Tag: jobs

Ismael Clemente: “This Crisis is Much Deeper but we are Better Prepared for it”

The Chief Executive of Merlin, Ismael Clemente, highlights the differences between the crisis sparked by Covid-19 and the previous recession; and advocates a speedy recovery if the appropriate measures are taken.

A much deeper crisis but one we face with invaluable experience from the past. That is how Ismael Clemente, CEO of Merlin Properties, is defining the impact that Covid-19 is having on the Spanish economy and, consequently, on real estate. The sector is using what it learned after the bubble burst in 2008 to face the pandemic now.

“This crisis is different from the previous one. The recession of 2008 was based on hyper-indebtedness and it was triggered by the real estate sector itself. This crisis has been caused by an exogenous factor, which has devastated demand and which has had a sharp negative impact on GDP, with significantly more job losses in the United States”, explained Ismael Clemente during the sectoral meeting organised by SimaPro and attended by Brainsre.news.

Construction, the Sector that is Losing the Most Companies and Jobs due to Coronavirus

In March, the construction sector registered a 12.4% monthly drop in the number of companies registered for Social Security purposes, which represented the largest decline of any sector, and which was accompanied by the destruction of 147,701 jobs.

To date, construction is the sector of the Spanish economy that has suffered the greatest losses in terms of companies and jobs due to the Covid-19 coronavirus crisis.

According to data from the Ministry of Employment and Social Security, the construction sector has been the hardest hit in terms of the Spanish labour market, with the greatest losses during the month of March. In this way, between February and March, the number of construction companies registered for Social Security purposes fell by 12.4% compared to an average fall in the wider economy of 6.5%. “In absolute terms, 16,216 companies out of a total of the 131,069 that were registered for Social Security purposes in February ceased to be registered during the month of March,” explains Antonio Ramudo, Data Scientist at Brainsre.

The same goes for employment. During the month of March alone (the lockdown and State of Emergency were introduced on Saturday 14 March), more than 147,000 construction jobs were lost. “If we talk about workers, the construction sector saw a decrease of 16.8% between February and March 2020. In absolute terms, it went from having 881,014 Social Security-affiliated workers to having 733,313 in just one month. As such, 147,701 jobs were destroyed. That represents a 16% decrease compared to the previous year ”, according to the analyst from Brainsre.

The construction sector is not the only one within the real estate market to be hit, albeit to a lesser extent, by the coronavirus crisis. Other companies linked to real estate activities, such as those dedicated to the sale and rental of real estate properties, agents, managers and administrators of real estate have also been affected; they saw a monthly drop of 2.3%. Nevertheless, that was one of the most moderate falls in the Spanish job market where the average reduction between February and March was 6.5%. In absolute terms, 836 companies and almost 3,789 workers ceased being registered for Social Security purposes last month.

Decreases in other sectors

Apart from the direct impact on the construction sector and real estate activities, other sectors linked to real estate have also been affected by the Covid-19 crisis. In this way, the hotel/hospitality industry registered an 11.6% drop in the creation of new companies during March, in other words, it lost more than 20,000 companies and almost 185,000 employees.

Transport and storage suffered a 7.7% decrease in March, with the loss of more than 5,000 companies and more than 35,000 employees. In commerce, the decrease in March was 4.9% with the loss of more than 14,000 companies and more than 86,000 employees.

SMEs and medium-sized companies, the most affected

Within the construction sector, which has gone from having more than 130,000 registered companies for Social Security purposes to having less than 115,000 in a month, the most affected companies have been small and medium-sized companies (those with fewer than 250 workers). There has been a special incidence of companies with between 3 and 250 employees, which have suffered a decrease of between 15% and 21% in their Social Security enrolments, for both companies and workers, accounting for 85% of the jobs lost in the construction sector in March.

In the real estate business, which has gone from having 35,862 registered companies for Social Security purposes to having less than 35,026 in a month, the most affected companies have also been small and medium-sized companies (those with fewer than 250 workers). There has also been a special incidence of companies with between 3 and 250 employees, which have suffered a decrease of between 4% and 10% in their Social Security enrolments, with those companies employing between 50 and 250 workers being the most severely affected.

The same has happened with employment, where companies with between 3 and 250 workers have also been those that have seen the most jobs destroyed during the first month of the coronavirus crisis in Spain, with between 4% and 7% of employees no longer registered.

Andalucía loses 26% of its business fabric

By region, the autonomous community that has seen the greatest impact due to the decline in the number of construction companies has been Andalucía, which has lost 26% of its companies in a month, and 31% of its jobs, with 5,550 fewer companies and 45,198 fewer workers in March.

Other communities severely affected by the Covid-19 crisis include Extremadura, with 22% fewer companies and 28% fewer workers; Castilla La Mancha, where the number of companies has decreased by 19% and the number of workers by 21%; Murcia, with 15% fewer companies and 17% fewer workers; and the Canary Islands, with 13% fewer companies and 17% fewer workers.

In absolute terms, Andalucía is also the region that has lost the most companies and workers in March 2020, having gone from having 20,975 registered companies for Social Security purposes in February to having 15,425 in March and from having 143,808 construction employees registered for Social Security purposes in February to having 98,610 in March.

At the provincial level, 25 provinces have seen a fall of more than 10% of the number of companies registered for Social Security purposes.

That ranking is mainly led by provinces in Andalucía such as Jaén, Córdoba, Granada, Huelva and Sevilla, all of which have been affected by a loss of more than 28% of the companies of this sector. In absolute terms, Madrid is the province that lost the most construction companies in March, 1,703 to be precise; it was followed by Malaga and Seville with 1,337 and 1,293 companies, respectively.

By number of workers, nationwide, the drop amounted to 17% in March compared to the previous month. The five most affected provinces in the sector were again all Andalucían: Cádiz (39%), Jaén (-37%), Córdoba (-35%), Huelva (-35%), Sevilla (-34%).

The least affected cities were Guipúzcoa, Lugo and León. However, in absolute terms, Madrid was the province that lost the most construction jobs in March: 18,108 to be precise; followed by Sevilla and Malaga, which lost 11,504 and 11,465 positions, respectively.

Iberostar will Add 1,500 Rooms to its Portfolio in 2019

24 January 2019 – Expansión

Grupo Iberostar is continuing with its expansion plans and intends to add seven new hotels to its portfolio this year, containing 1,500 rooms in five countries. The new establishments will open in Palma de Mallorca and Madrid, in Spain; in Monastir and Sousse, in Tunisia, where the Spanish hotel chain already has a presence; as well as in Istanbul (Turkey), Rome (Italy) and Lagos (Portugal), where the group will make its debut.

The company, which opened 13 establishments last year, explained that 2019 is going to be “key” for the consolidation of the projects it has underway in Los Cabos and Litibú (Mexico) and for others, which are more advanced, in destinations such as Montenegro, Aruba, Albania and Cuba.

The chain, which is owned by the Fluxá family, owned 96 hotels around the world containing 31,720 rooms at the end of 2018. In Spain, the company owned 35 hotels and 9,888 rooms at the end of last year.

In terms of operational data, Iberostar closed 2018 with revenues of €2.659 billion, which represented an increase of 9% YoY, and it created around 4,000 jobs (…).

Original story: Expansión (by R.A.)

Translation: Carmel Drake

CaixaBank & Allianz Grant a €135M Loan to Finance Caleido

20 November 2018 – Expansión

CaixaBank and Allianz have granted a €135 million loan to finance the construction and operational launch of Caleido, a project led by Inmobiliario Espacio, the property developer of the Villar Mir Group, and MegaWorld Corporation, the business conglomerate owned by the Philippine multi-millionaire Andrew Tan.

Caleido, which will constitute the so-called Fifth Tower in Madrid, is going to comprise a vertical 35-storey building, which will contain the facilities of Instituto de Empresa, and a second horizontal building at the base comprising four above ground floors and standing 17 metres tall in which Quirón Salud is going to manage an advanced medical centre. Moreover, Caleido is going to include an extensive commercial and services area, as well as lots of green space for Madrid and its citizens.

The loan, which has a 10-year term, will finance the construction period until the hand over of the property, in the final quarter of 2020, as well as seven years of operation.

The property developers have explained that the aforementioned agreement will cover the financing needs of Caleido, with a total estimated investment of approximately €300 million.

“This operation strengthens the confidence that financial institutions have in the project and the great expectations that are being generated around its construction. In this way, the technical solvency of the project is clear, as is its future management and operation”, said the property developers.

Caleido – designed by the architecture studios Fenwick & Iribarren and Serrano Suñer Arquitectos – will be located in the epicentre of the new financial district of Madrid and will serve to eliminate a scar from the north of the Spanish capital, connecting Paseo de la Castellana and Anida de Monforte de Lemos, as well as revitalising the current business complex.

The project is being built on some plots owned by the Town Hall of Madrid, granted to Espacio Caleido through a concession arrangement for the construction and operation of the project for the next 75 years. In exchange, Espacio Caleido will pay an annual fee of €4 million. The launch of Project Caleido will generate around 2,400 jobs during the construction period and another 3,992 jobs once it is operational.

Original story: Expansión (by R.A.)

Translation: Carmel Drake

Construction Costs Soar & Feed the ‘Boom’ in House Prices

9 September 2018 – El Confidencial

“A year and a half ago, I asked for a quote from a small construction company for a building project in Leganés. I drafted the plans, obtained the permit from the Town Hall and when I spoke to the construction company again about starting the work, they quoted me 35% more than we had originally agreed. It was crazy. And something similar has just happened on another project in Móstoles. I signed a building contract with another construction company two months ago, the work starts next week, but they can’t stick to the price we agreed because they can’t manage to hire workers for that price”.

The speaker is a property developer from Madrid, who prefers to remain anonymous so as to not generate hostility amongst construction companies. Over the last few months, he has suffered as a result of the significant rise in construction costs. There are severe labour shortages, which are causing prices to rise, given that the cost of construction materials, although increasing slightly, has remained much more stable.

The increase of 35% is not generalised across Spain, but it is starting to become quite frequent in cities such as Madrid, Barcelona and Málaga where real estate activity has recovered more strongly than in other parts of the country, according to the experts consulted.

To give us an idea, according to a study prepared at the beginning of the year by ACR Grupo, residential construction costs have risen by 17.5% in the last 24 months, and by 12% in the last year alone. After 2007, and coinciding with the crisis, those costs decreased by 20% and remained almost flat for more than five years until two years ago, when the long lethargy was finally broken.

This higher cost of labour has a direct impact on house prices. According to the experts consulted, a 40% increase in construction costs results in a 20% rise in house prices. And, if the price of land represents around 35% of the total cost of the construction, then construction costs now account for around 50%. “Why do you think that prices are rising so quickly in Madrid and Barcelona? The price of land is soaring and now this unexpected enemy has arrived on the scene”, said the same developer.

In the Spanish capital, prices are out of control in certain areas, with price rises of up to 20%. “…”. “Within a given development, a home that used to cost €400,000 is now being sold for almost €500,000. The increases are not only due to the fact that there is a lot of demand and limited supply, but also because if the properties aren’t sold at those prices, then the project is not profitable. Some of the listed property developers have already warned that they will not be capable of building as many homes as they had planned. We will see in a few months time whether they are going to be able to fulfil their sales forecasts”, add sources from a construction company.

Although property developers have recognised this problem publicly for months, they are also convinced that it has gotten worse over the last nine months (…).

Destruction of the production fabric

The lack of skilled labour is evident. Plumbers, framers, electricians, bricklayers, etc…And like in any market, scarcity causes increases. Many of those who used to earn their living building homes at the height of the boom have changed jobs or left the country and have no intention of returning.

The figures speak for themselves. In 2008, the year the bubble burst, 600,000 new homes were completed in Spain. Now, that number barely reaches 50,000 units. Moreover, that decrease in activity has led to the disappearance of more than 12,600 companies linked to the sector since 2012, around 6,800 construction companies and 5,700 real estate firms, according to data from PwC.

That destruction of business fabric has resulted in an enormous number of unemployed people. Whilst a decade ago, the number of wage earners linked to the construction sector amount to 2 million people, in 2017 the number barely exceeded 800,000. In other words, almost 60% of the workers have disappeared (…).

“The main problem is that people who worked in the sector before and who have now found work now elsewhere do not want to return because of the fear of another crisis…”.

The problem goes far beyond the increase in prices that the property developers end up passing onto end buyers. The severe labour shortage, together with the lack of financing, puts in danger the sector’s estimates in terms of their forecasts for the construction of homes necessary for a healthy real estate market. And no solution for that problem is likely to be found in the short term (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Equilis Invests €120M in a Commercial Complex in Esplugues

27 June 2018 – El Mundo

The Belgian real estate firm Equilis is finalising a new shopping centre in Esplugues de Llobregat, which is expected to be inaugurated in November; 90% of the stores in the complex have already been commercialised. The centre, which has received investment of €120 million and which has employed 1,000 people for its construction, will receive up to 8 million visitors per year and will create 500 more jobs once it begins operation, according to forecasts prepared by the company.

The macro-project from the company controlled by the Mestdagh family is a first step in its expansion in Spain, where it expects to begin six projects with a value of €750 million over the next few years, two of which will be in Cataluña, which will receive investment of €200 million – including Esplugues – and four in the rest of the country.

Finestrelles Shopping Center, as the commercial complex in Esplugues is known, is located in the Ca n’Oliveres sector, in the neighbourhood of Can Vidalet, on the plot that exists between Calles Laureà Miró and Sant Mateu. It will have two tunnels that will connect the space with Ronda de Dalt and la Avenida Diagonal.

The surface area of the complex will span 40,000 m2, distributed over five floors, two of which will be dedicated to parking and the rest for commercial use. The centre will contain 110 stores as well as a hall of residence for students with almost 375 beds and a hypermarket. “For the time being, there won’t be any cinemas, but we are not ruling that out”, said Víctor Gómez (pictured above), CEO of the company in Spain.

Original story: El Mundo 

Translation: Carmel Drake

Amazon Opens its Support Centre for SMEs in 22@ (Barcelona)

23 April 2018 – Eje Prime

Amazon’s support centre for SMEs has opened its doors in the 22@ district of Barcelona. From its Sell Support Hub facilities, the US company is going to offer support services to small and medium-sized companies (SMEs) in Spain, Italy and France that sell their products through Amazon Marketplace.

The facilities, which house more than 200 employees, are also going to be home to Amazon’s Research and Development Centre, specialising in machine learning. The date for the opening of that centre has not been released yet, but its doors are expected to open within the next few months.

From its new centre, Amazon is going to help companies understand how to use its tools to sell globally through its different web platforms. According to François Saugier, Vice-President of Amazon Marketplace in Europe, it is laying the foundations for companies to make the leap into the digital economy.

Seller Support Hub is going to facilitate the creation of 500 jobs over the next three years. Regarding the choice of Barcelona as the location for this centre, François Nuyts, Vice-President and Director General of Amazon.es and Amazon.it, said that “it is a city that combines international talent with a dynamic and innovative network of SMEs, entrepreneurs and startups”.

Original story: Eje Prime 

Translation: Carmel Drake

KKH Gets Green Light to Convert Deutsche Bank Building into Super-Luxury Apartments

11 December 2017 – Expansión

The former Deutsche Bank building in Barcelona, which saw its plans to be turned into a five-star hotel fall by the wayside, has finally obtained the municipal licence it needs to execute its plan B. As such, the former office building is now going to be transformed into a super-luxury residential property.

Its owner, KKH Property Investors, is going to invest around €180 million in total, according to market sources, to carry out the complete renovation of the property and build 34 homes with high-end services. One of the features of the project approved recently is that part of the four-storey commercial building located opposite the tower will be sacrificed and a passage will be built to make the residential building independent, and it will be made lighter.

KKH, led by the former CEO of Renta Corporación, Josep Maria Farré, has set out to build the most exclusive residential property in Barcelona. That distinction is currently held by the former Barcelona headquarters of Winterthur, owned by Squircle Capital, whose homes, measuring 500 m2, are sold (unfinished) for around €6 million, equivalent to more than €12,000/m2.

The 34 homes in the Deutsche Bank building will have a surface area of 200 m2 each and, as well as their privileged location, on the corner of Paseo de Gràcia and Avenida Diagonal, are going to enjoy panoramic views over the city. The common areas will include private parking, a gym, a spa, communal terraces, a swimming pool and meeting rooms. One of the features that will distinguish this residential community from others in the city, and which will make it equivalent to the best buildings in London and New York, will be the team of 20 employees that will be on hand to perform maintenance, cleaning, concierge, security and general support services for residents.

Plans

The project’s design has been entrusted to the architect Carlos Ferrater, and the first phase of construction has been subcontracted to Copcisa. The retail building, where Casa Seat will open, is expected to be finished in 2019 and the residential area, which will house another retail store on the ground floor, measuring around 500m2, should be ready by the beginning of 2020.

KKH Property Investors, a vehicle in which KKH Capital Group and the NYC fund Perella Weinberg Real Estate Fund II LP hold stakes, paid €90 million for the property in 2014. It then spent another €20 million to ensure that the Town Hall of Barcelona, led at the time by the convergent Xavier Trias, gave it permission to demolish the property and construct a hotel in its place.

The €20 million was spent buying equipment to lend to the city, to acquire buildability rights, and to pay €10.5 million to the Town Hall. But, when the project had received the municipal green light, Ada Colau arrived in government and, with her, the moratorium and new urban development plan that prevented the construction of the hotel, in which chains such as Four Seasons had expressed an interest and which would have resulted in the creation of 400 jobs.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Danish Logistics Giant DSV Inaugurates Facilities In Cabanillas del Campo (Guadalajara)

22 November 2017 – Cadena Ser

Today (Wednesday), the logistics company DSV cut the opening ribbon at its new facilities in Cabanillas del Campo (Guadalajara). The Danish logistics operator has a presence in 80 countries with 400 facilities, spanning a combined surface area of 5 million m2. In Spain, it has 227,000 m2 of space and 1,200 employees across 25 different locations.

In the case of Cabanillas, a logistics centre measuring 50,000 m2 was inaugurated today on the new SI-20 industrial estate; it is expected to create around 200 jobs. This platform, the ninth that the firm manages in Spain, has storage capacity for 65,000 pallets.

The opening ceremony was attended by the Director of DSV Solutions Spain, Xavier Juncosa; the Danish ambassador to Spain, John Nielsen; and the first Vice-President of the Government of Castilla la Mancha, José Luis Martínez Guijarro, amongst others. The latter reminded the audience about the support given by the autonomous regional governments for new investments in the region and the creation of employment.

DSV already had a presence in the province with other logistics spaces and is now expanding its facilities in Cabanillas del Campo.

Original story: Cadena Ser (by Jesús Blanco Orozco)

Translation: Carmel Drake

Employment In The Real Estate Sector Rose By 6.4% In October

3 November 2017 – Eje Prime

The real estate sector is continuing its role as a driver of the growth of employment in Spain. According to data from the Social Security office, in October, real estate activity registered a total of 130,850 affiliated workers, 63 more than in September. That figure represents a YoY increase of 6.4%, with 7,921 more professionals now active in the sector.

Including October, real estate activity has now recorded four consecutive months above the threshold of 130,000 jobs. This hopeful figure for growth contrasts with the just over 118,000 workers that were registered in the segment less than two years ago, in January 2016. Last year, during one month, March, the figure actually fell below that threshold, to an annual minimum of 117,986.

Nevertheless, the sector has been recovering its strength, month after month, and the real estate business made its debut in 2017 with 124,053 affiliated workers registered for Social Security purposes. Since January, the MoM growth rate has stood at around 1%, with around 1,000 new jobs being created each month, until the summer, when the rate of increase stagnated.

The strong performance in terms of employment in the real estate sector goes hand in hand with the recovery of the job market in general right across the country. In October, the Social Security office registered 17 million affiliated workers, which represents an improvement of 3.9% on the total employment figures recorded in the same month in 2016. The growth rate of employment in the real estate sector (6.4%) clearly shows that it is moving at a faster pace than the economy in general.

If we add employment in real estate activity with employment in the construction sector (the construction of buildings, specialist construction work and civil engineering), then the sector recorded an average of 1.27 million affiliated workers in October, up by 6.7% compared to the same month last year.

Unemployment rose by 56,884 people in October

The number of registered unemployed people at the Public Employment Services’ offices rose by 56,884 in October compared to the previous month. Nevertheless, the increase was well below the average rise in the unemployment figure in October over the last eight years, which amounts to 90,000 people.

In YoY terms, unemployment in Spain fell by 7.9% in the tenth month of the year, bringing the total number of unemployed people to 3.46 million. By economic sector, registered unemployment decreased above all in the construction sector, whilst it increased in the agriculture, industry and services sectors.

Original story: Eje Prime

Translation: Carmel Drake