Property Developers Launch Mega-urbanisations: Inside the Largest Residential Projects in Spain

Currently, in Spain, ten macro-urbanisations are being built with more than 300 units each. Large property developers such as Neinor, ASG and Stoneweg are behind these projects, which also include homes for rent.

Until the end of March, the date on which Covid-19 brought the habitual performance of almost every activity in Spain to a standstill, there were more than 4,800 new construction projects underway across the country, comprising 131,471 homes, according to data from the real estate big data platform Brainsre.

Of those more than 131,000 homes under construction, more than half form part of so-called large developments, i.e. projects with more than 50 units. That means that almost 800 macro-projects, comprising 75,630 homes, are being built to respond to the shortage of existing new build homes on offer. This has been reflected in the price trends, which have been growing at a faster rate than the prices of second-hand properties.

Of the 789 large developments in progress, ten contain more than 300 units. These are unique projects, located in large cities such as Madrid, Barcelona and Valencia, but there are also examples in Málaga, Bilbao and Tarragona. Together, these ten macro communities will comprise a total of 3,729 homes.

The ‘Twin Towers’ in Madrid

This is one of the most iconic real estate projects currently being constructed in the capital, in addition to being a key residential venture. It is the Skyline project and it consists of two skyscrapers that the high-end property developer Stoneweg is building in the Tetuan neighbourhood, in the north of Madrid. It will comprise 600 homes in total.

“It is a twin tower development. One of the towers is intended for sale to individuals and is being marketed by CBRE – it comprises 303 units. The second tower has been sold to M&G Investments and will initially be used for rental housing”, explains Diego Montojo, analyst at Brainsre.

With prices ranging from €300,000 to €645,000, construction work began during the first quarter of 2020 and is expected to last until the beginning of 2022. “The building work was halted by Covid-19 but no changes are currently expected to be made to the key delivery dates; in terms of the effect of coronavirus on reservations, there have been no cancellations,” says Montojo.

The largest rental project in Spain

Just one of the ten projects containing more than 300 homes is dedicated entirely to rent. That is the Barcelona Sants residence, owned by Becorp -the real estate agency created by the property developer Corp and Scranton, the investment vehicle owned by the Grifols family. It comprises 421 apartments for let. “This project is still under construction – the building work started during the second quarter of 2018 and the keys are due to be delivered in early 2021. The homes are not yet on the market,” according to the analyst at Brainsre.

Becorp’s Barcelona Sants project.

Becorp’s complex will have 12 floors and 3,956 square metres of common areas, along with swimming pools, a wellness area and coworking centre.

Neinor, the ‘king’ of the large projects

Another project comprising more than 400 units is the Sky Homes development being constructed by the listed property developer Neinor Homes in Valencia. The company led by Borja García-Egotxeaga currently has more than 960 homes under construction in the Community of Valencia, of which 417 correspond to a single project, with an investment of €86 million. “The construction work on this project started during the fourth quarter of 2019, after the license was obtained in September; the delivery of the keys is scheduled for the end of 2022”, explains the analyst from Brainsre.

Sky Homes by Neinor.

Nor is it the only major project Neinor Homes currently has underway. The company, which had almost 5,000 homes under construction until all building work was suspended by the Government, has two other developments amongst the largest in Spain. They are Bolueta Homes, in Bilbao, comprising 328 units. That is the sixth largest residential project under construction in the country. Work started there during the second quarter of 2019 and with prices starting at €235,000, this macro-project is due to be completed by the end of 2021, according to its developers.

The ninth and tenth largest developments in Spain also bear the seal of the Basque property developer (which has its origins in the real estate portfolio of Kutxabank). The ninth largest is Amara Homes, in the Madrilenian municipality of Las Rozas, comprising 316 homes. Work started on that project at the end of 2019, and with prices starting from €353,100, the company has already managed to sell 295 units. In addition, the firm is developing another project in Malaga (Hacienda Homes), comprising 308 homes and involving an investment of €65 million.

Neinor Homes had planned to deliver between 1,700 to 2,400 homes in 2020.

Project King, from ASG Homes, with 363 lofts.

Meanwhile, the Madrilenian town of San Sebastián de los Reyes is home to the fourth largest new home development in Spain: King, comprising 363 apartments. Its promoter, the company ASG Homes, started work on this macro-project last September, with the aim of completing it in early 2022. The project comprises 363 lofts whose prices start from €157,900. “To date, they have sold about 30,” says Diego Montojo.

Also in Madrid, with 334 homes, the only project carried out under a cooperative system, is ranked in fifth place, namely, Residencial Maravillas. Located in the financial centre of Madrid, a stone’s throw from Paseo de la Castellana and Nuevos Ministerios, this project has been underway for several years since Domo Gestora was awarded the land where the old Artillery Precision Workshop was located in late 2014 for €111 million.

After various legal problems obtaining the building permit, due to complaints from environmental groups, these 334 homes, which have already been assigned to the cooperative members, are expected to be completed in the third quarter of 2021.

Behind the remaining two large developments are two new property developers: AQ Acentor and Kronos Homes, which are building the AQ Turianova development, in Valencia, comprising 324 homes; and The Kube, in Tarragona, with 318 units.

In the case of the first, which is the seventh largest development under construction in Spain, 324 units are currently being built, although AQ Acentor’s plans contemplate the construction of 1,200 homes in total. Of those, 544 homes will be social housing properties. “It is a new neighborhood that is being developed in the area. The part of the development called ‘Arcos’ corresponds to private housing and the part called ‘Riodeva’ corresponds to subsidised housing (VPO),” says Montojo. With prices starting at €159,900, the building work was due to start in February 2020 and 30% of the homes have already been sold.

Meanwhile, The Kube project, by Kronos Homes, in Taragona, is the eighth largest residential project. Designed by the DNA Architects studio, 98 of the 318 homes it will comprise have already been sold. “They are deferring payments for customers who have made reservations. For 3 apartments that were about to be reserved, a discount of €20,000 euros has been applied on the condition that the buyers go ahead with their reservations during this lockdown period. In theory, they are not planning to lower their prices, since they were actually planning to raise them in a few months time,” says the analyst from Brainsre.

 

Neinor Reports Profits of €90M, Exceeding its Own Forecast by 30%

9 January 2020 – El Confidencial

Nine months after issuing a profit warning, announcing a new roadmap and appointing a new CEO (Borja García-Egotxeaga (pictured below)), Neinor has reported profits of €90 million, up by 30% compared to the revised forecasts of €70 million.

The property developer handed over 1,269 finished homes last year, within its forecast range of between 1,200 and 1,700, and has another 200 ready to hand over this year. It plans to hand over half of those this month (January) and the rest during the course of the year, depending on its margins.

2020 is going to be a critical year given the looming change in the economic cycle, with stabilisation expected in terms of sales and prices. In 2018, prices rose by 8%; in 2019, they increased by 6-7%; and in 2020, the firm’s objective is to sell 1,700 homes and achieve a price increase of 3.5-4%. Thanks to these rises, the group’s margin amounted to 30% at the end of 2019.

By contrast, Neinor has not managed to fulfil its land purchase plan to date, although it expects to achieve its ambitious forecasts for 2020 when it aims to invest €110 million in total.

The property developer’s two largest shareholders, Orion (28%) and Adar are both keen to support the growth of the company and benefit from the consequent recovery of its share price.

Original story: El Confidencial (by Ruth Ugalde)

Translation/Summary: Carmel Drake

Neinor Gains Approval to Begin Work on €86-Million Sky Homes Development in Valencia

24 September 2019 – Neinor Homes has obtained approval for its Sky Homes mega-development in Valencia. The new complex will consist of four residential towers with twenty floors each, for a a total of 417 flats. Neinor plans to invest 86 million euros in the development, including the acquisition of the land.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

CaixaBank Creates a Subsidiary to Finance Loans to Property Developers

17 June 2019 – Eje Prime

CaixaBank has created a new subsidiary to finance loans to property developers. The entity will operate under the brand CaixaBank Real Estate&Homes and will seek stable agreements with established property developers such as Neinor, Aedas Homes and Vía Célere, amongst others.

In 2018, CaixaBank financed 581 real estate projects lending €2.6 billion in total, up by 13% YoY. Moreover, 84% of the developments financed by the bank last year corresponded to projects involving less than 50 homes.

Original story: Eje Prime

Translation/Summary: Carmel Drake

Insur Delays the Scheduled Delivery of 650 Homes by 2 Years

3 June 2019 -Eje Prime

Insur has announced that it is delaying the scheduled delivery of more than 650 homes by two years. However, the real estate group claims that the delays “are not significant” and are due to external factors, such as the entry into force of the mortgage law, the strategy replanning of the company and “the redesign of plans to reflect the demands of clients”.

Nevertheless, the news follows the announcement of similar delays, and profit warnings, by rivals such as Neinor, Metrovacesa and Quabit, and so the market is understandably nervous about this latest news.

In the case of Insur, the company is delaying the delivery of more than 650 homes in 11 different promotions, including the BA-2 and BA-3 developments in Entrenúcleos, located in the municipal district of Dos Hermanas in Sevilla.

Nevertheless, the property developer claims that the delay in the scheduled delivery of its homes has nothing to do with Neinor’s profit warning and assures that the company’s analysts are not worried.

Currently, Insur has 275 homes under construction and 1,625 properties in developments through joint businesses. It also owns a portfolio of land spanning 95,000 m2 on which to build another 880 homes and has long-term purchase options over twelve plots with a buildability of 208,000 m2.

Original story: Eje Prime (by Marta Casado Pla)

Translation/Summary: Carmel Drake

Sabadell’s Board Evaluates 3 Offers Amounting to c. €850M For its Property Developer

28 May 2019 – El Confidencial

On Monday, Banco Sabadell received three binding offers for its property developer, Sabadell Desarrollos Inmobiliarios, from the funds Cerberus, Oaktree and a third unknown candidate, amounting to between €800 million and €900 million.

The board of directors of the Catalan entity chaired by Josep Oliu now needs to decide whether to accept one of them and thereby pave the way for the creation of a new major player in the Spanish property developer sector to compete alongside the likes of Neinor, Metrovacesa, Vía Célere and Aedas.

Oaktree has been the favourite in the bidding for the last few months given its good relationship with Sabadell and with the property developer itself, with which it already operates at least one joint venture. It would represent the US investor’s first operation of its kind in Spain, where it currently has a small platform with just 20 employees.

Nevertheless, Cerberus has been gaining ground. Unlike Oaktree, the US giant already has a property development platform in Spain, Inmoglacier, to which it wants to supply new land (which SDin owns). Cerberus could also benefit from synergies between the two firms.

Meanwhile, the identity of the third candidate remains confidential, but possible contenders include Habitat (Bain Capital), Aedas and the Canadian fund CPPIB, which were all reported to be evaluating the purchase during the preliminary phase.

Initially, Sabadell was hoping to receive more than €1 billion for its property developer, but following uncertainty in the sector in recent months and the sale of several assets, it will have to accept a more modest price if a sale is to be agreed.

Original story: El Confidencial (by Jorge Zuloaga)

Translation/Summary: Carmel Drake

Quabit Buys ‘Rayet Construcción’ for €13.1M

16 May 2019 – Eje Prime

Quabit has acquired 83% of the shares in the construction company Rayet Construcción for €13.1 million as a means of “reducing uncertainties in terms of the costs and timeframes of its construction projects”, according to a statement issued by the company to Spain’s National Securities and Markets Commission (CNMV).

The company reported its results on Wednesday and announced a 5%-10% decrease in turnover due to delays in the delivery of its business plan, whereby following in the footsteps of its rivals Neinor and Metrovacesa, which have also revised down their results in recent months.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Habitat to Invest €120M+ in More than 20 Developments in 2019

9 May 2019 – Eje Prime

Last year, Habitat Inmobiliaria, the property developer owned by Bain Capital invested €120 million in the purchase of 27 plots across Spain. The plan is to repeat that activity in 2019 with the launch of twenty developments and the commencement of building work at 25 sites.

So far this year, the firm has already purchased six plots for €52 million, has launched eleven developments comprising 1,207 homes. It has also started building work at 9 sites comprising 800 units.

The company’s medium-term plan is to invest €500 million in land purchases between 2018 and 2021 in order to achieve a cruising speed of 2,000 new home deliveries per year from 2021 onwards.

In parallel, the company is considering industrialising two of its developments, although its CEO, José Carlos Saz, is somewhat sceptical about the industrialisation of construction.

In total in 2019, Habitat expects to hand over around 300 homes in 2019, with that figure rising slightly in 2020. Such forecasts are now under the spotlight after Neinor disappointed the market by revising downwards its expected home deliveries in April.

Original story: Eje Prime (by Marta Casado Pla)

Translation/Summary: Carmel Drake

Julius Baer Acquires 3% of Metrovacesa and 8.14% of Neinor

17 April 2019 – Voz Pópuli

The Swiss bank Julius Baer has been increasing its stakes in the main Spanish property developers. The company now owns 3% of Metrovacesa through its Sicav Kairos and 8.14% of Neinor Homes, of which 6.55% is held indirectly.

As such, the Swiss bank is the second largest shareholder of the property developer created by Lone Star, behind the Israeli firm Adar Capital, which controls 28.6%.

The share purchase by Julius Baer comes a week after Neinor’s board approved the replacement of Juan Velayos as its CEO, in an environment of maximum uncertainty in terms of the achievability of the objectives set by the Spanish property developer.

Neinor’s share price has fallen by 17% so far this year, and as such, each share is worth around €10, well below its stock market debut price of €16.98.

Nevertheless, the group’s results for 2018 were strong, with revenues of €382 million, up by 70% YoY and an EBITDA of €56 million, which was almost seven times higher than in the previous year. Moreover, the property developer has already pre-sold 80% of the units it plans to deliver in 2019 and 30% of those due in 2020.

Original story: Voz Pópuli (by David Cabrera)

Translation/Summary: Carmel Drake

Aedas Revolutionises the Property Development Sector by Building 500 Turnkey Homes for Ares

12 April 2019 – El Confidencial

Aedas Homes has decided to launch a new line of business by building complete housing developments for other companies. In this way, the listed property developer hopes to generate value from its production over-capacity; it anticipates recording revenues of around €70 million from the initiative.

In this vein, the company led by David Martínez has reached an agreement with the fund Ares to build 500 homes in its name in three different locations: Torrejón de Ardoz, Alcalá de Henares and El Cañaveral (all in Madrid).

This is the largest turnkey project in the sector since the outbreak of the real estate crisis, a decade ago and as such, represents a real milestone.

The three largest listed property developers in Spain, Neinor, Aedas and Metrovacesa, are all living by the famous mantra “reinvent yourself or die”. As such, they are expanding their operations as they seek to actually generate the high turnover figures that they promised when they made their stock market debuts.

With this latest announcement, Aedas is sending a clear message to its competitors. It has over-capacity in its production model, which means that it can handle turnkey projects on a large scale, as well as deliver the roadmap that it is already committed to.

With the additional 500 homes from this project, Aedas Homes could end the year with more than 3,000 units launched, compared with the 2,580 initially planned for the year.

Meanwhile, Ares Capital is immersed in its commitment to the Spanish real estate market, with a particular focus on the residential segment, with homes both for sale and for rent.

Original story: El Confidencial (by Ruth Ugalde)

Translation/Summary: Carmel Drake