Construction To Resume In Valdebebas

30 January 2015 – Cinco Días

The Governing Board of Madrid’s City Council has finally approved the “Project for the Economic Redistribution of Plots in Valdebebas”, once all of the necessary administrative processes have been completed. “This is a particularly important milestone for Valdebebas, since it will allow not only for new building permits to be granted once more, but also for a return to normality for the first occupancy licences and building permits that have been already granted; the latter have been affected by litigation claims”, said the team responsible for the complex, located to the North of central Madrid.

Following the administrative decision, construction of almost 1,000 new homes (mostly non-subsidised dwellings) will begin in the next few months, adding to the stock of more than 4,000 homes that have already been built. “In terms of social housing, and once the existing supply of land has been used up, around 350 of the 1,000 new homes will be subsidised”. In addition to this new supply of housing, the urban restructuring will be completed with a shopping centre, comprising 56,000 constructible square metres, and a plot of land destined for private educational use, where the Joyfe Valdebebas College will be built. The parks in the area, which will occupy 1,000 hectares, are due to be opened between March and April.

The plans permit the construction of 12,500 homes, of which almost 4,200 have already been build and a further 800 are in the final phase of construction. Around 5,000 people currently live in Valdebebas, but it is estimated that the neighbourhood will have a residential population of between 30,000 and 40,000 people once the project has been completed. If we add the people that are expected to work in the nearby offices and shops, then estimates indicate that more than 100,000 people will pass through Valdebebas on a daily basis. The average price of non-subsidised housing in the new neighbourhood amounts to around €2,550 per square metre.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake

Telefónica Seeks Buyer For Buildings In Madrid And Barcelona For €60m

28 January 2015 – El Confidencial

Telefónica has begun to shed some of its real estate weight. And it is doing so at a time when investors are no longer planning their moves in the market, they are actually closing transactions. According to sector sources, the company led by César Alierta has completed the sale of five buildings for €65 million in recent months and is now looking for a buyer for four other properties, for which it expects to receive another €60 million.

The listed company has designed a real estate efficiency plan for 2014 and 2015, which includes the sale of nine buildings that will become totally obsolete in less than a decade, in the face of impending technological change. The company itself recognises that with the proceeds, it will be able to finance the investments required to adapt its business to the changing times. Telefónica will continue to lease the buildings as the tenant – known in real estate parlance as sale & leaseback – for between seven and ten years, so that once the lease contract is up, the new owners will have full use of the properties.

Currently- and although the market expects the company to put new assets up for sale – Telefónica is looking for a buyer for three buildings in Madrid (in Calle Irún; close to Plaza de Santo Domingo; and in Moratalaz) and one in Barcelona, in the La Sagrera neighbourhood.

The building in Plaza de Santo Domingo, a few metres from Madrid’s Gran Vía, is a very attractive asset due to its location, as well as for its urban classification as residential. Although Telefónica will remain as the tenant for several years, the future buyer of the property may later convert the building into homes in an area where residential property is in short supply. Similarly, the building in Calle Irun, just a ten-minute walk from Plaza de España and Principe Pío train station, could also be converted into homes in the future. The final property for sale in Madrid, measuring 5,800 square metres, is located in Moratalez and is also for residential use, just like the one in La Sagrera, Barcelona.

Indeed, seven of the nine buildings put up for sale by Telefónica are classified as residential. Only two of them are not. The first, a building in Valencia that was acquired by the owner of Embutidos Martínez, is located in the Plaza del Ayuntamiento and has seven floors and a surface area of almost 4,000 square metres. The second, Telefónica’s historical headquarters in Bilbao, on Calle Buenos Aires, was sold a few weeks ago and measures 5,500 square metres and is classified for alternative commercial use.

Investors’ appetite outside of Madrid and Barcelona

“Investors have seized the opportunity to acquire landmark assets that have great potential for future development and meanwhile, obtain very competitive rents, guaranteed by an AAA tenant. This has facilitated a very agile sales process, which has lasted less than two months, clearly demonstrating the market’s appetite for well-located buildings that have good lease contracts to guarantee yields over the medium and long term”, says Pablo Méndez, Investment Director at Aguirre Newman.

Moreover, the assets are strategically located in the centre of some of Spain’s most important cities, which has helped to boost their appeal. “It is especially striking that investors are showing interest in buildings in cities such as Bilbao, San Sebastián and Valencia. This shows that the perception of risk is continuing to decline in the real estate market and that investors are now more willing to take positions in cities that are regarded as secondary to prime markets, such as Madrid and Barcelona”, said Patricio Palomar, Director of Office Advisory and Alternative Investment at CBRE.

He adds that “for this type of product, it is also very important that domestic investors, like family offices and private firms, are more agile in their ability to take decisions and get offers on the table as this gives them a competitive advantage with respect to foreign buyers with more institutional capital, such as insurance companies, fund managers and those with more sophisticated vehicles”.

These are not the first and they certainly will not be the last non-strategic assets to be sold by the company, given that over the coming years, it will have to gradually get rid of many of them following the demise of analogue technology and the digitalisation of all equipment. “Telefónica serves as an example of good wealth management. It knows that in a few years copper cable connections are going to become completely obsolete and that in a ten years, telephone cables will no longer be used; all connections will be fibre optic”, says Patricio Palomar.

“The sale of these assets demonstrates very professional management by a corporation such as Telefónica, which has a clear strategic vision for the business. Given that the type of activity that takes place in these buildings is destined to disappear, the company ensures through these sales that its services will continue for as long as necessary, until the move happens over to the new technology. In addition, it affords it a line of financing that is cheaper than many others and it could choose to use this liquidity to grow its core business, which is much more about providing telecommunications services than investing in real estate” he concludes.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Matutes To Expand Hotel Only You In Madrid

28 January 2015 – Expansión

Palladium, the hotel chain owned by the former minister and businessman Abel Matutes is strengthening its commitment to Madrid by expanding its Hotel Only You. The success of the boutique hotel, which opened its doors in 2013 and is located in Calle Barquillo, has encouraged the company to lease the adjoining building, which will allow it to add 50 rooms taking hotel’s capacity to 125 rooms in total; nine of these will be suites.

In 2014, Palladium recorded turnover of €429 million, an increase of 10% on the previous year. The hotel chain, which brings together 50 hotels and 14,000 rooms, will invest €80 million in three hotel projects this year, covering 1,280 rooms. In May, it will open the Grand Palladium White Island Resort & Spa in Ibiza. This will be followed by the opening of two new hotels between 2015 and 2016: one under the Ayre brand in Madrid, opposite the Atocha train station and the other, the Hard Rock Hotel in Tenerife.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

Wanda Meets González To Discuss Its €3,000m Investment In Madrid

28 January 2015 – Expansión

Representatives of the business group Wanda, owned by the Chinese magnate Wang Jianlin, met with the President of the Community of Madrid, Ignacio González, first thing on Tuesday, to discuss the project to build a housing, hotel and leisure complex in the Campamento neighbourhood of the capital.

The Wanda delegation was led by its CEO, Zhu Huan.

Wang Jianlin, owner of the Wanda Group, recently announced his willingness to invest €3,000 million in a large housing and leisure complex in the Campamento area of Madrid, in the south-west of the capital, on land belonging to the Ministry of Defence.

A few months ago, the Chinese magnate bought the Edificio España, in Plaza de España, with a view to building housing, shops and a luxury hotel there; and a few days ago, he completed the purchase of 20% of the football club Atlético de Madrid for €45 million following a capital increase by the club.

Original story: Expansión

Translation: Carmel Drake

Ortega Purchases Gran Vía, 32

27 January 2015 – Cinco Días

Amancio Ortega will be the landlord of one of Inditex’s competitors, the Primark Group. The founder of Zara has acquired Gran Vía, 32, the building in Madrid where the Irish company will open its flagship store in Spain.

A consortium of funds comprising PSP, APG, Phoenix Group and Sun Capital, led by Drago Capital, has announced the sale of Gran Vía 32 to Pontegadea, the real estate company owned by Amancio Ortega. PSP Investments – the public pension fund of the Canadian armed forces and one of the largest pension managers in this country – holds a 50% stake in Longshore (the company that currently owns the building); the management team of Drago Capital, the company that manages the assets, also holds a minority stake. The remaining 50% is owned by the real estate investment fund Drago Real Estate Partners, in which a number of companies hold stakes, including the Dutch firm APG (the largest pension fund in Europe), the British insurance group Phoenix Group (formerly Pearl Assurance) and the British investment company Sun Capital Partners.

Previously, the building was owned by Grupo Prisa, which sold the property to Drago Real Estate in 2008.

Spokemen of the various companies involved in the sale were not willing to disclose the amount paid, but sector sources estimate that the price would be around €400 million.

The building on Gran Vía 32 has a total floor space area of 36,376 square metres, divided into nine floors above ground, plus the ground floor and basement.

Four of the largest fashion companies in the world will share the building, and its new landlord, in Madrid. Gran Vía 32 already houses H&M, Mango and Lefties (Inditex) stores. The Irish chain Primark plans to open its largest store in Spain in the building at the end of this year, where it will have 9,000 square metres of retail space across three floors.

Primark is owned by the Associated British Foods group and now has 41 stores in Spain, after entering the market in 2006.

Madrid, Barcelona, London

Pontegadea, a company that also receives dividend income that Amancio Ortega earns from Inditex, recorded a profit of €93.3 million in 2013, an increase of 32% compared with 2012, according to information published in the El País newspaper last August, based on data extracted from the company’s accounts filed at the Commercial Registry.

The company recorded rental income of €98.5 million, an increase of €4.3 million. The volume of assets on its balance sheet amounted to €4,519.5 million. The company reduced its bank debt by €73.8 million down to €325.1 million.

In recent years, Amancio Ortega has invested in property in Madrid, Barcelona and London, although he has also done business in New York.

Pontegadea owns several landmark properties, including the Torre Picasso in Madrid, which it acquired at the end of 2011 from the FCC group for €400 million; and a building located on Manhattan’s West Side, which it bought at the end of 2013 for €69 million.

Last year, Pontegadea purchased two buildings from Sareb – the property that used to house the headquarters of Banesto, in Plaza Cataluyna, Barcelona, for €44 million and the building that houses the Apple store in Valencia, for €23.5 million.

Recently, it also purchased Rio Tinto’s headquarters in London. At the beginning of 2013, it completed the purchase of Devonshire House, in London, a building that houses 16,000 square metres of offices and retail space. In 2006, it bought another building in London, 100 Wood Street, for GBP 140 million and in 2011, it acquired an office building on Oxford Street for GBP 220 million.

Original story: Cinco Días (by Alberto Ortín Ramón)

Translation: Carmel Drake

GMP Buys Torre Ederra From BBVA

27 January 2015 – Expansión

BBVA had acquired the building for €87.5 million in 2003 from the French group Saint Gobain Cristalería, which continued to occupy the premises under an agreement reached with the buyer.

The real estate group GMP has purchased the Torre Ederra, located in Madrid on Paseo de la Castellana, 77, following a sales process in which several investors participated, the company announced in a press release.

GMP says that it will now undertake a comprehensive renovation of the property with the aim of optimising its efficiency and sustainability, to convert it into an avant-garde building in a prime location.

In this way, GMP will promote Castellana 77 as a landmark building and will target companies looking for a prime location in Madrid.

The building covers 21,000 square metres in total, over 18 floors, which occupy 16,200 square metres. It also has five underground floors with 190 parking spaces.

BBVA appointed the property consultant CBRE to manage the sales process of the property. The real estate group, in which the sovereign fund Singapur CIG holds a 30% stake, already bought a building on Calle Eloy Gonzalo, 10 in mid-2014, whose lease ended in December, almost a year before the end of its renovation.

This transaction strengthens GMP’s presence in the AZCA financial centre, where the firm already owns a building designed by the architect Sáenz de Oiza, on the Paseo de la Castellana, 81.

Original story: Expansión

Translation: Carmel Drake

Gecina Sells BMW Offices In Madrid For €41m

26 January 2015 – Invertia

The French real estate company Gecina has finalized the sale of an office building in Madrid (Avenida de Burgos) to a SOCIMI managed by IBA Capital Partners.

Gecina was advised by Resource Capital Partners, Jones Lang Lasalle, CBRE and law firm Almagro.

Original story: Invertia

Edited by: Carmel Drake

Wang Jianlin Plans To Invest €3,000m In Macro-Complex In Madrid

22 January 2015 – Expansión

Following his investment in Atlético de Madrid, the Chinese tycoon, owner of the Edificio España, is studying the possibility of building a residential and tourist complex that would also include casinos. He is considering two locations: Campamento and Venta de la Rubia.

Yesterday, for the first time, the Chinese businessman, Wang Jianlin (pictured), owner of the conglomerate Wanda Group, confirmed his plans for the creation of a residential and leisure macro-complex in Madrid. “We have already had a meeting with the Spanish President and it is now up to Spain to take a decision”, said Wang in China, after signing an agreement to acquire 20% of the Atlético de Madrid football club.

The objective of Wang Jianlin, who has assets of more than $13,200 million, according to the most recent Forbes ranking, is to invest at least €3,000 million in the creation of an upmarket complex that would include up to 15,000 luxury homes. The development would also house leisure areas, such as a retail complex, theme parks and casinos. In fact, Jianlin has already hired the project’s creator from the gaming magnate Sheldon Adelson in Macau, say sources close to the entrepreneur.

Location

In terms of the location of the macro-complex, Wang Jianlin and his team have two options. On the one hand, the site in Venta de la Rubia, in Alcorcón, where Sheldon Adelson was going to build the failed Eurovegas project. On the other hand, an old barracks site in Campamento, in Madrid, which is currently owned by the Ministry of Defence.

In favour of the former are its location, close to Madrid’s tourist attractions, such as the Royal Palace, and crucially, the fact that it has a single owner, the central Government, which would massively simplify future negotiations regarding construction. Against, is the price that Jianlin would have to pay for the site, which covers almost 9 million square metres, and the fact that a development plan already exists and modifications to it may delay construction.

The second option, in Venta de la Rubia, is close to Santander’s business park, as well as to the land where Atlético de Madrid plans to build its new sports facilities; in addition, Wang would be allowed to create a tailor-made development plan for the site. Furthermore, the owners of the land, who are united through a Compensation Board and which include companies such as Metrovacesa and the Urtinsa group, would be willing to hand over some of the land for free – something they already offered to Adelson, according to real estate sources – since the rest would be re-valued.

Regardless of the location that Wang Jianlin and his team finally choose, the construction of this macro-complex would revitalise this area to the south-west of the capital. “The goal is to convert the Paseo de Extremadura into the new Castellana, and develop the whole of the surrounding area through the Jianlin complex”, explain sources close to the businessman.

“He is keen to start very soon”, said Enrique Cerezo, President of Atlético de Madrid, yesterday. Mr Cerezo has acted as a guide to Jianlin during his visits to Madrid. Yesterday, the President of the Community of Madrid, Ignacio González said that  “The regional government is “fully” committed”.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Housing: Rental Prices Increase By 2.6% In 2014

21 January 2015 – El País

Barcelona is the most expensive regional capital in Spain and Lugo is the most economical.

House rental prices in Spain closed the year (2014) with a slight increase of 2.6%, to reach €7 per square metre per month. During the last quarter of the year, prices continued to rise, up by 0.2%.

“The data shows a stable outlook for the rental market, which although is now recovering, is not showing any signs of a sudden increase in prices. In any case, as with the market for house sales, we have to recognise that the rental market has two speeds. Thus, the increases recorded in markets such as Madrid, Barcelona, tourist areas and specific areas of the País Vasco have sparked interest from investors towards these regions, however this has been at the detriment of other less profitable areas”, says Fernando Encinar of idealista.com.

By autonomous region, the greatest increase was recorded in Cataluña, where landlords are now charging 9.8% more to let their properties than a year ago. It is followed by the regions of Extremadura (3.9%) and the Balearic Islands (2.4%).

By contrast, Murcia and Galicia have experienced price reductions of around 4% and 3%, respectively.

Madrid continues to be the most expensive autonomous region, at €10.20 per square metre. It is followed closely by the País Vasco (€10.00/m2) and Cataluña (€9.20/m2).

Barcelona consolidated its position as the most expensive regional capital in Spain, with an average price increase of 11% to take it to €12.50 per square metre; it is followed by San Sebastián (€11.80/m2) and Madrid (€11.40/m2). At the opposite end of the table, we find Ourense and Lugo, as the cheapest regional capitals, with an average price of around €4.10/m2 in both cities.

Notably, Jaén was the regional capital that saw the highest increase in rental prices in 2014, which grew by 10.4%.

Original story: El País (by Paula Cossío)

Translation: Carmel Drake

Spain’s Top Cities Show Signs Of Housing Recovery

21 January 2015 – WSJ

Spain’s residential real-estate recovery is a tale of two cities: Madrid and Barcelona.

Barcelona is the only city in Spain to post an annual increase in home prices during 2014. Prices in the city rose 2.8%, with some neighborhoods gaining as much as 8%.

Madrid, too, has fared better than most. While it hasn’t enjoyed price gains, Madrid’s decline of 4.9% last year was better than the 5.7% drop for Spain overall, according to fotocasa.es, a Spanish property website.

The price performance in Madrid and Barcelona helps explain why Spain’s construction sector is expected to make a comeback in 2015 after seven comatose years, as demand grows amid a modest economic recovery. Most of the building will take place in Spain’s two biggest cities.

“You have to look at Spain as if it were two countries,” says Fernando Rodríguez de Acuña of real-estate consulting firm R.R. de Acuña & Asociados in Madrid. “There’s the Spain that’s recovering. That’s the Spain that has the big cities and wealthy coastal areas. Then there’s the Spain where we went crazy during the housing boom, and that’s not going to recover for at least 10 years.”

New housing permits in greater Madrid were up 26.4% in the first 10 months of last year compared with the same period in 2013, according to the latest available data from Spain’s Ministry of Public Works. Most of the residential construction, investors say, is apartment buildings. Loans to build residential housing in Spain overall were up 25.6% in the third quarter of 2014 from a year earlier, according to Spain’s General Council of Notaries.

No one expects a surge in building comparable to the boom days. Nearly the same number of building permits in greater Madrid were issued in June 2006, at the height of the building frenzy, as in the first 10 months of 2014.

The construction comes as Spain tries to digest an estimated one million unsold empty houses, which can seem “counterintuitive,” says Fernando Encinar, head of research at idealista.com, a Spanish property website. “In 2015, there will be a high level of housing stock at the national level, but a deficit of housing in certain markets that will allow for the construction of new homes.”

Even within Madrid and Barcelona, there are major differences. Home prices in an exclusive neighborhood of Madrid, Chamartín, fell 2.2% in 2014, while another neighborhood south of the center, Villaverde, saw declines of 14.6%, according to data from fotocasa.es.

Spaniards who didn’t lose their jobs during the country’s downturn and have been waiting for house prices to slow their decline are among the most likely buyers, analysts and investors say. Banks also have been more willing recently to issue home mortgages to buy the newly built houses.

(…….)

Fernando Moliner Robredo, Chief Executive of Actívitas Inversión Inmobiliaria SL, the developer of a 105-unit apartment building in the Villaverde neighborhood of Madrid, says a postcrisis building lull created a need for housing. “In Madrid, new housing stock won’t cover demand for more than six or nine months,” he says.

Luis Martín Guirado and César Barrasa, executives at Sareb, Spain’s “bad bank,” say they also are seeing an uptick in demand for land beyond Madrid and Barcelona, including along the Mediterranean Coast and the Balearic Islands.

The expectations for construction growth in Spain break from the norm in other European cities hard hit by the financial crisis. Residential property development in Europe has generally remained sluggish.

“The standout would be Germany, which has been able to maintain robust levels of capital investment,” said Simon Rawlinson, head of strategic research at construction-consultancy Arcadis . “Most others have not.”

Before the crisis, cheap mortgage lending helped drive housing construction in markets like Spain and Ireland. Spain’s construction sector started to collapse in 2008, as the market was clogged by the building boom. The bust saddled banks with billions of euros in bad loans, forcing lawmakers to request a €41 billion bailout from the European Union to shore up confidence in the stability of the country itself.

The signs of life in Spain’s building sector come as the number of unemployed has declined and as the country’s economy—the fourth-largest in the European Union—is expected to grow more than 2% in 2015, among the strongest performers in the region.

But the country’s recovery is a modest one. Unemployment is still a staggering 23.7%, the highest in the EU after Greece.

An increase in construction now “doesn’t mean that everything is going well in the real-estate sector,” says Mr. Rodríguez de Acuña. “Construction is happening in very specific areas and at very competitive prices, which is why they are able to sell it.”

Original story: WSJ (by Jeannette Neumann in Madrid and Art Patnaude in London)

Edited by: Carmel Drake