Corum Will Invest €450M-€500M In Europe In 2017

8 March 2017 – Expansión

The real estate fund manager Corum Asset Management has placed its focus on Spain. The firm, created in 2011 and with offices in Paris and Amsterdam, has closed 2016 with a record investment figure of €328 million.

In the case of Spain, the manager chose the market to carry out its first operation outside of France, acquiring its first asset in 2013: a retail property in Tarragona, which is leased to MediaMarkt.

Three years later, in May last year, Corum sold that asset to a fund managed by Ciloger for €9.43 million. “2016 was a record year in terms of transactions, with a deal volume amounting to €360 million, of which €328 million involved acquisitions. In addition, we made our first sale in an overseas market in 2016, in this case in Spain, where we achieved a significant return”, explained Philipp Cervesa, Head of Investments at Corum AM.

Besides that sale, the French manager closed three purchases amounting to €41.4 million in Spain, involving logistics assets, during the year. Specifically, in April, it acquired two platforms in Gerona and Guadalajara, with a combined surface area of 35,670 m2. Three months later, Corum AM paid more than €24.8 million for a logistics building leased to the company Trabis. “Our strategy is to bet on real estate cycles. We are investing in Spain because it offers good diversification and is a very dynamic market”, said Cervesi.

Both operations achieved a return of around 7.6%. “We invested heavily between 2013 and 2014, when the market fell, and thanks to that, we have undertaken some good deals, such as the sale of the property leased to MediaMarkt, which we sold last year for a hefty profit”. A high return that the manager forecasts it will maintain in 2017. “We are looking for assets with long-term lease contracts and high returns, of around 7%, he added.

This year, the manager, which invests directly through an Asset Management fund, has set itself the objective of increasing its portfolio to €500 million. “Our strategy for 2017 is to invest between €450 million and €500 million in the Eurozone. We have not set ourselves any country limits, which means that we could buy an unlimited amount in Spain”, explained the Head of the fund.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Excem Capital Launches New Rental Home Socimi

20 February 2017 – El Economista

Excem Group has opened itself up to the real estate investment business targeting young people and has launched a new Socimi “Excem Capital Partners Sociedad de Inversión Residencial”, wich will debut on the stock market in September 2018. The aim of this new entity is to “professionalise” the “growing” demand for rental homes from students and young professionals.

In a statement, Excem Group said that its “Excem Real Estate” division was created with the aim of becoming a key player in the management of real estate investments aimed at young people. In addition, Excem will co-invest in one of the projects.

“Socimi Excem Inversión Residencial” began its activity with an investment capacity of €12 million and is currently undertaking a capital increase, through which it hopes to raise additional investment capacity of €35 million by April.

In addition, it plans to expand its presence to Madrid, Barcelona, Bilbao, Santiago de Compostela, Salamanca, Valencia, Sevilla, Málaga, Córdoba and Granada.

The new Socimi will invest in homes for students and young professionals, as well as hostels and similar properties, to meet leisure demand, and co-working spaces so that young people can undertake their employment activities in collaborative environments.

Specifically, regarding the management of homes for students and young professionals, Excem has said that its objectives include managing professional leases, which is what students and young professionals from all over the world demand when they arrive in Spain.

In this context, the CEO of the Socimi, Antonio Mochón, said that there are increasingly more young people looking to set up home in Spain’s major cities. They are looking for work and some are even developing business projects that they created during their masters or degrees, and these people need “well-managed, high quality accommodation in central areas”.

Regarding the “hostels”, the firm wants to create a network of hostels and tourist apartments for travellers from all over the world with the aim of having more than 3,000 beds in the domestic market and with a view to “globalising rapidly”.

“The scarcity of professionalised supply at the global level makes this a large investment product with strong, safe projections, given the central locations in each city…and the high returns generated by the business”, said Excem.

Original story: El Economista

Translation: Carmel Drake

Madrid: Destination Of Choice For Wealthy Investors

5 March 2015 – Expansión

For the first time, the Spanish capital enters the top 20 on the list of locations preferred by wealthy individuals for investing their capital.

The improved perception of the economy and the possibilities for obtaining returns on investments have placed the Spanish market and more specifically its major cities, Madrid and Barcelona, amongst the destinations of choice for investors with estates worth more than $30 million (€26.8 million).

Specifically, Madrid is ranked at number 18 on the list of large investors’ favourite locations around the world.

“Firstly, vulture funds make purchases, then institutional investors arrive and finally the wealthy individuals come”, explains Humphrey White, Director of Capital Markets at Knight Frank in Spain.

Amongst the attractive features of Spain’s cities, Mr White highlights the price of their luxury properties, which are much more affordable than those of other European capitals. Thus, according to Knight Frank’s report, with one million dollars, an investor can purchase just 20 square metres of residential property in London, 50 m2 in Paris and 68 m2 in Rome, whereas in Madrid he/she can acquire 133 m2. “If you have a lot of money, you can achieve a very attractive return from luxury housing in Spain. The highest prices currently stand at around €10,000/m2, compared with the levels they reached at their peak of €14,000/m2”, explains Alberto Costillo, Managing Partner of the Luxury Residential Department at Knight Frank.

Nevertheless, the price of luxury housing increased by more than 5% in Madrid in 2014. “It is worth noting that the price of premium property in Madrid rose by 5%, in contrast with the downward trend in Europe, where prices decreased by 0.4% on average. We expect this trend to continue”, says Kate Everett-Allen, partner in International Research at Knight Frank.

By country, wealthy investors from Mexico, Colombia, Argentina and Venezuela tend to opt to buy property in Madrid, whereas other millionaires, such as the Russians, prefer Barcelona and other coastal regions. Importantly, Spain’s cities have an opportunity in the Russian market, given that more than a third of the wealthy investors from that country have indicated that they intend to leave Russia during 2015, according to findings by The Wealth Report.

London

Although Spain has now entered the elite ranking of locations desired by millionaires, the first position on the list is held by London, which ousted New York a few years ago as the most favoured destination. New York moved down to second place; Hong Kong is ranked third. In terms of where these wealthy investors live, London leads that list too, for another year, with 4,364 resident millionaires, followed by Tokyo with 3,575 and New York with 3,008.

Meanwhile, Madrid is home to 544 individuals with estates worth more than 30 million dollars, whilst 438 live in Barcelona. “There are 63 new millionaires in Spain this year and one third of them are living in Madrid and Barcelona”, says Humphrey White.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake