Arcano’s RE Fund Acquires 2 Assets For c. €20M

27 March 2017 – Observatorio Inmobiliario

On Tuesday (21 March), Arcano’s real estate fund, the Arcano Spanish Opportunity Real Estate Fund (ASOREF), announced the acquisition of two new assets for almost €20 million. The assets acquired comprise an office building in Barcelona’s Plaza Europa (number 22-24) and a residential building on Calle Divino Pastor, 5 in Madrid.

Following these operations, the fund has now invested 50% of its capital; it plans to complete the rest of its investments this year.

The office building on Plaza Europa, 22-24 in Barcelona (pictured above) involved an investment of around €13 million. The asset is located in one of the fastest growing areas of the city for high-quality office space. The property currently has an occupancy rate of 84% and a gross leasable area of 7,334 m2, along with 83 parking spaces and storerooms covering 452 m2. It also has 164 parking spaces as an administrative concession.

Now that Arcano has acquired the property, its objective, as part of its added-value strategy for this fund, is to invest in its refurbishment and update, to increase the value and appeal of the building. “Our strategy will involve repositioning the property through the active management of it. From our point of view, Plaza Europa is the natural area of consolidation for the office market in Barcelona – it is going to undergo significant changes over the next few years”, said Pablo Gómez-Almansa, Investment Director at ASOREF.

The asset acquired in Madrid, on Calle Divino Pastor, 5, for a price of just over €6 million, is for the construction of 28 new homes with 1 and 2 bedrooms, a commercial space and 88 parking spaces. It is an 810 m2 plot of land with a constructed residential surface area of 2,371 m2. The plot is located in the Malasaña neighbourhood, in the Centro district of the city of Madrid, between Calles Fuencarral and San Bernardo. The building is very well located and in a strategic area between Calles Princesa, Gran Vía, Fuencarral and Carranza. It will benefit from the lack of land and shortage of new residential developments in the area.

In the words of Eduardo Fernández-Cuesta, Head Partner at ASOREF, “the two acquisitions announced today underline Arcano’s commitment to forming a diversified portfolio and adding value to its properties, through renovation, new builds and better positioning of its buildings in the market, to increase the supply of high-quality assets”.

Original story: Observatorio Inmobiliario

Translation: Carmel Drake

Airbnb, HomeAway & Wimdu Outperform Traditional Long-Term Lets

23 February 2017 – El Confidencial

Traditional rental agreements (…), which are governed in Spain by the Urban Rental Act (LAU) and which allow a tenant to live in a home for an extended period of time, are starting to become scarce in some very specific areas of large cities such as Madrid and Barcelona. They are falling victim to the unstoppable progress of so-called tourist apartments or short-stay lets (available on a daily, weekly or monthly basis), which have grown like wildfire in recent years, thanks to the development of platforms such as Airbnb, HomeAway, Wimdu, Niumba, Rentalia and Booking.

Users consider that these assets offer a much more flexible and economic alternative than the product offered by the hotel sector. Meanwhile, homeowners have found a business niche and are generating extra income both from their own homes and from properties acquired as investments. Moreover, their yields are ranging between 4% and 8%, which is well above those offered by other traditional investment products at the moment, including traditional rental properties.

To give us an idea of the volumes being handled by these types of platforms, Airbnb has 13,000 online adverts in the city of Madrid, whilst Idealista has 8,700 adverts for rental homes. In Barcelona, the online platform has 20,000 adverts compared with 6,400 on the real estate portal.

Nevertheless, the problem is limited to very specific locations, such as Malasaña and Chueca in Madrid and Las Ramblas and El L’Eixample in Barcelona. There it is almost impossible to find a long-term rental home. As such, the few products that do come onto the market are leased in a matter of hours and at much higher prices than they were just a couple of years ago. (…).

Rental prices in Malasaña now rarely fall below €800 for a one-bedroom flat measuring just 40m2, but on average, homes there cost between €1,200 and €1,300 per month. On the real estate portal Idealista, there are a few 60m2 flats for rent, for which the owners are asking €2,700/month and even €3,500/month for luxury properties.

Emergence of individual investors

Airbnb defends the “home-sharing” concept, saying that it does not remove available housing from the market because people who live in these homes are still around, they are just sharing their primary residences. Some of these people are using the money to pay for their housing costs”, says the platform. “Studies have been carried out in several cities around the world, showing that the number of homes advertised on Airbnb for exclusively professional use is too low to have any impact on the housing market”.

Nevertheless, the high returns offered by tourist apartments have led many individuals and small-time investors to buy homes in these areas, to subsequently sell them or rent them to tourists. Specifically, individual investors are behind 3 out of every 10 house sales in Madrid, according to data from Tecnocasa. (…).

A very localised phenomenon

What is happening in Malasaña is also being seen on some other very specific streets both in Madrid and Barcelona, where rental prices have really soared. According to Urban Data Analytics, rental prices have risen by more than 20% in neighbourhoods such as Sant Andreu and Sants-Montjuïc, and by 15% in areas such as Gràcia, where prices decreased slightly during the crisis. (…).

According to Bankinter, in its latest report about the Spanish residential sector, these price increases will not last forever. “In our opinion, these double-digit increases, which are driven by a shortage of supply and the boom in tourist rentals, will not last in the long term, nor will they spread to the market as a whole, especially if new legislation is introduced to limit the number of tourist homes a given owner may rent out”.

Sources at Airbnb insist that “The increases in house and rental prices are due to normal factors at play in the real estate market, including: the high demand to live in cities, the appeal of real estate as investment property, the lack of space to build new developments…also, the pressure on house prices is not just being seen in Barcelona, it is happening in all of the large cities around the world (….). House prices were rising before Airbnb ever existed (…)”.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake