Invesco Buys Property On c/Serrano 53 For €52M

14 December 2016 – Expansión

The German fun Invesco Real Estate is heading into the final stretch of the year as one of the most active funds in the Spanish real estate market, having invested more than €500 million in 2016. Its latest acquisition is Serrano 53. The building on the famous Madrilenian street was constructed in 1905. It is primarily a residential property, but it also houses a retail space, which has been vacant for some time. Its previous owners, a Spanish family office, searched for a tenant for several months following the departure of the accessories company Jota Ele. In the end, it sold the property to Invesco for €52 million.

The German fund will now be responsible for leasing the premises, along with the new homes. The latter represents a change in strategy for the fund. To this end, Invesco has engaged the firms Catella and Knight Frank, which will be responsible for searching for new tenants for the retail and residential premises, respectively, whilst Barba Grupo Inmobiliaria will lead the design of the new homes.

The German fund’s plans, which involve an investment of more than €3 million, will retain the nineteenth century character of the building, with a renovation that will allow the wrought-iron balconies to be conserved, along with the original entrance doorway and interior staircase. In total, Serrano 53 will contain nine homes measuring more than 200 m2. Invesco has already applied for the construction permit, with the aim of handing over the homes to their new owners in June 2018. Although the asking price for these properties has not been set yet, they are expected to fetch between €9,000/m2 and €10,000/m2.

Retail premises

The retail premises on Serrano 53 will be ready sooner. Just a few metres away from Chopard, Cartier and Gucci, this space is one of the largest premises available on the exclusive Madrilenian street. In total, it has a surface area of 1,800 m2 spread over three floors, which is unusual in an area characterised by much smaller stores. “This is a unique property due to its size, and because it shares its location with prestigious brands”, said Íñigo Gutiérrez, Senior Advisor at Catella. “The objective is to lease this store to a luxury brand”, he added.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Funds Seek Out Dilapidated Buildings For Renovation

24 August 2015 – El Economista

The interest from international funds in Spanish real estate has no limits. These investors are not only looking for iconic buildings and premises right in the centre of Madrid, they are also willing to buy dilapidated residential properties for renovation.

Interest is growing in the acquisition of these kinds of assets in cities such as Madrid and Barcelona, explains Samuel Población, National Director of CBRE Residential. According to the director, these investors, which tend to be international funds of Anglo-Saxon, US and French origin, are willing to pay between €5 million and €25 million to buy properties that need to be fully refurbished. “They spend up to €50 million on a single asset, but there do not tend to be many buildings for that price on the market”, he adds.

The modi operandi of these funds are almost always the same. They form partnerships with Spanish property developers, which contribute a smaller proportion of the capital, but who know the local market and who can streamline the administrative procedures. If a fund has a good business plan, it may generate a return within two and a half year, explains Población.

These investors also purchase properties to demolish them and build new ones in their place; in fact, that is often a cheaper option than a complete refurbishment. In this sense, Población indicates that “the problem they face is that the listing levels (for the protection of buildings) are very high and do not allow developers to demolish buildings and construction new ones. They have to restrict themselves to full refurbishments, preserving elements such as stairways and façades, which drives up the construction costs significantly”.

That is exactly why Población believes that introducing more flexibility in terms of the listing levels of buildings would allow the stock of homes to be refurbished more quickly, since more investors would enter the market. The reality is that Spain needs this type of investment, since around two million homes in the country are in poor conditions and need renovating, according to the figures provided by the Institute for Energy Diversification and Saving (IDAE). These figures place Spain, which has 25 million homes in total, as one of the most obsolete real estate stocks in the European Union.

A real reflection of these numbers has been seen in Madrid this month, where two properties have been demolished due to their poor condition. To avoid these kinds of incidents, Norberto Beirak, a member of the Governing Board of the College of Architects in Madrid, considers that certain protocols need to be established, which must be fulfilled when Technical Inspections of Buildings are carried out (ITE).

“There are no rules governing the procedures for these inspections”, he explains. Moreover, it is typically the buildings’ owners that pay for this service and they tend to commission very basic inspections due to a lack of resources.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake