New Winds Group Buys Hearst’s HQ in Madrid from Patron Capital

26 January 2018 – Eje Prime

New operation in the office sector in Spain. New Winds Group, a real estate company controlled by Milagros Reyzábal, has purchased the building located at number 23 Calle Santa Engracia in Madrid from Patron Capital. The building is occupied by the communications company Hearst.

The acquisition forms part of the growth strategy of the New Winds Group, in its office real estate division, which is expected to continuing investing in similar buildings with a medium- and long-term value-added approach. Hearst has a rental contract that runs until 2025.

Patron Capital has been advised in this transaction by CBRE, and New Winds Group has received technical assistance from the Madrilenian architecture studio SML.

New Winds Group is a Madrilenian real estate company linked to the Reyzábal family; above all, it is known for being the owner of the Windsor building. In recent years, it has grown its property portfolio with the inclusion of shopping centres, such as in Montecarmelo in the capital of Spain, and office buildings.

Original story: Eje Prime

Translation: Carmel Drake

Valdebebas, Castellana Norte & Mahou-Calderón Try to Inject New Life into Madrid

2 December 2017 – Expansión

After years of paralysis in the real estate sector, the reactivation of house sales has come at a time when there are hardly any new build homes available in Madrid.

According to calculations by the real estate consultancy CBRE, the municipality of Madrid and its surrounding areas have an absorption rate of around 20,000 homes per year and yet, the output for the region barely reaches 10,000 units.

In this context, yesterday, the Valdebebas Compensation Board, the last major development area in the north of Madrid, approved the economic “reparcelation” of the whole area, which will be the largest process in the history of Spain, with the aim of reactivating the granting of licences in an area where there is still land available for the development of 3,794 homes.

The aim of the economic “reparcelation” is to put an end to the urban planning problems associated with this development, which relate to the commercial area that was initially planned. “The problems date back to 2013, when modifications were made to the general plan, which included the construction of the largest shopping centre in Europe. The plan was modified to make the shopping centre smaller and to add more homes, most of which were social housing properties”, explain sources at the Valdebebas Compensation Board.

The new plan was legally appealed and in May, a ruling overturned the changes. “The legal ruling caused the Town Hall of Madrid to stop granting licences for the whole area. In light of that paralysis, the only option has been this economic “reparcelation” process (…), which will cost more than €5 million, which the Compensation Board will bear in its entirety”(…). “The “reparcelation” will allow the development of the last major PAU in the north of Madrid, given that in the others, such as in Las Tablas, Sanchinarro and Montecarmelo, there are barely any plots left (…).

The lack of supply has already had an impact on prices. “In two years, land prices in Valdebebas have doubled and, that is inevitably reflected in prices. Whilst before you could find a home for €2,400/m2, now you can’t find anything for less than €3,000/m2”.

Operación Mahou-Calderón

Operación Mahou-Calderón represents the last large plot of land in the central district (…). In total, it comprises 147,050 m2 of buildable land, where around 1,200 homes may be built (…) with prices of around €2,950/m2 (…).

Madrid Nuevo Norte

Operación Chamartín is reinventing itself (…). It has been paralysed for more than 20 years, but the new project includes a reduction in the buildable surface area, which will amount to 2.68 million m2, where 11,000 homes will be built, of which 20% will be social housing properties. With an investment of around €6 billion, construction work is expected to begin in 2019.

Berrocales, Valdecarros and Cerros

Meanwhile, the development of the southeast of Madrid has been put on the back burner. The Compensation Boards responsible for the three urban developments there (Los Berrocales, Valdecarros and Los Cerros), have joined forces in a common platform to promote the construction of more than 100,000 affordable homes over the next 25 years in the southeast of Madrid. Meanwhile, the Town Hall of Madrid is proposing a change to its urban development plans, with a maximum of 27,700 homes between now and 2030, to which another 26,000 may be added by 2039, depending on demand (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

BNP Paribas: Land Sales Will Soar To €4,076M In 2017

9 November 2017 – Expansión

The blast of property developer activity and the entry of funds into the residential business have caused land purchases to soar in recent months. According to forecasts from BNP Paribas Real Estate, 2017 is set to close with approximately 22,700 land purchase transactions in total, with a combined value of €4,076 million, which represents an increase of 37% compared to 2016.

The consultancy firm explains in a report about the residential market that interest is focused on the more stable markets, such as Madrid and Barcelona. Nevertheless, the scarcity of available buildable land has led to searches for plots in other markets too, such as Sevilla, Málaga and Valencia.

“After overcoming some very tough years for the real estate market, and in particular the land market, with the paralysis of property developer activity, the segment started to recover over the last two years, in line with the improvement in the fundamentals of the market and the good performance of the economy”, explain sources at the consultancy firm.

The report points out that, although there is a lot of available land in Spain, the average time it takes to create buildable land is eight years, due to the administrative processes that are required. “Over the last 10 years, no land has been generated; no one was interested in investing in the market”.

In certain areas of the more established markets, that lack of buildable land is leading to an increase in prices, with rises of up to 30% and even 40% over the last two years. In this way, in markets such as Valdebebas, Montecarmelo and El Cañaveral (in Madrid) have seen significant land price increases, as a result of the fact that the supply of buildable land is very limited.

BNP Paribas Real Estate highlights the change brought about in the sector due to the increased demand and the entry of investment funds eager to back the market.

New players

Property developers such as Neinor, Aedas – both of which are listed – , Vía Célere, Metrovacesa and Aelca are taking advantage of the good times that the sector is enjoying and the upwards cycle, in general, to strengthen their presence and launch new developments.

The report points out that, during the eight months to August, 315,795 house purchase operations were closed. It forecasts that the total number of transactions could reach 530,000 homes in 2017, which would represent a return to the pre-crisis levels. The main international market is the United Kingdom, whose citizens account for 14.9% of transactions by overseas players, despite Brexit. In addition to the Brits, the French, Germans, Belgians, Italians and Nordics are the other main buyers of homes in Spain.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Ferrovial, FCC, Acciona & ACS Are Building Houses Again

25 May 2017 – El Confidencial

A decade after they sold or wrote off their real estate arms, the country’s largest construction companies are now returning to the residential property development sector. Ferrovial, ACS, Acciona and FCC have regained their appetite for property and although they have different paces and strategies in mind, they have all definitively decided to revive their real estate divisions.

In the case of the group chaired by Rafael del Pino, which sold Ferrovial Inmobiliaria to Habitat for €2,200 million at the end of 2006, it will lay the first stone of this new strategic phase in Valdebebas. It owns plot 128A there, in what is one of the most important urban planning developments in the north of Madrid, and it plans to build between 200 and 300 homes on the site.

And that is just the tip of the iceberg, given that as the group’s CEO, Íñigo Meirás, acknowledged to this newspaper, the firm “is willing to become a property developer once again”. (…).

This strategy, combined with the gradual recovery in the real estate sector, has allowed residential construction work to account for 5% of the group’s total building portfolio, having closed last year at €442 million, up by 31.7% YoY. The group aspires to increase those numbers, by resuming its property development activity, which has caused it to analyse land operations in different areas to the north of Madrid.

FCC Real Estate also wants to make a similar move. The division, led for the last year and a half by Xavier Fainé Garriga, has decided to start developing half a million m2 of land that it owns in the Madrilenian town of Tres Cantos. The company has owned the plots for years, and its construction division will also participate in their development, along with the real estate subsidiary Realia, which will collaborate on the marketing side. (…).

Meanwhile, Acciona has a more ambitious plan, after it tried, two years ago, to divest its real estate arm, by listing it on the stock market or selling a stake in it to a fund – it has now ended up deciding to return to development. That was recognised by the firm’s Corporate Development Director, Juan Muro Lara, in March, when he announced the launch of 16 housing developments: 13 in Spain and the rest in Mexico and Poland.

In parallel, the group is finalising the transfer of its rental properties to Merlin, in a deal disclosed by El Confidencial in October, which will see the former’s exit from the real estate business. It also wants to push ahead with the sale of its hotels and office buildings through individual operations.

In the case of ACS, the firm is carrying out its strategy in the development segment through Cogesa, the historical subsidiary of the group, which stands out because it is the owner of the group’s two main corporate headquarters, the office buildings located in Las Tablas and on Avenida Pío XII in Madrid, and for owning sizeable land portfolios in areas such as Montecarmelo, Arroyo Fresno, Las Tablas, Carabanchel and Ensanche de Vallecas.

The turning point for this subsidiary, which is led by the brother of Florentino Pérez, Enrique, came two years ago, when it carried out a capital increase amounting to €44 million and then acquired one of the last plots of residential land in Montecarmelo for €2,200/m2. That figure turned the operation into one of the most onerous since the burst of the bubble, but is now seen in a very different light. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

New Winds Group Buys Málaga Plaza Shopping Centre

31 March 2017 – Eje Prime

New Winds Group has purchased the Málaga Plaza Shopping Centre from Inversiones Igueldo. The asset, located in the financial and commercial heart of Málaga, has a gross leasable area of 6,600 m2, spread over three shopping floors and three underground floors containing 320 parking spaces.

The Málaga Plaza Shopping Centre was constructed in 1993 by the architect Ángel Asenjo and currently receives 3 million visitors per year. It is home to brands of the calibre of Burger King, FNAC, VivaGym and Primor, amongst others.

Over the next few months, New Winds Group will undertake an ambitious project to improve the shopping centre and will introduce new operators. Aguirre Newman has advised the divestment through an improvement in the occupancy rate and in the quality of the tenants and the subsequent sale at a profit.

New Winds Group is a Madrilenian real estate company linked to the Reyzábal family, known primarily for being the owner of the Windsor building. In recent years, it has acquired other shopping centres, such as Montecarmelo in the Spanish capital.

Original story: Eje Prime

Translation: Carmel Drake

Speculation Returns To The Market For Land In Madrid & Along The Coast

11 April 2016 – ABC

During the years of the crisis, investors regarded land as one of the least attractive assets. In fact, in the face of scarce demand and the paralysis in the construction sector, land values fell to historic lows. (…).

Sales of urban land, the substratum of real estate developments, are growing again after nine years of consecutive decreases. And they are doing so at a healthy – and on occasion, vertiginous – rate in certain areas of the country where the housing market has already started its recovery, such as the more illustrious areas of major cities, including the north of Madrid and established areas along the coast (Málaga, Palma de Mallorca and the Canary Islands). So much so that a warning is now spreading amongst analysts and agents in the sector: the scarcity of developable land – which does not require land planning approval – in certain areas, and renewed interest from investors is generating a new “overheating” in the price of transactions, something not seen since the burst of the real estate bubble.

The latest “Market Trends” report prepared by Solvia, the real estate arm of Banco Sabadell, warns that the expectation of a strong recovery in value is incubating operations of a speculative nature. “The fact that the supply of well-located land is scarce in areas with demand, that there is widespread liquidity in the market and that there is fierce competition to acquire assets, means that land purchases are being made for speculative purposes, in certain specific cases, for subsequent resale at significantly higher prices”.

In this sense, the study, which does not cite who is behind such transactions, highlights the cases of the Madrilenian neighbourhoods of Valdebebas and Montecarmelo. In the case of the latter, the price of land has risen by between 40% and 60% to €2,400/m2.

Montecarmelo and Valdebebas

Fernando Rodríguez de Acuña, Director General of Operations at the consultancy firm RR de Acuña y Asociados distinguishes between three players in the race for land: the financial entities and large investors, who have put their assets up for sale “in stages” and the small and medium-sized funds, which are more prone to speculative operations given that they seek high short-term yields. The confluence of these players has given rise to a situation in which both the activity and value of these real estate assets have increased significantly, if we exclude the statistical effect of operations carried out by financial entities foreclosing unpaid debt. Thus, the number of transactions carried out by operators in the sector (developers, funds and cooperatives) increased by 37% in 2015 compared with the year before and by 60% in terms of transaction volume. (…).

According to the experts, two operations in particular have caused prices in the land market in the Spanish capital to sky-rocket: firstly, the sale of 14 plots containing more than 93,000 m2 of buildable space, by the Valdebebas Compensation Board to the property developer Pryconsa for more than €55 million and secondly, the acquisition of a plot of land in Montecarmelo by Cogesa, which belongs to the Dragados group, for more than €20 million. (…).

Original story: ABC (by Luis M. Ontoso)

Translation: Carmel Drake

Cogesa Paid c. €2,200/m2 For The Final Plots In Montecarmelo

25 September 2015 – El Confidencial

Some people regard it as an Urban Planning Action Plan (‘Programa de Actuación Urbanística’ or Pau) for “rich people” only. But, Montecarmelo, the smallest of the three new neighbourhoods in the north of Madrid – together with Sanchinarro and Las Tablas – has become the talk of the sector. And it is no wonder. The neighbourhood has starred in the most expensive land operation to be closed since the burst of the real estate bubble, and although it did not trigger alarm bells per se, it did raise concern amongst the main players in the market, for whom the memories of the worst excesses undertaken during the boom are still fresh and vivid.

Less than three months ago, at the beginning of July, the company Cogesa, which forms part of Grupo Dragados and is led by Enrique Pérez, the brother of Florentino Pérez (the President of Real Madrid Football Club), paid an “exorbitant” amount for the final few residential plots in Montecarmelo. Specifically, Cogesa paid just under €2,200/m2 for the land, i.e. significantly more than the figure (€1,400/m2 – €1,500/m2) the experts consulted by this newspaper consider should have been paid for the launch of a profitable development, unless, of course, it is developed as a cooperative.

Montecarmelo, which is located next to Monte del Pardo, the Colmenar motorway and the M-40 ring-road, was conceived at the beginning of the 1990s. With more than half a million square metres of land allocated for residential use – 8,500 homes, both unsubsidised and subsidised – it became the destination of choice for hundreds of young couples who saw the neighbourhood as a good place to live that allowed them to travel into the city centre each day to work. It was born as a commuter town (neighbourhood), just like Sanchinarro and Las Tablas, but is now witnessing the “overheating”  of land prices that seems to be happening once again. (…).

Knight Frank…estimates that there is only around 50,000 m2 of buildable space left in the development, i.e. 5% of the total, since the remaining 95% is under construction or has already been built. (…).

Cogesa’s bid took the other participants in the tender completely by surprise: Construcciones Amenabar and Grupo CP, two companies that have been involved in previous projects, as well as Momentum and the cooperative DMS have said as much…none of the other offers even came close to the figure that was put on the table by the Grupo Dragados’ company, to acquire the last large plot for sale in Montecarmelo. The company already has a presence in the neighbourhood, with around one thousand homes in several developments. At one of them, Las Terrazas de Montecarmela, the company has been selling homes for just under €3,000/m2.

“Cogesa already has interests there. It owns several plots, which means that by paying the amount it has done for this plot, it has also increased the value of its own portfolio there” says an expert consulted by this newspaper. (…).

However, the most recent land operations are raising concerns that the segment is “overheating”. In fact, the numbers do not add up for some developers. “A those prices, they would have to sell the homes for more than €3,500/m2, and not only is it going to be difficult to find buyers willing to pay that much, the figure also leaves minimal scope for profit. A logical price would have been €1,400/m2-€1,500/m2, because even if the cost of the land attributable to the final price of the homes was 50%, they could be sold at €3,000/m2 and not lose money”, explains a source at one developer, who prefers to remain anonymous.

“At these prices, the only thing that would make sense is a development on a cooperative basis, a formula that this company has adopted in the past. The developers need to make a profit of between 15% and 20%, however, in a cooperative, the manager does not earn any more than 10% and the risk is diluted amongst the cooperative”, says Ernesto Tarazona, Partner and Director of Residential Property and Land at Knight Frank, who believes that the lack of supply in the area benefits any project that is undertaken in Montecarmelo. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Strong Recovery In Madrid’s Market For New Homes

14 July 2015 – Cinco Días

The lack of new housing developments in Madrid in recent years means that the few blocks that have been built are being sold quickly, as the economic environment improves. So much so that the marketing company Foro Consultores has conducted the first comprehensive study of the new build segment, which not only estimates the size of the stock of new homes in the capital, it also calculates when that stock may be depleted if the current strong rate of sales continues.

The study, based on visits to all of the developments currently for sale and simulations of purchases or direct surveys at the sites, has focused on analysing the existing supply in new urban developments (Arroyo del Fresno, Montecarmelo, Las Tablas, Sanchinarro, Valdebebas, El Cañaveral, El Ensanche de Vallecas and Carabanchel), since those are the areas where the new builds are concentrated. Whole new buildings are the exception rather than the rule in the city centre and in the city’s more established neighbourhoods.

Foro Consultores begins its report by highlighting the number of new homes: currently the stock of new homes available for sale in Madrid amounts to 1,770, of which 781 are “free” and 989 are social housing (VPO) homes. That figure represents just 20% of the total number of buildings that have started to be built since 2010. Moreover, we are talking about very small numbers if we take into account that the study has analysed 102 developments in total, containing 4,001 “free” homes and 3,861 social housing homes, almost 8,000 homes, which came onto the market in recent years as turnkey properties or homes sold off-plan.

4.1 homes sold per development per month

The uptake of homes by region is not uniform. More than half of the new homes built in El Cañaveral, in the south of the city – the last development to get underway – have not yet been sold. Meanwhile, in other new neighbourhoods, such as Montecarmelo, less than 5% of the new homes or those under construction remain unsold. Furthermore, in Ensanche de Vallecas in 2007, there were almost 3,000 unsubsidised new homes for sale, but now there are just 166 left.

As well as the scarcity of supply due to the construction paralysis in recent years, one of the keys that explains the fast absorption of the stock is the acceleration in the rate of sales in recent months. Foro Consultores estimates that if no new developments come onto the market, then the excess would be depleted in just six months, at the current sales rate of 4.1 homes per development per month.

The study highlights that these 4.1 homes sold (per development per month) represents the sale of 5.3% of developments every 30 days, an average rhythm that has not been seen since 2003, and for unsubsidised housing, that figure is almost 5 homes per development per month, whereas during the crisis, it never exceeded one unit per month.

The study also shows that 79% of the developments on the market were started between 2010 and 2015, and of those 77% have already been sold.

In terms of prices, the report also highlights that in certain developments in El Cañaveral, the price of unsubsidised homes is lower than the price of VPO homes, which is not very typical in Madrid. “This shows that the social housing pricing model is out of synch with the market and that the promoters of unsubsidised homes have adapted better to the changes in conditions”, explained Foro Consultores.

In the areas analysed, the absolute prices of unsubsidised homes ranges between €77,000 and €657,000, with an average price of €273,021. Meanwhile, the prices of VPO homes range between €38,474 and €382,652, with an average price of €150,721.

Finally, the study concludes that by type of home, three-bedroom houses are in most demand. Meanwhile, the construction of studios and small flats, which were so fashionable during the boom, is now reducing.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Funds And Developers Compete To Buy Land In North Madrid

9 June 2015 – El Confidencial

Land is no longer the most toxic asset in the market, rather it has become one of the most sought after by investors. Although, not all plots or all locations are of interest, it is clear that the number of transactions, especially in Madrid, has reached “cruising speed” during the last few months. But, what are investment funds and property developers looking for exactly?

“Land has to be ready to build on (‘suelo finalista’); it is imperative that we can begin to build on it within a period of six months”, says Roberto Roca, Investment Director, Head of Spain at Orion Capital Managers, a fund that has closed two of the largest shopping centre transactions centres in Spain in the last year: the sale of Puerto Venecia (Zaragoza), the largest shopping centre in Europe, for €451 million and the sale of Plenilunio (Madrid), for a record figure of €375 million.

(…)

The market for land in Madrid is in full swing, to the extent that some experts agree that there is “overheating” in certain specific areas.

“Most activity is concentrated within the M-30 and on buildable land. Also, outside of the M-30, to the North of Madrid, from the A-6 to the A-1, i.e. the area comprising the urban developments of Arroyo del Fresno, Sanchinarro, Montecarmelo and Las Tablas”, says Ernesto Tarazona, Director of Residential Property and Land at Knight Frank.

However, in the South of Madrid, “despite the decreases, prices have not dropped enough…to reflect the real demand in the area”, concludes Tarazona.

(…)

One of the most active players in the market is Neinor Homes – the result of Lone Star’s purchase of the real estate arm of Kutxabank – which has €1,000 million to spend on land in Spain, and which regards Madrid as one of its main targets. The company led by Juan Velayos has just bought four plots in Alcobendas and another one in San Sebastián de los Reyes – both towns to the North of Madrid – for almost €65 million. This has been the largest land transaction so far in 2015, both in terms of square metres acquired, as well as surface area purchased. The plots are completely established and ready for construction, with a total surface area of 70,000 m2 and a buildable area for the construction of almost 600 (unsubsidised) homes. The vendor was a private group, i.e. the land did not used to belong to the Public Administration.

This transaction comes after the recent purchase of three other plots of land, one in Madrid and two in País Vasco for €22 million. According to a statement from BNP Paribas Real Estate, which advised on the deal, the first plot – with a buildable area of 6,400 m2 – is in the Legazpi neighbourhood and has been granted a special plan, approved by Madrid’s Local Council, to build a 20-storey tower block. The other two plots are located in Gexto and Urduliz.

Meanwhile, the cooperative manager Ibosa is finalising an agreement with an investment fund, which will allow it to pay €70 million to buy 40,000 m2 of land from the Valdebebas Compensation Board, which will allow the construction of 1,000 homes (of which 100 will be social housing).

Nevertheless, the largest land-related deal in Madrid is undoubtedly the possible future auction – maybe after the summer – of the Ministry of Finance’s plot of land on Calle Padre Damián, which already has 4,000 individuals calling at its door.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake