Tag: operations

Deloitte: 173 New Hotels will Open in Spain Between Now and 2021

9 June 2018 – Expansión

The tourist boom and interest in the real estate sector have boosted the hotel segment. So far this year, operations amounting to €2.4 billion have been closed and an acceleration is forecast for the coming months.

Spanish hotels are standing out as one of the most sought-after assets for investors in the real estate market. The tourism boom in Spain, which recorded its fifth consecutive record year in 2017 with the arrival of 82 million international visitors, coupled with the property boom, caused hotel investment to reach maximums in 2017 of almost €3.1 billion. Moreover, the commitment from investors to these assets will allow that figure to double this year.

According to data from the Hotel Property Handbook, compiled by Deloitte, to which Expansión has had access, €3.1 billion was transacted in the segment last year, which represents an increase of 44% YoY and accounts for 22% of all the investment activity undertaken in Europe, placing Spain at the head of the investment ranking behind only the United Kingdom, which accounted for 29%.

During the first five months of this year, more than €2.4 billion has been invested, which will be added to operations currently under negotiation amounting to around €4.2 billion, which are expected to close over the coming months, according to the study.

“So far this year, we have transacted an investment volume almost as high as that signed during the whole of last year. The private equity funds are proving to be the main stars of the activity, which may even double the figure recorded in 2017”, said Javier García-Mateo, Partner at Deloitte Financial Advisory.

Loans

That is in addition to the strong appetite from traditional Spanish credit institutions to finance hotel properties, due to the momentum of the sector. Their financing spans projects under development, including remodellings, repositionings and developments. In this sense, the most active banks in terms of senior lines of credit for these assets are CaixaBank, Santander and Sabadell.

Investors are betting on mega-operations and the creation of large portfolios, which will allow them to have a diversified business and gain bargaining power over tour operators.

This trend comes in addition to the interest from Asian players in hoisting their flags in Spain. For example, the emergence of the Thai group Minor in NH Hotel Group, which has reached an agreement to purchase HNA’s stake in the Spanish hotel chain and is studying a takeover bid for 100% of the company.

In this context, the large hotel groups have taken advantage of the boom years to invest in improvements in their asset portfolios although there is still a long way to go. The opening and renovation of hotels consolidated itself in 2017, with activity involving 74 hotels and 12,500 rooms, reaching cruising speed following a significant recovery in 2015 and 2016, with projects in 120 hotels and almost 17,300 rooms.

Over the next five years, investment in work to adapt the hotel stock is expected to amount to €2.2 billion.

According to the report, 65% of the hotel stock in Spain is obsolete, with an average age of more than nine years, which makes investment in capex the main priority if operators are to handle the competitive pressures and achieve better margins.

“The strong growth in tourism in Spain contrasts with average rates that are still excessively low in the holiday segment. The renovation of obsolete projects, combined with the arrival of international operators, will allow the repositioning of an offer that ought to compete on quality rather than quantity”, explains Viviana Otero, from Deloitte Financial Advisory.

By region, the Canarian archipelago, Andalucía and the Balearic Islands are the regions that require the greatest capex spending, accounting for almost 68% of the total.

This effort has contributed to an improvement in the main performance ratios of hotels. According to Deloitte, revenues per available room (RevPAR), one of the main profitability indicators, grew by 10% last year.

New openings

The strong performance of the sector also accounts for the new promotions and project renovations underway. Over the next four years, 173 hotels are expected to be opened in Spain containing almost 30,000 rooms. “53% of those will be new projects and 47% will be renovations. It is worth highlighting the importance that rebranding is gaining as a defensive strategy against the alternative destinations of Greece, Turkey and Croatia, said Patricia Plana from Deloitte Financial Advisory.

In terms of challenges facing the sector, the report highlights the saturation of certain destinations in the summer and the problems of co-existence alongside local residents in those regions, as well as the recovery of competitor countries in Southern Europe and the rise of holiday rentals boosted by collaborative economy platforms such as Airbnb.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Barcelona’s Prime Office Rents Now Exceed Their 2007 Levels

20 March 2018 – Eje Prime

The rental prices of prime offices in Barcelona are returning to their pre-crisis levels. Specifically, to their 2007 figures. That is the conclusion drawn by Cat Real Estate, the real estate consultancy firm, which confirms that in the most expensive areas of the office market in the Catalan capital, demand has risen again and assets have gotten more expensive.

Specifically, the Catalan company recently closed an operation involving the sale of a 450 m2 office on Paseo de Gracia for €6,500/m2. That transaction shows that in Barcelona, “we have returned to 2007 prices in terms of the value of office purchases in the main commercial areas”, says Nacho Castella, CEO of the consultancy firm.

The buyer of that asset on Paseo de Gracia was an international fund. In this regard, Cat Real Estate explains that “the improvement in consumption has reactivated interest in domestic operations above all from international players keen to take positions on the high street once again”

“Barcelona continues to be an important location for overseas investors”, says Castella. Cat Real Estate forecasts that the real estate market will continue to rise in 2018. During the first quarter of the year, the consultancy has already brokered forty operations involving a volume of real estate assets under management of €480 million.

Original story: Eje Prime

Translation: Carmel Drake

Savills: Occupancy Rate of Málaga’s Prime Offices Reaches 90%

15 March 2018 – Eje Prime

The sun is shining over the office market in Málaga once again. The capital of the Costa del Sol achieved an occupancy rate of 90% in its prime office area, a figure that has not been seen since the start of the crisis.

The Málagan office market experienced significant demand last year in the central and financial districts of the city. In both areas, there was a notable reduction in office stock and rental prices rose to €18/m2 on the central street Calle Larios, according to a report from Savills Aguirre Newman.

In addition to Calle Larios, thoroughfares such as Corte-Inglés-Vialia recorded an increase in rents for spaces in the area up to €13/m2-€14/m2.

The main driver of the office market in 2017 was, precisely, the real estate sector. It was followed by technology companies, which, as usual, requested space in the most central parts of the city for offices with surface areas of less than 1,000 m2. Nevertheless, the tech companies that needed more space opened their offices in the Andalucía Technological Park in Málaga, according to the study.

Construction companies, law firms and telemarketing companies are also players with significant demand in the city’s office market, in which Savills Aguirre Newman has brokered operations spanning more than 10,000 m2 of office space over the last 15 months.

The consultancy firm indicates, moreover, that this trend is going to continue in 2018, which means that buildings that have been available for almost a decade will finally be occupied by new tenants. This growth in demand will lead to a record volume in terms of the number of rental transactions in the Málaga office park.

For this reason, Savills Aguirre Newman considers that, given the positive trend for the next few months in the office market, there is a need to develop new projects and to convert existing spaces in order to expand the office stock in Málaga. The Head of the Office Market at the consultancy firm in Andalucía, Aranzazu García, believes that “it is extremely important to identify an area of the city where we can establish future projects”, although, she says that “they must be conceived as exclusive-use spaces, to replace the mixed-use buildings that traditionally have carried a lot of weight in the city, with a market share of close to 50% in the city centre”.

In this sense, the executive believes that “the new projects must be positioned architecturally to house the corporate headquarters of international companies, to respond to their needs in terms of technical features, efficiency and sustainability standards, and locations that allow easy connections with the rest of the city, the airport, the AVE station and the main public transport services”.

Málaga’s Silicon Valley  

In addition to requesting new projects, García reflects on the use that may be given to the Andalucía Technological Park, located in Málaga. The director of Savills Aguirre Newman in the autonomous region calls on the competent authorities to collaborate in this area to position it as “the ideal enclave for the office market in the city or as the Silicon Valley of Málaga”.

In this regard, the executive hopes that they will resolve some of “the problems generated by the inadequate public transport network, with no forecast for a future metro line, service area and parking for users”.

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

INE: House Sales Soared by 23% in January

15 March 2018 – Expansión

The real estate sector is aiming high in 2018 off the back of the economic recovery. Having surpassed the barrier of half a million homes sold in 2017 and whereby made a return to pre-crisis levels, in January, house sales soared by 23% YoY, to reach 47,289 units. It is the best data for a decade, since May 2008, according to the latest data published by INE. That, combined with the 4.5% recovery in prices in February, as estimated by Tinsa’s price index, indicates that the time is ripe for consolidation in the sector. “The consolidation of credit, the improvement in the economic context and the strong outlook for the sector and the economy, in general, explain this reactivation in demand for housing”, explains the Head of Research at Fotocasa, Beatriz Toribio. With respect to December, sales in January soared by 46.8%.

Forecasts for the real estate sector point to increases of 5% in terms of prices and 10% in terms of sales, in line with the forecast evolution of the Spanish economy. Even so, the number of operations recorded is still well below the more than 100,000 homes sold per month in the years prior to 2008, when the real estate bubble burst. Prices have also continued to recover, and whilst in the centre of some cities, they have now recouped their losses, there are still many areas of the country where house prices today are 65% lower than they were in 2007.

On the one hand, the large capitals and coastal areas are leading the increases in prices, boosted by interest from investors, the tourist boom and a shortage of stock and of new homes. In fact, the overheating of prices in many areas is leading to a displacement of demand towards less central areas of those cities.

In terms of sales, the 23% increase is backed by double-digit growth in 13 autonomous regions. Asturias, the Community of Valencia and Murcia lead the rises, with increases of 56%, 40% and 39%, respectively. Nevertheless, only Valencia remained in the top 3 in absolute terms. That community was, after Andalucía, the one where most house sales were recorded in January (7,409 units). Andalucía was the area where most homes were sold, 8,988 units, up by 31% compared to January 2017. The third region on the podium was Cataluña, which recorded 7,334 sales, although at a rate that was well below the average, of 8%. In this regard, Toribio said that although “the political situation may have slowed down activity in the Catalan real estate market, it has not paralysed it completely”.

Meanwhile, in Madrid, 6,526 homes were sold, up by 14%. Together with Cataluña, La Rioja, Aragón and Extremadura recorded the lowest increases in transaction numbers, up by 8%, 5% and 1%, respectively. The geographical differences expand further as you zoom out of the photo. By province, Álava grew by the most (56.5%) and several provinces saw their sales figures fall. Specifically, in Ciudad Real sales decreased by -19.4%, in Zamora by -10.3% and in Badajoz by -7.4%.

The composition of that growth was also uneven by segment, with a clear predominance in terms of second-hand housing. Of the total number of transactions, just 8,272 were new homes, compared to 42,745 second-hand properties, in other words, 17.5% of the assets sold were new and 82.5% were second-hand. Nevertheless, both segments are evolving in parallel, with growth of 23.5% for new homes and of 23% in the case of second-hand dwellings.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Registrars: House Prices Rose by 7.6% in 2017

19 February 2018 – Eje Prime

All of the indicators are continuing to ratify the good health of the housing sector in Spain. In this vein, house prices recorded an increase of 7.6% in 2017, whereby continuing the rise observed in recent quarters. Moreover, they registered a quarterly increase of 19.8% between October and December, according to the Real Estate Statistics Register published by the College of Registrars of Spain.

Between October and December, 111,921 house sales were recorded in the property registers, down by 6.1% compared to the previous quarter, which made Q4 the quarter with the fewest house sales in 2017. Nevertheless, all four quarters of the year saw the number of house sales exceed 110,000 operations, something that has not happened since 2008.

The distribution of house sales by type was stable in terms of its structure, with 82.73% of total sales relating to second-hand homes and 17.27% to new build properties. During the last quarter of 2017, 19,325 new build homes were sold, representing a decrease of 7.47% with respect to the previous quarter, and 92,596 second-hand homes were sold, down by 5.77% compared to the third quarter.

Meanwhile, sales volumes increased by 19.8%, in total, compared with the last quarter of 2016. Over the last twelve months, 464,233 operations were registered, the highest annual figure recorded since 2008, up by 15% YoY.

All of the autonomous regions saw increases in the number of house sales in 2017 with respect to 2016. In the lead, Castilla-La Mancha saw a 23.1% rise, Asturias, 20.7%, Madrid, 19.1%, and the Community of Valencia, 17.8%. Moreover, the rates of growth reached double-digits in thirteen of the autonomous regions.

In terms of homes purchased by foreigners, the fourth quarter of the year closed with the highest percentage of purchases by foreigners in the last eight quarters, accounting for 13.6% of all house purchases. In absolute terms, they represented around 15,300 operations, slightly below the almost 15,600 transactions recorded in the previous quarter.

In addition, in cumulative YoY terms, the number of purchases by foreigners accounted for 13.1% of the total, continuing at record highs, with annual figures of almost 61,000 house purchases, compared to 59,200 in the previous quarter.

By nationality, the Brits retained their usual position as the most active buyers, accounting for 15.6% of the total purchases by foreigners, followed by the French (8.2%), Germans (7.8%), Swedes (7.1%), Belgians (6.8%), Italians (5.2%) and Romanians (5.1%).

Original story: Eje Prime

Translation: Carmel Drake

 

Irea: What Led to Last Year’s Record Inv’t in Spain’s Hotel Sector?

12 January 2018 – Hosteltur

Last year saw investment in the Spanish hotel sector break all records, with investors spending €3.907 billion on transactions involving existing hotels, properties for conversion into hotels and land for the construction of hotels. That figure represents an increase of almost 80% with respect to 2016, according to Miguel Vázquez, Managing Partner of the Hotels Division at Irea; and was the result of the sale of 182 establishments comprising 28,813 rooms, with an average price per room of €119,000, compared with an average price per room of €92,000 in 2016 and of €85,000 in 2015, which represents an increase of 40% in just two years (…).

According to the Irea Director, this investment boom was driven “not only by the greater number of operations but also by the fact that the prices of the assets sold were higher as they were coming onto the market after being repositioned in recent years. The types of investors have also changed, as have their demands in terms of returns: around 5-6% in the urban segment and around 6-7% in the holiday segment, given that we are no longer seeing as many opportunistic funds entering the market (…)”.

In fact, he has quantified that “more than 2,000 holiday hotels still need to be renovated and repositioned. There is a wide range of opportunities that the funds are focusing on, in search of agreements with small chains at times of generational changes and when they are interested in selling…or not, because the strong buyer pressure is continuing to motivate owners who are not typically sellers to put their assets on the market, especially independent operators. And that is leading to the entry into the market of large holiday hotel portfolios, which is what investors are backing Spain for, as well as independent hotels”.

Forecasts for 2018

And after “the stratospheric data of 2017”, in the words of Vázquez, “the inertia with respect to 2018 is very positive, the year is starting off very well”, although he thinks that hotel investment will moderate and “the effect of the uncertainty in Cataluña will make it very difficult for us to see a repeat of last year’s figures”.

Nevertheless, he cites three operations that should be resolved during the first few months of this year: the completion of the purchase of the Alua portfolio by Hispania (…); the sale of a portion of the Ayre hotel portfolio, which is currently on the market; and the launch of a hotel Socimi by a financial entity with 15 establishments, which could take place soon.

Vázquez estimates that the investments already committed for the first few months of the year identified by Irea amount to €4 billion, comprising mainly new build projects, taking advantage of the increase recorded in the purchase of land for the construction of hotels, with operations in Bilbao, San Sebastián, the south of Tenerife, Barcelona and Sevilla.

In terms of the strengths in the market, besides the repositioning of hotels that is leading to an improvement in competitiveness and the appeal of Spain as a destination, the Director highlighted “the magnet effect of qualified investors such as Blackstone, which are reinforcing Spain as a destination for hotel investment” (…).

Weaknesses: overheating

Vázquez highlighted the overheating of prices that is happening in destinations such as the Canary Islands, where the average (sales) price per room has increased to €152,000, compared to the national average of €119,000, although, it should also be taken into account that “the operation that carried the most weight in terms of those figures was Sabadell’s sale of HI Partners to Blackstone (…), involving high quality, repositioned hotels, which increased prices”.

In fact, the most expensive prices were recorded in Barcelona and Madrid, which holds the record for the sale of the most expensive room with Operación Canalejas, for approximately €1.4 million, whereby exceeding the figure of €1.2 million recorded during the sale of Hotel Villa Magna (…).

In the Balearic Islands, as the director acknowledges, “there is still more margin because there are a lot of hotels there that still need repositioning and, although there is price inflation, it is not as marked as in the Canary Islands, which benefit from having year-round demand and five years of high occupancy rates, which drives up prices”.

Original story: Hosteltur

Translation: Carmel Drake

Idealista: Hotel Inv’t to Reach Record Figure of €3.2bn in 2017

26 December 2017 – Idealista

The year-end forecasts for hotel investment are marking record highs, exceeding the €3.2 billion threshold. This represents an increase of 45% with respect to 2016 and of 25% with respect to 2015, the record year to date when investment amounted to €2.55 billion. The large operations completed during the year include the 14 assets (HI Partners) that Sabadell sold to Blackstone for €630 million and the purchase of the iconic Edificio España building (pictured below) in Madrid by the hotel chain Riu for €380 million.

The hotel segment has risen to prominence in 2017 in terms of real estate investment, accounting for 30% of the total market share, exceeded only by retail. During the first six months of the year, €1.655 billion was invested in hotel purchases.

Madrid and Barcelona are the two cities that recorded the majority of the real estate operations: the Spanish capital accounted for 19% of total investment and the Catalan capital 12%. Nevertheless, markets such as Valencia, Sevilla and Bilbao also started to spark interest amongst investors. Meanwhile, in terms of holiday markets, the Canary Islands, Andalucía and the Balearic Islands led the investment ranking, accounting for 23%, 13% and 9%, of the total investment, respectively.

Between January and November 2017, 94 operations were closed, with 109 hotels changing hands. The most significant operation was completed by Blackstone, with its purchase of the HI Partners portfolio from Sabadell (…).

Another important deal was closed in June with the sale of a portfolio of 3- and 4-star Meliá Hotels, located in Ibiza, Lanzarote, the Balearic Islands and Torremolinos to London & Regional for €230 million.

In 2018, the investment figures in the hotel sector could soar once again if Barceló’s plan goes ahead to take over the NH Hotel Group, worth €2.48 billion. That deal would create a new market leader with more than 600 hotels and 109,000 rooms.

Original story: Idealista 

Translation: Carmel Drake

College of Registrars: House Prices & Sales Rise in Q3 2017

11 December 2017 – Registradores.org

According to the Real Estate Statistics from the College of Registrars, which took the temperature of the housing market in the third quarter of 2017, house prices continued to strengthen during the period. The House Price Index of Repeated Sales (IPVVR) increased by 2% with respect to the previous quarter, to record a cumulative YoY increase of 6.8%. Since its most recent minimum levels, recorded in 2014, the index has increased by 18.6%, which means that the reduction since the maximum prices of 2007, has moderated, to 22.4%.

Between July and September, more than 119,000 house sales were registered in the Property Registries, up by 15.6% compared to the same period in 2016. That volume of operations, like the level recorded in Q2, has not been seen since 2011 and exceeds the volumes recorded in certain quarters of 2010, 2009 and even 2008.

Over the last twelve months, 445,725 operations have been registered, the highest YoY figure for the last six and a half years, and representing a YoY increase of 13%.

The latest report from the Registry Statistics also shows an incipient change in the trend, given that new homes are also showing their first signs of recovery. In fact, they recorded the highest QoQ increase, of 4%, whilst the sale of second-hand homes decreased by 1%. Even so, second-hand sales still account for more than 80% of all operations.

The distribution of operations by autonomous region retained its typical structure, with Andalucía, Cataluña, the Community of Madrid and the Community of Valencia recording the most sales, whilst, by province, the list was led once again by Madrid, Barcelona, Alicante, Málaga and Valencia.

Purchases by foreigners

After more than a year with overseas demand exceeding 13% (of the total), the figure decreased slightly to account for 12.8% of all house purchases. In absolute terms, that means more than 15,300 operations per quarter and 59,200 per year are being closed by foreigners. According to the report from the Registry Statistics, “in a scenario of growth in the absolute number of house sales, it is normal that in percentage terms, foreign demand would tend to stabilise in the best of cases, and decrease slightly under normal conditions, without that meaning that interest from foreign citizens in house purchases in Spain is decreasing”.

By nationality, Brits maintained their traditional position of leadership, although with a slightly lower percentage than in Q2, followed by the French, Germans, Swedes, Belgians, Italians and Romanians.

The Balearic Islands, Canary Islands and Community of Valencia were again the regions with the highest foreign presence, in such a way that foreign citizens account for between one third and one quarter of all purchases in those regions. They are characterised by their high tourist appeal, primarily in terms of their “sun and beach tourism” offerings. The same thing happened in the classification by province, which were led by Tenerife, Alicante, the Balearic Islands, Málaga and Girona.

Original story: Registradores.org

Translation: Carmel Drake

Notaries: House Sales Rose By 8.6% In Sept To 40,094

20 November 2017 – Eje Prime

House sales are continuing to soar. The volume of residential transactions rose by 8.6% in September with respect to the same month in 2016 (and by 12.2% in the series corrected for seasonality) to 40,094 operations, according to data from the General Council of Notaries.

By type of home, the sale of apartments registered a YoY increase of 7.7% (up by 11.3% in the series corrected for seasonality) and the volume of private home sales rose by 8.%. This increase in the number of transactions involving private homes was due, exclusively, to the expansion of second-hand home sales (10%), given that the sale of new build homes decreased by 1.9% YoY. Meanwhile, the sale of family homes rose by 12% YoY.

In terms of average prices, the cost per square metre of the homes purchased in September 2017 amounted to €1,331/m2, whereby reflecting a YoY price increase of 2.4%. According to the notaries, this increase in the price per square metre of homes was due to both an increase in the price of family homes (1.4%) and an increase in the price of apartments (3.8%). Meanwhile, the price per square metre of private homes rose by 4%.

Original story: Eje Prime

Translation: Carmel Drake

La Once Sells Industrial Warehouse In Barcelona For €1.2M

7 November 2017 – Eje Prime

The industrial sector is continuing to see the completion of new operations during the final stretch of the year. Ilunion, La Once group’s job placement subsidiary, has signed the sale of an industrial warehouse measuring 3,088 m2 in Barcelona to the Metauto Motor group for €1.2 million. Moreover, the company has allocated a further €400,000 to spend on the complete renovation of the property to adapt it to its needs.

The warehouse is located on the Fonollar Norte industrial estate, in Sant Boi de Llobregat, Barcelona. Thanks to this operation, advised by NCI Asesores Inmobiliarios, the Metauto Motor group will launch a new establishment for second-hand vehicles, as well as a service for the cleaning, maintenance and rental of cars.

NCI has become a very active player in terms of operations in the industrial sector in Cataluña. Led by Carles Torres, the real estate consultancy firm has closed several operations in the autonomous region in recent months, including the acquisition of a 2,500 m2 asset on the La Post industrial estate for the company Litografía Roses, next to the Barnasaud shopping centre.

One of the most important operations that the group has led in the last year has been the one that it signed with the cosmetics company Markwins International. The construction firm Byco de Inbisa is responsible for completing the turnkey construction of the group’s logistics warehouse, which is located in Montornès de Vallés, Barcelona, and which will have a surface area of 9,500 m2. The land where the warehouse will be built measures 13,000 m2 and was also acquired by Markwins International in the same operation.

That operation required an investment of €6 million for the group, which until now has been undertaking its activity on the Mas Galí de Gurb industrial estate. From the new warehouse located in Montornès de Vallés, one of the main logistics enclaves in Barcelona, it will receive products from its factories in Asia to distribute them across Europe, Africa and the Middle East.

Moreover, Inbisa Construcción has already built a logistics warehouse for Goodman, one of the main operators in the ownership, management and development of investments in the industrial real estate sector, and another one for Decathlon, which specialises in the distribution of sports equipment, clothing and footwear.

In addition, in April, the company carried out the lease of a warehouse, measuring almost 1,500 m2, and of new offices in Barcelona for the Swiss company Alfa Metalcraft Corporation (AMC), a multi-national firm specialising in the manufacture of saucepans.

AMC then went on to occupy an industrial warehouse on the La Torre industrial estate, with a surface area of 1,387 m2, for use by the quality control department. Additional outdoor space measuring 1,000 m2 was added to that warehouse to allow trucks to manoeuvre, load and unload.

Finally, the group leased offices measuring 450 m2 in Sant Cugat, in the Testa building, located at number 64 Avenida Alcalde Barnils. A large number of domestic and international companies have their offices in that area, such as Hewlett Packard, Emagister, Omega Pharma and the current offices of Schibsted, although that firm is actually going to move its operations to Barcelona’s 22@ district within the next few months.

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake