Habitat Appoints José Carlos Saz as its New CEO

29 May 2018 – La Vanguardia

Habitat Inmobiliaria has appointed José Carlos Saz (pictured below) as the CEO and most senior executive of the company, with the objective of boosting growth in the Spanish real estate market through an active investment policy.

Saz has said that the target will be “high-quality urban development projects” close to large Spanish cities, according to a statement issued by Habitat today.

Habitat Inmobiliaria’s new CEO holds a degree of Industrial Engineering from the Escuela Superior de Madrid and is a graduate of the Director Development Program at IESE.

In recent years, Saz has served as the Operations Director at Neinor Homes and prior to that, he held positions of responsibility at LV Salamanca Ingenieros, Abengoa, Mutua Madrileña, Mace and the British construction firm ISG, amongst other companies.

Original story: La Vanguardia

Translation: Carmel Drake

Unibail Will Invest at Least €800M in Spain Over 6 Years

26 January 2018 – Expansión

Unibail-Rodamco, the largest European real estate group, has committed investments for projects in its portfolio in Spain amounting to, at least, €800 million between now and 2024; it has already disbursed €120 million of that figure.

The Director of Development and Investments at Unibail-Rodamco in España, Javier Solís (pictured above, left), explained yesterday at a meeting organised by IESE, Tinsa and Savills Aguirre Newman, that the company has projects in its portfolio spanning a new gross leasable area (including extensions) of 187,000 m2 and a total committed investment of more than €800 million, reports Efe.

Of the projects underway, the director highlighted the shopping centre in Benidorm (Alicante), whose construction has already commenced and which is expected to open in 2020. In his opinion, the increase in visitor numbers and sales at shopping centres suggests “that returns have the potential to rise”.

The director explained that some of the investment planned for the coming years will be spent on improving its assets so that “they are more than just a place to shop”. In this sense, Solía advocates transforming them into centres for meeting up, having fun and being entertained, for enjoying new gastronomic experiences and with higher standards in terms of energy efficiency and sustainability.

In terms of future possible purchases, Solís said that the company’s intention is to incorporate new assets that are already operational, although, for the time being, it does not have any operations on the table.

In Spain, Unibail-Rodamco owns a dozen shopping centres and has two more under development. Its most high profile assets include Parquesur and La Vaguada (in Madrid) and Les Glòries and La Maquinista (in Barcelona), worth around €3.7 billion.


Unibail-Rodamco, which has a presence in 11 European countries, reached an agreement at the end of 2017 to purchase its Australian rival Westfield for $24.7 billion (€19.8 billion).

The operation will result in the creation of a colossus with a gross asset value of €61.1 billion and a presence in 13 countries. Following the integration, Unibail-Rodamco will extend its competitive distance over its main European rivals, Klépierre and Hammerson. Indeed, one month ago, the latter announced an agreement to purchase Intu and grow in the shopping centre segment.

Original story: Expansión

Translation: Carmel Drake

Asprima: Buildable Land is Running Out in Madrid

25 November 2017 – ABC

Land is running out and the market is becoming distorted in the Spanish capital. For two years, the price of buildable land for the construction of new homes in the Community of Madrid has been rising, especially in the centre. There is not much buildable land left and the space that is available has seen its value rise due to the increase in demand. This equation means that, unless new variables are introduced, we will end up seeing an acceleration in house prices. “Real estate activity has returned with a vengeance and new housing is needed”, according to Daniel Cuervo, the Director General of the Association of Property Developers in Madrid (Asprima) (…). By way of example, “in Valdebebas, two years ago, people were paying €800 per square metre for buildable land “and now that price is above €1,500/m2 (…)”.

He also thinks that the property developers feel very certain about the sale of their homes “and that there is competition between them”, which translates into high house prices. Certain political decisions have paralysed several developments (…).

The Councillor for the Environment and Town Planning at the Community of Madrid, Pedro Rollán, was quite explicit this week when he said that “talking about housing requires us to talk about land” (…). “Many people have been obliged to go outside of Madrid due to the (high) price of land (in the centre),” he said, at a conference organised by the Association of Housing Managers (AGV). At the same time, he called for “a policy that allows for the development of sufficient land to deal with the true demand in the city of Madrid”. Rollán made reference to the importance of the “large batch of land in the south-east of Madrid”, where “at least 50% of the homes will be subsidised properties”.

Value of land

Daniel Cuervo also said that the project underway in Los Berrocales, Los Ahijones, Los Cerros and Valdecarros (the Strategy for the Southeast, within the municipality of Madrid) will allow “the relaxation of new house prices, given that more than 100,000 homes are planned”. To this end, the Town Hall needs to “continue complying with urban planning legislation to convert plots into buildable land”.

The Director General of Asprima also (…) made reference to a study conducted by IESE, which indicates the need for 13,000 new homes per year in the municipality of Madrid “and the impossibility of achieving that”.

According to the experts, the price of land, with respect to the price of a home, should not exceed 20-25% of the total value; and the traditional unwritten rules indicate that it should represent one third. “In the neighbourhood of Salamanca, in certain cases, the price paid for land may reach 70%-75% of the final value of the home”, explains Óscar Ochoa, Director of the New Build department at the real estate firm Gilmar (…).

Areas on the rise

If we talk about other parts of Madrid, things change. In San Sebastián de los Reyes, for example, the value of land “represents around 30%-35%”. Ochoa warns that it is not only in the centre that it is impossible to find new land, the supply is also scarce along some of the main access roads. “Such is the case in Las Tablas, San Sebastián de los Reyes, Montecarmelo and Valdebebas along the A-1 and in Pozuelo and Las Rosas along the A-6”.

For Ochoa, the solution involves establishing urban development plans designed to meet the true demand for the areas (…). Ochoa acknowledges that in terms of buildable land “we are in the hands of the politicians”. That is why he asks “for the plots to be organised and for the concession and licence processes to be streamlined”.

According to the Community of Madrid, there is a need for between 15,000 and 20,000 homes per year, including the repositioning of homes for those who want to change the kind of property they live in and new homes that are built. (…).

The situation is also affecting the rental market, according to José María García Gómez, Director General of Housing and Rehabilitation for the Community of Madrid (…). “The rental market is under pressure and prices are rising there once again”.

García Gómez believes that the role of the Administration “is not to put obstacles in the way, but rather to grant licences. He believes that the new Land Act, which is being drafted, will bring stability, pointing out that of the 178 municipalities in the region, only 20 have a general housing plan in place. The conclusion is clear: much remains to be done” (…).

Original story: ABC (by Belén Rodrigo)

Translation: Carmel Drake

Iese Invests €24M In New Campus In Madrid

17 November 2017 – Eje Prime

The Universidad de Navarra is going to expand its presence in Madrid. Iese, the entity’s business school, is going to start construction work in 2018 on a new campus with a surface area of 16,000 m2. The University will invest €24 million in the project. With the future building, which will be located next to the current faculty, the university will double its space in the town of Aravaca.

In addition to the new campus, Iese will build a car park with 300 parking spaces. The aim of the Universidad de Navarra is to triple the capacity of its business school in the Spanish capital, according to El Confidencial.

The design of the campus comprises four classrooms, one of which will be equipped with the latest technology, as well as an auditorium with capacity for more than 500 people. For the financing, the University de Navarra ‘s business school has launched a fundraising campaign, which aims to secure 70% of the investment from employer companies and the network of Iese former students, with the remaining funds being provided by the budgets of the institution itself.

Original story: Eje Prime

Translation: Carmel Drake

Pontegadea: Global Political Uncertainty May Impact RE

30 January 2017 – Expansión

Speaking last Thursday (26 January), Roberto Cibeira, CEO at PontegadeaAmancio Ortega’s investment vehicle – highlighted the “significant uncertainty” that exists in the real estate sector regarding the UK’s exit from the European Union. “Depending on what Brexit looks like, the economy will evolve, along with the demand for space. Companies are being very cautious”, said the Director, who was participating in the Third Real Estate Meeting, organized by the IESE.

The UK is one of the top five most important countries for Pontegadea on the basis of turnover; it accounts for a significant proportion of the firm’s business. “London is London, it is always going to be there. We are hopeful and are waiting for opportunities to invest”, said Cibeira, who indicated that the company will continue to focus on the countries in which it already has a presence (Spain, USA, Canada, Mexico, France, UK, Italy, Portugal and South Korea), although growing in Asia “is also a possibility”.

Moreover, the Director said that Pontegadea’s debut on the stock market “goes without saying”, although he did not want to comment further and said that the real estate market in Spain is characterised by three features: “A shortage of supply, a lot of overseas investors and a great deal of competition”.

The Trump Administration

Pontegadea’s CEO was guarded in his comments regarding Donald Trump’s arrival at the White House. “If the country’s economy performs well, then it will be good for everyone. People are still waiting to find out about Trump’s economic policies. The decrease in taxes is good for companies operating in the US and is regarded as a good thing in the short term”, he said.

Regarding the real estate market in the country, the Director said that “it is beginning to explode. But that there has to be a limit to these rent hikes”. The words of Cibeira relate specifically to the rents for stores on Fifth Avenue in New York, where rental prices have risen to $5 million/year per 100 m2.

Original story: Expansión

Translation: Carmel Drake

JLL & IESE: Investors Are Willing To Take On More RE Risk

30 March 2016 – Expansión

The increase in liquidity, accompanied by the lack of profitability of alternative assets – such as the bond market – and the volatility of world stock markets all mean that the real estate sector is regarded as a very attractive option for investors. This trend, which was first glimpsed last year, will be maintained in 2016, but there will also be a step up in terms of the risk curve this year. That is one of the main conclusions emerging from a report prepared by the consultancy firm JLL and the business school IESE, on the basis of interviews with 101 investors in the sector, both domestic and international.

More yields / Most investors are looking for value added opportunities in light of the scarcity of prime assets.

The study indicates that the lack opportunities to add value in prime areas and the increase in funding means that investors are willing to take on more risk in their operations in the real estate market, although they continue to analyse the feasibility of these assets and check that they are financeable, given that capital continues to be selective.

In this way, investors have expanded their radars to other less exclusive areas and to buildings that need renovating. One example of how investors are willing to take on more risk with their operations is the purchase, in July 2015, of Telefónica’s former headquarters on Calle Ríos Rosas (Madrid) for €90 million by the institutional investors M&G. The building will be completely renovated and its tenant will be WPP, the multi-national media agency and marketing group.

Similarly, the report detects interest for alternative investments, such as student halls and health centres, as well as an increase in rental prices.

Asset values are on the rise

Following a record year in the commercial real estate market, with investment of €9,200 million, 89% of investors expressed a “high” or “very high” interest in the Spanish market, compared with 10% who expressed a “low” level of interest. In addition, 60% of the investors surveyed consider that the value (of assets) will continue to grow for another 18 months, at least.

The responses to the survey reveal that the typical investment in the commercial real estate market falls in the range of €30 million to €100 million, with a gearing level of between 50% and 60%. The average investment time horizon is less than five years, with an initial yield of between 5% and 7% and an IRR of between 8% and 14%. Offices in Madrid and Barcelona, logistics warehouses and shopping centres are the business segments in most demand. They are followed by retail premises on main streets and hotels, whilst the assets generating the least interest are residential properties and land.

Looking ahead to the future, investors remain alert to Spain’s political situation. The investors surveyed consider that the political uncertainty at home may slow down the upwards cycle seen over the last few years and they express concern regarding the possibility that some local governments, such as the one in Barcelona, are not granting them the permits they need.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Spain’s Rental Market Has Gold Mine Potential

26 October 2015 – Expansión

Spain is a country of property owners, in which less than 20% of homes are allocated for rent. That percentage is a far cry from the figures recorded in major European countries such as Switzerland, Austria, Denmark and Germany (where the rental market accounts for at least 35% of all homes). The rental market began to take off in Spain when the crisis forced thousands of families out of the market for buying properties and into the rental market, but it still has a long way to go.

Companies in the sector see this as a great business opportunity in Spain, according to comments made last week at the Barcelona Meeting Point trade fair. Demand exists and is on the rise, but the supply is scattered and lacks professionalism. In Germany, several companies specialise in the sector, with more than 100,000 homes for rent. In Spain, Blackstone has just 10,000 homes.

“Currently, tenants have to deal with amateurs and individuals; anyone that succeeds in becoming a professional manager of rental housing, with good services, will secured demand in a growing and unsatisfied market”, says Javier García-Carranza, Managing Director of Morgan Stanley in London.

The President of CBRE España, Adolfo Ramírez-Escudero, thinks that now is the right time to develop this segment. “Housing is cheap” for buy-to-let homes. García-Carranza says that the economic incentive to promote this niche in the market is to offer services that increase revenues thanks to their added value. “If we rely only on the appreciation of property prices, we will have a cyclical model, with less recurrent business”, he says.

The percentage of rented homes has risen from 11.4% during the real estate boom to 18% or even 20% according to analysts in the sector, although the Bank of Spain reports a more conservative figure of 15%. Therefore, 3.42 million of the 18 million primary residences in Spain are rental properties. If we also include holiday rentals, that figure increases to 5 million.

Prices, which are now more competitive than ever, have contributed to this situation. The average rental price amounted to €7.02/m2/month in September, i.e. 30% lower than in May 2007, according to the IESE-Fotocasa index. In September, rental prices increased by 1% YoY.

For example, rental prices in Cataluña increased by 2.5% during the first half of the year, for the first time since 2008. In Barcelona, the increase amounted to 6.9%, according to the Generalitat, which notes that the market is beginning to become saturated.

Changing attitudes

The changing mentality is here to stay In 2011, 70% of Spaniards believed that “renting meant throwing money down the drain”, but now 65% regard it as a robust life choice, according to a survey conducted by Fotocasa. “This is partly explained by the crisis and because the younger generations have a much more favourable attitude (towards renting)”, explained Beatriz Toribio, Head of Research for the website.

Another website, Idealista, predicts that the rental market will continue to gain strength over the next few years, to account for around 25% of the total market. “Despite the classic reluctance to rent in Spain, the rental market is now undergoing a period of significant development”, said Fernando Encinar, Head of Research at the company.

Original story: Expansión (by J.M. Lamet and A. Zanón)

Translation: Carmel Drake

Bank Of Spain: Residential Yields Rise to 8.6%

23 October 2015 – Expansión

Now is the most profitable time since the burst of the real estate bubble to buy a home. At least that is according to official figures: the average gross annual yield of homes currently amounts to 8.6%, a level not seen since 2007, the year when prices and sales peaked in the residential market. That is the latest data published by the Bank of Spain relating to the first half of the year.

The total gross yield on a residential property “is calculated as the estimated gross income from rental plus any capital gain”. In other words, it takes into account not only the amount an investor would obtain each year from renting out a property, but also the gain that he would make by selling it after twelve months.

This indicator, which is key for buyers looking to acquire homes as safe investments, soared during the second quarter of 2015. In March, the gross annual return on homes increased to 6.180% and in June, it rose again, by 2.41 points to the aforementioned figure of 8.6%.

That means the residential yield is five times greater than the return currently offered on 10-year debt (1.75%). Bank deposits offer a return of 0.5%, according to the body headed by Luis María Linde.

What does this mean? Put simply, it means that now is an ideal time to invest in rental property, for both small and large investors. (…).

We are living in an impasse of high returns with minimal risk. House prices are beginning to rise (by 2.6% in 2015, according to Servihabitat) and so are rental prices, although at a more moderate rate (by 1%, according to the IESE index and Fotocasa).

Moreover, the percentage of citizens choosing to rent rather than buy has increased significantly, from 9.6% during the real estate boom to its current rate of 15.4%, according to data from the Bank of Spain. Over the last three years, the rental market has welcomed one million new homes and as such has grown by 42.5%. For this reason, investors looking for higher returns have launched searches for properties in areas that are well established and have high demand, to lease them out.

Eight year high

8.6% is the highest figure seen since September 2007, when the return on buying a home reached 12.1% per year. At that time (eight years ago), the residential sector was immersed in a spiral of hyperinflation and credit. The bubble was about to burst, but politicians and businessman alike were in denial, as they tried to sustain the over-heating of the real estate sector. In other words, to mislead buyers.

It was then that the residential market started to decelerate, in other words, to deflate. During the next quarter, the return on homes decreased to 8.5% and from then on, the figure did not stop falling; it entered negative territory in the third quarter of 2008 and reached its negative low (a return of -11%) in September 2012.

Now the situation is radically different. After years of depression, stigmatisation and hangovers, the recovery of the residential sector has finally begun. Gradually and in a moderate way, homes are getting more expensive, sales are recovering and the mortgage market is reactivatin. (…).

The phenomenon happening right now is something that rarely happens, even during changes in the cycle because investors are finding find bubble-like returns, but without the bubble itself.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

IESE: Demand For New Homes In Madrid Will Reach 20,000 In 2019

2 June 2015 – El Mundo

At a conference organised by the College of Civil Engineers before the local elections, Manuela Carmena, who will become the mayoress of the capital provided Esperanza Aguirre does not stand in her way, ruled out Operación Chamartín as a significant objective: “I do not think that we need 17,500 homes, we will talk about that again in 2017 or 2018, but not now”.

Her comments are interesting because just a few days later, professor José Luis Suárez, of IESE, has claimed that, during 2015 and 2016, demand for new housing in the metropolitan area of Madrid will reach 14,000 units and in 2017 alone, it will reach 13,000. Suárez is one of the foremost experts in the Spanish real estate market and during the annual symposium of the Center for International Finance (CIF), he presented the preliminary results of a study about the evolution of demand for new homes in Spain until 2028.

Suárez and his team of researchers are building a model to allow them to predict the demand for new homes in nine large Spanish urban areas. The model is driven by several factors, including the reduction in the number of people per household; financing; the rate of obsolescence of homes in use; the demand for replacement; the acquisition of second homes; employment; investment in housing; the preference for new housing; renovations; the declining population; the over-stock of housing; and rentals.

Although Spain’s “demographic winter” may lead us to expect a decrease in the number of homes, as well as in their average size, the calculations performed by Suárez for the Madrid area show that demand for new homes will reach 20,000 units in 2019. This quantity would mean demand returning to the levels last seen in 2009-2010, years when the trend lines between the purchase of new homes and the supply of new homes intersected. At the height of the bubble, in 2006, more than 40,000 new homes were sold in Madrid and during that same year, more than 60,000 units were constructed.

In fact, the excess stock of housing in Madrid is practically non-existent now. There is still excess supply in Spain, but not in places where demand is high.

Urban planning is one of the areas that the local politicians enjoy the most and where Carmena is undertaking a detailed program. She is committed to renovating and supporting operations in deprived neighbourhoods, such as the so called Operación Campamento, which is sponsored by Chinese capital. Although critics accuse the plans of being neoliberal since they serve individual interests, the fact is that urban planning is anti-liberal by definition and is fertile territory for commercialism.


Original story: El Mundo (by John Müller)

Translation: Carmel Drake