Town Hall of Madrid Approves Legislation to Close 10,000+ VUTs

27 March 2019 – El País

On Wednesday, the Town Hall of Madrid approved a special plan to regulate the licences required to operate tourist apartments (“viviendas de uso turístico” or VUTs).

To obtain a licence, a VUT must now have a separate access from the other homes in the building, which means, in practice, that 95% of the establishments of this kind in Madrid will have to close. More than 10,000 VUTs will be affected, according to municipal calculations. The legislation applies to those properties defined as VUT by the Community of Madrid, which are effectively those that are leased for 90 days or more per year.

The new legislation, which was supported by Ahora Madrid and the PSOE, will enter into force within the next few days. Non-compliance will trigger a process to cease the activity in that property, like in the case of a bar operating without a licence, rather than the imposition of a fine.

It was in January 2018 that the Town Hall of Madrid established that VUTs – homes that are leased for three months or more – represent an economic activity and, therefore, require a licence. At the same time, a moratorium was declared on the granting of licences whilst the new legislation was drafted, which has now been approved.

The impact on the more than 40,000 reservations that have been made in accommodation of this kind for the Gay Pride celebrations in July 2019 is far from clear.

Original story: El País (by Gloria Rodríguez-Pina)

Translation/Summary: Carmel Drake

Juan Velayos: “Spain Needs to Create a Large Rental Player”

22 October 2018 – Eje Prime

Neinor Homes is going to reach “cruising speed” in 2019. The listed property developer is working to close the year with the delivery of almost 1,000 homes, half the number planned for next year. In the growth plan for the real estate company for the next few years, its CEO, Juan Velayos, does not rule out selling entire developments to a large rental home manager, a type of player that “Spain needs to create”, assured the director at a breakfast meeting held yesterday in Barcelona.

Velayos recognises that, for the time being, there are not any real estate companies specialising in rental “with such a large volume that would allow them to offer us an attractive margin, but we would be delighted to negotiate with any of them”.

The possibility of expanding its portfolio of clients through agreements with large asset managers could prove attractive for one of the property developers with the largest land bank in Spain and which forecasts starting to hand over 4,000 homes per year from 2020 onwards.

In total, the listed company has buildable land on which to construct 13,500 homes spread over 180 developments all over the country. The external valuation of this portfolio amounts to €1.813 billion, according to sources at Neinor.

“The company has already started to hand over homes and generate a positive cash flow and result”, highlights Velayos. The property developer currently has cranes at sixty developments, which will introduce 5,000 homes onto the market. Following the latest purchases of land in Bilbao, Sevilla and Madrid, “we have the land bank covered until 2021”, confirms the director.

In financial terms, Neinor recorded revenues of €78.9 million during the six months to June. That figure reflects a lot of activity in the marketing area. As at 30 September, the property developer had pre-sold 3,000 of the 7,000 homes that it had on the market, resulting in revenues of more than €1 billion for the company controlled by the Israeli fund Adar Capital.

“We will reach cruising speed in 2019”.  

Velayos trusts that the increase in productivity this year will allow Neinor to reach “cruising speed in 2019”. Next year, the listed company will have more than 120 developments underway, with a percentage of pre-sales that already exceeds 75%.

On this roadmap to lead the Spanish residential segment, Neinor trusts “wholeheartedly” in Cataluña, confirmed Velayos. It represents the firm’s current “star” location, as proven by the fact that 50% of the 5,000 homes that the property developer currently has under construction in Spain are located in this region and, primarily, in the metropolitan area of Barcelona.

“We are working on quite a few operations in the first ring”, said the director. In terms of the profile of the property developer’s buyers in Cataluña, young couples stand out, accounting for 39% of its customers, ahead of families with children (33%). In this sense, it is worth noting that 15% of its clients are investors, a percentage that exceeds Neinor’s average at the national level (11%).

Regarding the moratorium that Ada Colau is planning to launch in Barcelona, and which will oblige 30% of all new developments to be reserved for social housing, Velayos is clear: “That measure will not affect us because we won’t buy land in Barcelona” (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Spain’s Regional Gov’ts Clamp Down on Tourist Apartments

28 January 2018 – El Economista

Spain is breaking records in terms of visitor numbers and, in the age of the globalisation of communications, many people are wanting to make money from renting out their homes. This trend has forced autonomous governments and town halls to introduce legislation so that the so-called collaborative economy does not end up turning into unfair competition.

The tourist housing sector has been calling for the homogenous regulation of its activity for some time now, but for the time being, it has had to make do with the regulations approved by certain autonomous governments and town halls, above all those in the most central neighbourhoods, which are seeing their resident populations emptying out in the face of rising rental prices.

The latest to join the regulation train is the Town Hall of Madrid, which has approved a one-year moratorium for the granting of operating licences for all kinds of accommodation in residential buildings exceeding 90 days.

The moratorium will result in the suspension of licences for the opening of new hotels in the centre, a paralysis that in the case of tourist homes also extends to the districts of Chamberí, Salamanca and Arganzuela.

The Community of Madrid is also preparing a decree to regulate homes for tourist use, which will require owners to have a certificate of suitability to guarantee that their properties fulfil the conditions necessary and which will define digital platforms such as Airbnb as “tourist companies”, liable to fines of up to €300,000.

One of the pioneers in regulating this activity was the Town Hall of Barcelona, which prohibits the opening of new accommodation of this kind in the centre of the city, but does allow the closure of existing ones in the outskirts to be compensated, provided the new units are located in exclusive buildings and have not been used for residential purposes.

Moreover, it has strengthened the detection and sanctioning of illegal tourist apartments and, in the application of Catalan law, has fined operators that publicise them.

The Balearic Islands’ Government is also fining people who let their apartments to tourists up to €40,000, and in the case of real estate agents, tourism brokers and the digital platforms that publish them like Airbnb and HomeAway, it is levying fines of up to €400,000.

In fact, last month, sanction files were opened against Airbnb and Tripadvisor for their illegal supply of rental apartments in the Balearic Islands.

Meanwhile, since 2016 in Andalucía, the Junta has obliged homes used for tourist purposes to be recorded in a register, in order to avoid fraud, intrusion and unfair competition against hotel establishments (…).

After a great deal of controversy with tourist associations, the Canarian Government regulated the use of holiday rentals in 2015, and although the High Court annulled the article that prohibited holiday rentals in tourist areas, the law is still valid because the Executive filed an appeal with the Supreme Court, which has not ruled yet (…).

Any apartment offered through a digital platform in the Community of Valencia must be registered with the Valencian Tourism Agency and is subject to governing regulations in terms of safety and quality.

Murcia, meanwhile, has implemented a specific plan to reduce the current mismatch between the regulated and unregulated supply, putting a stop to intrusion and reinforcing the fight against employment on the black market, which is typically precarious and exploitative.

By next spring, the Community of Castilla-La Mancha will have drafted a law that will put an end to the legislative vacuum in this regard and which, according to the regional Government’s calculations, will allow it to shed light on between 1,500 and 2,00 tourist homes that are advertised on several online portals, but which offer no guarantees for clients and generate no tax revenues for the administration.

In Euskadi, last month, the Basque Government approved a draft decree that seeks to regulate the most tourist aspects of homes, providing guarantees to advertisers, neighbours and tourists, given that the decision to grant licences lies with the town halls, such as those of Bilbao and San Sebastián, which account for two thirds of the almost 2,500 tourist apartments in the País Vasco (…).

In March 2017, the La Rioja Government approved a general tourism regulation, which distinguishes tourist apartments – those that contain three or more accommodation units in the same building – from homes for tourist use, including those that are advertised online.

Last year, a decree entered into force in Asturias to regulate tourist apartments and, according to the most recent available figures, 640 registrations have been recorded and 159 sanction files have been opened (…).

Finally, the Junta de Extremadura is working to reform Law 2/2011, dated 31 January, governing the Development and Modernisation of Tourism in Extremadura, which will materialise this year and which will offer new instruments to help in the fight against fraud involving tourist apartments.

Original story: El Economista

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

Cataluña’s High Court Cancels Moratorium On New Hotels In Ciutat Vella

4 October 2017 – Inmodiario

Section 3 of the Administrative Chamber of the High Court of Justice in Cataluña has upheld the appeal submitted against the approval of the agreement by the Town Hall of Barcelona of the Modification of the Special Plan for public establishments, hotels and other activities in Ciutat Vella and has annulled the obligation to obtain the withdrawal of one or more existing hotel licences equal in number to or exceeding the new hotel activity.

The legislation was approved by the CiU municipal government in July 2013 with the support of the PP. The aim, as the Town Hall explains in its argument against the appeal, was to maintain hotel beds, but relocate them within the district, to avoid over-concentration in specific areas.

The Town Hall alleges that the modification to the special plan for public establishments, hotels and other activities, whose articles 14 and 20 the TSJC has now annulled, is governed by urban planning criteria and not by economic or tourism policies, with the aim of achieving a better relationship between visitors and the resident population.

For the complainant, which owns several properties that it purchased to operate as hotels, the obligation to “withdraw” a number of licences equal to or exceeding the volume of the new hotel activity makes the implementation of these tourist establishments “prohibitive and unfeasible economically”.

In its opinion, the legislation affects the sphere of private relations and creates a “market for licences”, an argument that the court agrees with. The court highlights that it already annulled a similar ruling from 2010, which talked about the “renouncing” of licences rather than their “withdrawal”.

For TSJC, this change in nomenclature means “coining” a new term, which stands out due to its “vulgarity” and also generates “clear legal uncertainty”, since, in reality, it is a “non-specific legal term that is completely inscrutable”.

According to the court, the “poorly named withdrawal” continues to be just as illegal as the “renouncement”, and will only end up “making the market for licences more endogamic, if that’s possible”. That is because, according to the annulled regulations, someone can only access a hotel licence if they previously held one, which “drives a parallel and artificial market of licences and ownerships”, says the court.

Original story: Inmodiario

Translation: Carmel Drake

Irea: Madrid Led Ranking For Hotel Investment In 2016 (€445M)

2 October 2017 – El Boletin

The strong outlook for tourism in Madrid is continuing to attract interest from investors, as shown by the fact that the Spanish capital was the largest focus for hotel investment in 2016, with a total volume of €445.3 million, according to the report “Five Keys Madrid vs Barcelona 2016 – 2017”, published by Irea.

Last year, Madrid recorded 13 transactions in total, the most notable of which involved the sale of Hotel Villa Magna to the Dogus Group. During the first half of 2017, the city of Madrid registered 6 hotel transactions, whereby doubling the number recorded in 2016, with a total volume of €312.9 million. By far the most significant operation in H1 2017 was the purchase of Edificio España by Riu Hotels, which is going to convert the property into a 650-room hotel in the heart of Madrid.

Meanwhile, Barcelona was relegated to third place in the hotel investment ranking in 2016, behind Madrid and the Canary Islands, but ahead of the Balearic Islands, with a hotel investment volume of €214.6 million. Six hotels were sold in the Catalan capital, containing 1,028 rooms in total.

Nevertheless, that investment figure represented a decrease of 38.8% with respect to the maximum reached in 2015, explained in large part by the price rise effect resulting from the hotel moratorium approved by the city’s Town Hall. The first half of 2017 was very active in terms of hotel transactions, with the sale of five hotels and a total investment of €230.2 million. The main transactions involved the purchase of 55% of Hilton Diagonal by AXA REIM (for a price per room of more than €300,000) and the acquisition of Silken Diagonal by Benson Elliot and Highgate.

Demand

Madrid also led the domestic ranking for the number of travellers last year and came second (after Barcelona) in terms of the number of overnight stays, with 9.0 million and 18.1 million, respectively. For another year, the Catalan capital was the leading destination in terms of overnight stays in 2016 (19.6 million); it received 7.5 million travellers, which represents an average stay of 2.6 days (vs. 2 days in Madrid).

The report highlights that in both markets, the behaviour of international demand has been excellent and it notes the growth of 10.2% in the case of Madrid during the first half of 2017, confirming the upwards trend driven by overseas tourists (…).

Supply

In terms of the hotel supply, Madrid recorded a total of 68,790 beds in the highest category (an almost identical figure to that of Barcelona) (…), with 5-star establishments accounting for 15% of the city’s hotel beds in 2016.

Although the statistical data do not reflect it yet, the recovery in the construction of new hotels in the capital is already evident – according to the report – and will be noted in the data for the coming years, given that short-medium term forecasts for Madrid indicate that more than 4,400 new hotel beds are going to available soon, led by major hotel chains and international investment funds, who are backing the city, given the strong outlook for its tourism sector (…).

Key indicators

The positive trend that Madrid has recorded in terms of demand, together with the stable evolution of its hotel supply, has led to the growth of operating results in recent years. The Spanish capital recorded an average RevPAR of €63.30 in 2016, up by 6.1% compared to 2015 and up by 32% compared to the minimum level recorded in 2013 (…).

Meanwhile, the profitability indicators for the hotel sector in Barcelona have also grown significantly in recent years. Revenue per available room experienced average annual growth of 2.3% during the period 2008-2016 (…). In 2016, RevPAR in Barcelona amounted to €95.90 (…) up by 5.2% compared to 2015.

Original story: El Boletin (by E. B.)

Translation: Carmel Drake

CBRE: Inv’t In Hotels Exceeded €700M In Q1

10 May 2017 – CBRE

Hotel investment in Spain is growing again, as are the main tourist indicators. Just when it seemed as if the YoY growth in hotel investment was beginning to slow down (based on the results for 2016), transactions worth almost 35% more were closed during the first three months of this year, than during the first quarter last year. According to the data compiled by CBRE Hotels, between January and March 2017, investment in hotel asset purchases amounted to €710 million, including not only hotels but also tourist apartments, aparthotels, as well as plots of land and buildings acquired for hotel use.

Of the 44 assets that changed hands during the first three months of 2017, approximately 55% belong to the urban segment and 45% to the vacation segment. With respect to the destination of investments, the Spanish capital stands out, accounting for more than 40% of the total volume invested compared to 27% in Barcelona, which despite its moratorium saw the sale of five hotels. The Balearic and Canary Islands, together with the Costa del Sol, accounted for another 19% of the total investment figure. The remaining investment was distributed across the rest of the peninsula.

During the first quarter, almost 40% of investments were carried out by private investors, compared with 55% during the first quarter of 2016. On the other hand, almost 20% of the volume invested was disbursed by hotel chains and operators, whilst the remaining 40% corresponded to institutional investors, including banks, sovereign funds, Socimis, fund managers, insurance companies and pension funds.

In terms of the types of contract, and based on the data from CBRE Hotels, 45% of the total transaction amount corresponded to operations in which the buyer became the manager of the establishment, whilst the remaining 55% related to investors that assigned the management of the establishment to the existing operator or to a new one.

In terms of the main operations that took place during the first quarter of the year, we highlight the sale of 50% of Centro Canalejas by OHL and Villar Mir; the acquisition of Hotel Velázquez, which was acquired by the Didra group; the purchase of NH Manzanares; and the operation involving the future Generator, which was acquired by Queensgate. At the same time, in the Catalan capital, the Hotel Silken Diagonal Barcelona and Hotel Generator Barcelona were sold, for a combined total of more than €100 million. CBRE Hotels brokered the sale of one hotel in Barcelona during the first quarter of the year.

Finally, several operations involving portfolios of hotels were also closed during the quarter, including the transaction completed by the Portobello group in March, which saw it acquire 95% of the Blue Sea Hotels & Resorts hotel chain, which owns several of the hotels that it manages.

Original story: CBRE 

Translation: Carmel Drake

Gov’t To Extend Suspension Of Evictions For Vulnerable Families

6 February 2017 – RTVE

Last Wednesday, the Minister for the Economy, Luis de Guindos, announced that the Government will extend the moratorium that prevents families in vulnerable situations from being evicted from their primary residences. The moratorium was due to expire on 15 May this year and its extension had also been requested by the Socialist Party.

“Yes, we will do so again now (extend the moratorium), like we did in 2015. We are open to negotiations”, said De Guindos, after confirming that 24,000 families have now benefitted from this measures, which favours certain groups.

The Minister was responding to questions from the Socialist congresswoman María del Mar Rominguera (…), who asked him about the Government’s intention to extend the deadline for the suspension of evictions of the most vulnerable families from their homes.

De Guindos said that the Government has protected the people who have suffered the most during the economic crisis and pointed out that some of the measures undertaken in this regard, such as the Code of Good Practice and the Social Housing Fund, approved by the Government, have benefitted more than 76,000 vulnerable families.

Evictions from primary residences have decreased by almost 30%

De Guindos said that the Government is willing to continue with these actions because they are having a “positive” effect, although he pointed out that the most recent statistics indicate that evictions from primary residences have decreased by around 30% “and that is a result of the economic recovery”.

De Guindos insisted that the creation of employment is what will confirm the economic recovery, given that “it is not only a matter of establishing palliative measures, although they are also important”.

“If employment improves in Spain, if there are increasingly more possibilities, if we increasingly see that house prices are not collapsing, we will see how situations involving evicted families will become increasingly marginal”, he said.

The PSOE supports the extension

Meanwhile, the Socialist congresswoman said she appreciated the fact that the Government has extended the moratorium for anti-evictions, which was due to expire in May (…).

The PSOE had requested an extension of the moratorium, four years after it first came into force. Nevertheless, De Guindos did not specify how long the moratorium would be extended for. (…).

Original story: RTVE 

Translation: Carmel Drake

Colau Closes 256 Tourist Apartments In 1 Month

11 August 2016 – Expansión

One month ago, the mayoress of Barcelona, Ada Colau, announced the launch of an emergency plan against unlicensed tourist apartments in operation in the city. Since then, the Town Hall has ordered the closure of 256 flats in total; in 2015, 400 orders were issued during the whole of the year. Nevertheless, for the trade association Apartur, which represents legal suppliers (of tourist accommodation), that figure is insufficient, and so it has called for the municipal government to make more effort.

A month ago, the town hall reinforced the number of agents making on-site inspections or verifying offers advertised on the internet. The sanctioned owners will receive a court order requiring them to cease their activity and they must pay a fine of €30,000. If they reoffend, the amount of the fine will increase.

One of the initiatives that Colau had announced a year ago was that unlicensed homes that joined the program for homes to be used as social housing would not be sanctioned, but for the time being, no property has joined that plan.

The town hall has also continued to process the files that it opened against the platforms Airbnb and Homeaway one year ago for reporting unlicensed flats.

Over the next few weeks, both operators will receive notifications and must pay a fine of €60,000 each. If they reoffend, the sanctions may reach €600,000.

The trade association Apartur celebrated the municipal initiative, but stressed that it is still a long way from eradicating the illegal offer that exists in the city. It also questioned the moratorium underway, which is affecting both the opening of hotels and the granting of new licences for tourist apartments, given that it is making the eradication of this activity more difficult. Its commitment, it said, is to a “responsible”, “sustainable” and civic tourist model.

Web site and letters

The municipal government defended itself against the critics and said that proof that it is giving priority to this issue is the creation of a website that allows neighbours to report illegal tourist apartments. During the course of one month, it has received 375 notifications. It has also started to send 800,000 letters this week, in which it calls on citizens to “collaborate”.

Nevertheless, the discomfort of several neighbourhood organisations against illegal tourist apartments is continuing to grow, and this summer it has extended further beyond the centre to reach neighbourhoods such as Poblenou.

Original story: Expansión (by David Casals)

Translation: Carmel Drake

JLL: Hotel Inv’t Amounted To €1,030M In First 7M 2016

3 August 2016 – Expansión

(…). Hotel investment in Spain amounted to €1,030 million during the 7 months to July 2016, which represents a 41% decrease compared with the same period last year. Nevertheless, it also represents the second highest figure recorded since 2007, according to a report prepared by JLL.

Specifically, as at 31 July this year, 81 (hotel) assets had been sold, for a combined investment volume of €1,030 million through 68 operations, compared with 92 assets sold as at July last year, with a combined investment volume of €1,752 million through 55 operations.

The most noteworthy operations so far this year have featured: Hotel Villa Magna, which was acquired by the Turkish group Dogus for an estimated €180 million; and Hotel Pullman Barcelona Skipper, which was purchased by the Saudí Royal Family for €90 million.

Excluding those two operations, Spanish investors accounted for 80% of the total volume invested in Spain.

In this vein, the most active investors in the hotel market have been the investment fund HI Partners (a subsidiary of Sabadell) and Hispania, which have completed transactions amounting to €110 million and €71 million, respectively.

Meanwhile, on the sell side, hotel groups have accounted for 41% of all hotel assets sold, followed by real estate companies (26%) and private investors (13%).

For Manuel Climent, Vice-President of JLL Hotels & Hospitality Group, the decrease in investment this year reflects, in part, the lower number of hotel portfolio transactions sold this year, after they soared in Spain in 2015.

Specifically, last year, up to eleven portfolios were sold, containing 74 hotels in total, for a combined investment volume of €1,450 million. So far this year, seven portfolios have been sold, containing 21 hotels and a combined investment of €174 million.

Climent forecasts that activity will intensify in terms of hotel portfolio transactions during the second half of the year, with HI Partners and Hispania leading the way.

For Climent, the moratorium in Barcelona has caused lots of investors who had purchased assets with a view to converting them into hotels, to become more cautious again. By contrast, some owners have put their hotel assets up for sale as they think that now is a good time to sell, given the lack of supply, which is raising prices in a space that is still very attractive for tourism.

The Vice-President of JLL Hotels & Hospitality Group considers that, although some important transactions are expected to be closed before year end, total investment volumes will fall below last year’s record of €2,740 million.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake