Tag: latent demand

Fotocasa: Second-Hand House Prices Record Their Highest Increase Since 2006

24 January 2019 – Expansión

Second-hand housing is continuing to spearhead growth in the residential market. Not only because it accounts for more than 80% of all house sale operations, but also because it is the segment where prices are increasing by the most.

The price of second-hand homes rose by 7.8% at the end of 2018, recording the highest increase in 13 years, since 2006, before the crisis, according to data published yesterday by Fotocasa. Taking into account the fact that the online portfolio started monitoring house prices in 2006, it is the largest annual increase in the historical series. Although the prices of second-hand homes have not stopped growing in month-on-month terms for 27 months – more than two years – in 2018, they rose at a rate never before seen.

The awakening of latent demand, investor appetite and the profitability of rental properties in the context of low interest rates explain why interest has returned to property purchases, with the consequent impact on prices”, explained Beatriz Toribio, Head of Research at Fotocasa.

Despite the increases, the average house price stands at €1,869/m2, the level last seen in 2013, when the residential sector had not yet started to recover. House prices peaked in April 2007, when the price per square metre reached €2,952/m2, 36.7% higher than it is now (…).

Even though prices are still well below their historic maximums, the evolution of the market varies by area. Although the increases were widespread across almost the whole country in 2018, Toribio explains that “the intensity of the increases is very different, and there are even areas where slight decreases were registered”. Madrid is the province where prices increased by the most, specifically, by 19.5%, followed by Las Palmas (13.8%), Santa Cruz de Tenerife (12%), Alicante (11.3%), Barcelona (10.5%) and the Balearic Islands (10.4%).

The Spanish market continues to grow at various speeds, with large cities driving prices and sales. Guipúzcoa, Barcelona and Madrid are the most expensive provinces in Spain, with prices per square metre of more than €2,880/m2.

By contrast, the provinces that are suffering from depopulation and ageing demographics are recording significant price decreases (…). Toledo is not only the province that has recorded the largest decrease in prices since the peak (-55%), it is also the cheapest, with prices of €948/m2. It is followed by Ciudad Real, where second-hand homes are going for €990/m2.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Aelca to Build 2,100 Homes in Sevilla

20 February 2018 – Expansión

The property developer in which Värde Partners holds a stake has acquired several plots of land in the town of Entrenúcleos, where it plans to invest €250 million.

The residential property developer Aelca, in which the US fund Värde Partners holds a 75% stake, has completed a major land purchase in Sevilla, which is going to allow it to enter the Andalucían capital with a huge real estate project.

The company, led by Javier Gómez and José Juan Martín (pictured above), has announced the purchase of several plots in the Sevillan municipality of Dos Hermanos, where it is going to build more than 2,100 homes, according to ABC Sevilla.

In total, Aelca has acquired a portfolio of land with a buildable surface area of 227,788 m2, which it is going to develop in several phases. The first phase will be launched in May, with the development of 163 multi-family dwellings on one site and 78 family homes on another.

The investment in Entrenúcleos will amount to €250 million, said the company today.

“Andalucía is a key market for the company and, as part of our strategic plan, we hope to strengthen our presence in the region, where we have just opened a local office. We know that there is latent demand there at the moment in terms of housing and we are convinced that this is going grow further still, because the capital’s entire area of influence is already sparking a great deal of interest due to the numerous benefits that it offers and its competitive prices”, says Javier Gómez, CEO of Aelca.

The company, founded in 2012 by its current CEOs, Javier Gómez and José Juan Martín, closed 2017 with 1,118 homes sold. This year, the firm plans to launch 3,777 homes, spread across around 50 developments.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Excem Launches 2nd Socimi & Spends €22M On 1st Asset In Madrid

31 July 2017 – Eje Prime

Excem is on a roll. The company has just launched its second Socimi, Sociedad de Inversión Turística (Situr), dedicated to hostels and tourist apartments. The group, led by the Hatchwell family, will invest €250 million on the launch of this new investment vehicle, which will be led by Amir Yerushalmi, former director of the US fund Gaia. Moreover, the new entity has just acquired its first asset in Madrid for €22 million.

In March, as Eje Prime announced, the company activated its second company specialising in hostels for young people, whereby following the roadmap drawn by the group when it proposed the project, which also includes the creation of a third Socimi specialising in assets destined for use as co-working spaces.

The company constituted the hostel business, which operates under the name Excem Capital Partners Hospitality, and which at the time had just one administrator, Philip Hatchwell Altarar.

The investment to be undertaken by this second Socimi will amount to €250 million between now and 2018, approximately. The company has set itself the objective of owning 3,500 beds in a dozen buildings, primarily in Madrid and Barcelona, as well as in other tourist cities around the country.

Excem’s second project responds to a “latent demand”, according to the company, which maintains that each year young people from all over the world spend more than $230,000 million travelling and that there are only six companies in the world specialising in offering them high-quality accommodation at competitive prices.

With the company structure already in place, Excem has acquired its first asset through Situr. The company has purchased an asset located at number 3 on Calle Postigo de San Martín, in Madrid. That property, which is located opposite the Monasterio de Las Descalzas and Puerta del Sol, has a surface area of 4,000 m2 and 400 beds. Excem has spent €22 million on this purchase.

Excem’s second Socimi has been created with the aim of acquiring between ten and fifteen buildings, during the first phase and starting in Madrid, to build up a portfolio of 3,500 beds in the historical centres of the main cities in Spain, Europe and the USA, which will be managed as hostels.

In addition to this first asset in Madrid and a second committed property in Málaga, Situr has already chosen more than 30 buildings in main cities across Spain to continue its acquisition plan. According to the company, “we expect to undertake a capital increase for Excem Socimi Situr between September and December 2017 and start to debut on the MAB in 2019” (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

Amazon Revolutionises The Logistics Sector

9 February 2017 – Expansión

The boom in e-commerce and the arrival of the large distribution giants, like Amazon, have caused a genuine tsunami in the real estate market and in the way we understand logistics. Logistics assets – which were, until recently, the ugly duckling of the sector – have really blossomed and now represent one of the investment segments with most potential, given their risk-return relationship, according to the experts.

Operators are increasingly looking for more large logistics warehouses on the outskirts of cities, which they combine with distribution centres situated on ring-roads to make deliveries on time and on budget.

“The effect is a reflection of new consumer habits and online purchases, as well as of consumer expectations, which require products to arrive on time and to be easily returnable (inverse logistics)”, explains Antonio Montero, Director of the Industrial-Logistics business at Aguirre Newman.

Alberto Larrazábal, National Director of Industrial and Logistics at CBRE, said that there has been an increase in the e-commerce market. “Operators are increasingly demanding more logistics and distribution space. In Madrid and Barcelona, 400,000 m2 and 700,000 m2 of space was leased, respectively, in 2016 and e-commerce accounted for 25% of those amounts.

Javier García-Mateos, Partner in Financial Advisory at Deloitte said that “retailers are starting to use their own establishments in cities as logistics and distribution points for e-commerce”.

García-Mateos also said that there is greater demand for the development of cross-docking warehouses (which reduce the time needed for logistics operations and which can be adapted to the needs of e-commerce) in the vicinity of the main urban nuclei. (…).

“Logistics spaces are moving increasingly closer to cities, there are even warehouses inside city centres. These are points where companies can serve their customers in the fastest and most effective way”, said Luis Guardia, Director of the Logistics and Industrial Area at JLL.

Guardia also explained that the major department stores are also committed to opening “regional hubs” to get closer to the major urban nuclei.

Development activity

In terms of investment, Larrazábal considers that the logistics and industrial sectors are becoming more fashionable by the day. “Large funds and private investors will end up acquiring these assets”, he said.

Over the last three years, investment volumes have grown considerably, to reach more than €800 million last year.

One example of this investor appetite is Merlin’s purchase of Saba Parques Logísticos – the company that groups together Saba’s stakes in five parks – for €115 million.

“The logistics market is interesting as it allows the Socimis to diversify and add new assets to their portfolio that generate returns not afforded by the other assets at the moment”, said García-Mateos. Other operators that are committed to this market include Logicor (Blackstone), Zaphir, Prologis, Rockspring, GreenOak and the joint venture between Colony and Neinver.

In the same way, experts indicate that development activity has resumed. “Developers and investors know that there is latent demand in high quality logistics assets and this is encouraging them to buy land and build assets”, said Montero

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Demand For Off-Plan Homes Returns As Stock Runs Out

6 June 2016 – El Economista

The purchase of off-plan homes has returned to the stage after years of lethargy, driven by: the absorption of residential stock in many areas of Spain; the need for new homes; the improvement in the economy and in future employment; and the clear recovery of the real estate sector.

According to the President of the property developers’ association APCE, Juan Antonio Gómez-Pintado, the “stock” of homes, which has weighed down (on the sector) since the crisis, has been gradually absorbed and in certain areas, such as Madrid, Barcelona and the Costa del Sol, it is practically non-existent. (…).

The market, in general, has a view that residential stock has disappeared in many areas, leading to the activation of prices and the construction of new homes, said the CEO of Quabit, Javier M. Prieta. He added that housing permits soared by 42.5% in 2015, whereby confirming the need for new homes.

Exponential growth

Since 2013, the number of off-plan purchases has grown exponentially, especially in the medium-high and high end residential segment, according to the Director of the Development at Gilmar, Óscar Ochoa, who highlighted that after many years of crisis, there is a latent demand for newly built homes.

At present, buyers are looking to purchase homes to reposition themselves, say sources at Tinsa, who consider that one of the major challenges in the residential market will be to achieve the recovery of the employment market and the conditions that allow for that pent-up demand to become solvent.

Sources at Neinor Homes have also observed a significant revitalisation of the market in the last year and assure that off-plan buyers are looking for a type of home that has not been built yet or that was hard to find until now. Clients are very demanding and well-informed about what their homes should be like.

The property developer Vía Célere has also detected a substantial increase in off-plan sales, both in Madrid, where 90% of Residencial Célere Adelgas II has been sold with still a year to go before it is completed, and in Barcelona, where half of Residencial Célere Magoria, which was launched at the end of 2015, has already been sold.

These are clients who do not need a home in the short term and who are able to invest more in exchange for a new home in which they will not have to invest anything over the long term, said the Director of Gilmar. (…).

Clients who buy off-plan should always verify that the project has a building licence, that the contract includes a delivery date and that the amounts paid during the construction process are guaranteed by some kind of insurance policy or aval, say sources at APCE.

In terms of the benefits of buying off-plan, price is a fundamental aspect, as well as the possibility of customising the home, say sources in the sector.

Sources at Tinsa, APCE, Quabit, Gilmar, Vía Célere and Neinor all agree that off-plan buyers should only purchase from transparent and solvent firms with experience in the sector, and they recommend steering clear of apparent bargains. Off-plan buyers should also check that the property developer in question already owns the land on which the property is going to be built or that an aval has been constituted for the entire development.

Off-plan buyers should also demand a guaranteed individual aval to allow them to recover monies paid in the event that their homes are not handed over in the end.

Original story: El Economista

Translation: Carmel Drake