Tag: outskirts

A US Fund Wants to Invest €100M to Build 3,000 Homes for Young People

26 March 2019 – Idealista

An American fund is looking to buy public land in Spain on which to build homes in line with the salaries of young people. The under 35s are the forgotten cohort, with low salaries making it impossible for them to afford current house prices. As a result, 14 million young people still live with their parents.

The real estate firm Centro Comercial Inmobiliario (CCI) is holding negotiations with the fund to create a property developer that will build homes for young people. They are particularly interested in areas on the outskirts of major cities, such as Madrid, Barcelona, Málaga and Valencia, where young people are typically priced out of the local property market.

The aim of the fund and CCI is to invest around €100 million to build 3,000 social housing properties both for sale and rent over three years.

Original story: Idealista

Translation/Summary: Carmel Drake

Urban Hubs: The Future Pillars of the Last Mile are Seducing the Real Estate Sector

22 October 2018 – Eje Prime

Blackstone, Goldman Sachs, Prologis and Amazon have started to invest in urban hubs. The future pillars of e-commerce logistics are still in an embryonic phase, but the large real estate investors have started to track these types of assets, whereby sparking interest from other players. Forgotten old warehouses and factories (and even office buildings) in inner cities are now seducing these giants, which regard them as the new urban nuclei for handling same-day deliveries, and even, same-hour deliveries, which are demanded by e-commerce nowadays. Spanish investors are already beginning to study opening logistics centres in the heart of Madrid and Barcelona.

The Spanish market is still at the tail of the e-commerce market in Europe, where it represents just 4% of all retail sales, compared with 12% in the United Kingdom and 16% in the United States, according to the ratings agency Moody’s. Nevertheless, experts forecast that e-commerce in Spain, and on the rest of the planet, will continue to make inroads to ultimately account for one third of all retail sales.

This drastic transformation of retail is challenging for the traditional logistics system, comprising regional distribution platforms located away from urban centres that supply different local warehouses to delivery to different businesses. The new system is supported by an e-fulfilment centre (a fully automated platform), which directly supplies several urban hubs located inside cities, which make deliveries to consumers (…).

Blackstone, one of the largest real estate investors in the world, has invested around €4 million in small urban warehouses in Europe since the beginning of 2018. Unlike large warehouses on the outskirts of cities, urban hubs are smaller facilities with a lower risk in terms of their development.

The sovereign Singapore fund, GIC, has also entered the segment. The investment group even has a specific division for building logistics facilities on urban land (…).

Nevertheless, they are difficult assets to find and mould for their new function. On the one hand, because cities have grown and transformed over the last few decades, with housing replacing former industrial land (…). On the other hand, because, these facilities need to be rethought for the constant entry and exit of goods.

The future urban hubs will be built on land still classified as industrial inside cities, which is much cheaper than residential. And, given the difficulty of expanding width-wise due to the lack of land, the plans involve constructing properties with various storeys. In large cities in Asia, where land prices are very high, multi-storey warehouses are already typical.

In addition to industrial land, another option for urban hubs is to use office buildings. To the extent that new business areas in new parts of cities are created, so empty and underused spaces are being left in city centres.

Currently, new technology-based distribution companies, such as Paack and Stuart, are shaking up the market, by accelerating e-commerce deliveries using logarithmic calculations. Meanwhile, traditional express transport companies, such as Seur and MRW, amongst others, have also started to adapt to expedite last mile deliveries with small warehouses in the centre of large cities.

Small signs in Spain

Sources in the real estate sector indicate that some investors specialising in retail have started to study the implementation of these types of logistics structure to complement the flagship stores in the centre of Madrid. Specifically, some players have started to analyse the option of installing urban hubs in office buildings.

In Barcelona, we have already seen one case along those lines. In 2016, Amazon opened a warehouse in the former headquarters of the publishing house Gustavo Gili, on Calle Rosselló in the El Eixample neighbourhood, to introduce its Prime Now service offering deliveries within the hour. Nevertheless, sources in the sector indicate that Amazon may have started to question the suitability of that platform since it has not managed to make the prices of the urban land profitable (…).

Aitor Martínez, Head of Industrial & Logistic are Savills Aguirre Newman, points out that in some cities, such as London and Málaga, pilot tests are being carried out regarding deliveries of the future. A common denominator in all of them are the urban hubs. In the logistics of the future, these new logistical nuclei, will not only speed up deliveries, but they will also respond to other challenges in the sector, such as the introduction of greater restrictions over the entry of vehicles into city centres and the prohibition of polluting vehicles from the roads (…).

Original story: Eje Prime (by S. Riera & P. Riaño)

Translation: Carmel Drake

Segro Purchases 44,500 m2 of Land for Industrial Development in Madrid

11 October 2018 – Eje Prime

Segro is increasing its commitment to the Spanish logistics sector. The British Socimi, which specialises in the industrial segment, has purchased 44,500 m2 of land on which it is going to build two urban distribution centres in Madrid.

The first logistics space is going to be located in the south of the Spanish capital. The centre, spanning a surface area of 33,500 m2, will be located in the district of Villaverde, an area that is home to multinationals such as Telefónica, Repsol and Air Liquide.

The Socimi is also planning to build a second warehouse measuring 11,000 m2 in the Madrilenian municipality of Coslada, where it already owns a business park. The company has chosen that location due to its proximity to Barajas airport, the centre of the Spanish capital and motorways such as the A-2 and the M-40.

This operation reinforces the good times that the logistics sector is enjoying in Spain, driven by the rise in e-commerce in the country. Not in vain, in 2017, the sector achieved an investment record, exceeding €1.5 billion.

With demand constantly growing, above all due to the arrival of international funds and investment firms that are keen to enter the logistics segment, encouraged by the high yields and stability, operators are also looking for land in the last mile space to respond to current demands. That means the development of sites on the outskirts of large cities, with assets that are no more than 50km away from the city centre.

Original story: Eje Prime

Translation: Carmel Drake

Urbania Developer: Panamanian Capital Promotes 20 Developments in Valencia

31 July 2018 – Eje Prime

Numerous Spanish real estate entrepreneurs crossed the pond when the Spanish property sector crashed at the end of the 2000s. One of the property developers who got on a plane when the walls of the real estate sector were starting to crack in Spain was Juan Antonio Claveria. That Valencian businessman is now back on his home turf with Urbania Developer, a Panamanian real estate company that is planning to “have up to twenty projects under development over the next three years in the Community of Valencia”, explained Claveria to Eje Prime.

The Spanish businessman is the CEO of Urbania Developer, a company listed on the Panamanian stock market, which he created last year together with his partners, the local investors Yasser Williams and Omar Fricentese. “The company’s share capital is 100% private”, highlighted Claveria.

The three have recently teamed up with the Valencian builder José Vicente Roig, who has included the assets of the former property developer Patrimonios del Levante in the group. With those, the real estate company has launched its growth plan in the Community of Valencia, where the firm already has eight projects underway or on the verge of being executed.

“We are interested in towns with between 200,000 and 300,000 inhabitants”, explains Claveria, who is also attracted to “those suburbs that have between 40,000 and 80,000 inhabitants, which are well connected by metro”. Public transport links and the proximity to the capital of Valencia are the key aspects of the investment policy that Urbania Developer is going to carry out. It is turning its back on the overheating of prices that is being recorded in the centre of the city.

Torrent, Paterna, Mislata, Benimamet and Paiporta are the towns on the outskirts of Valencia where Urbania Developer has residential projects underway at the moment. Nevertheless, “we are now finalising the purchase of new plots of land”, said Claveria, who indicated that his company could close around half a dozen operations soon.

Moreover, the property developer has already expanded its business to the south of Valencia with the purchase of a “small plot” in Alicante. Size is important for the company, which projects developments comprising “between eight and thirty homes”. “In Castellón, we are also looking at plots”, said the businessman, who wants to focus solely on the Community of Valencia in this first phase of his arrival in Spain (…).

Currently, the property developer has more than 5,000 homes built or under construction in Panama, the epicentre of the company’s business,  as well as in Paraguay and Nicaragua. In the Panamanian market alone (“the Switzerland of Latin America”, according to Claveria), the property developer manages 2.2 million m2 of residential land spread over 18 projects.

Original story: Eje Prime

Translation: Carmel Drake

Protecmed Buys a 1,300m2 Logistics Warehouse on Outskirts of Barcelona

14 May 2018 – Eje Prime

Protecmed is strengthening its logistics presence in Barcelona with a new warehouse. The engineering firm has acquired an industrial complex with a total surface area of 1,309 m2 and an outdoor patio area measuring 600 m2 on the El Plà de Bruguera industrial estate, located in Castellar del Vallès, according to a statement issued by the company.

The environmental engineering company, which specialises in solutions for treating drinking water and wastewater, has strengthened its presence on the outskirts of Barcelona with this purchase. Nevertheless, the company, which is undergoing an internationalisation process with projects around Europe, as well as in South America and North Africa, has established its headquarters in Sant Cugat del Vallès.

Located forty kilometres from Barcelona, Protecmed’s new warehouse represents another yet investment in the logistics market in the Catalan capital. During the first quarter of 2018, logistics absorption grew by 50% in Barcelona, with 185,982 m2 of space leased in total, according to data from the consultancy firm Forcadell. 

Original story: Eje Prime

Translation: Carmel Drake

Q21 Real Estate & Baupost Buy Luxury Property Developer Levitt

1 March 2018 – Eje Prime

A new corporate operation has been closed in the Spanish real estate sector. Q21 Real Estate, a company created by the former Grupo Pinar and the US fund Baupost, has acquired the luxury property developer Levitt. Following the purchase, the group will consolidate its position as one of the reference players in the luxury residential market in Madrid, as well as in the northeast and northwest of the Community of Madrid.

With this purchase, Q21 is going to increase its existing portfolio, comprising more than 1,700 homes, with 145,000 m2 of residential buildability in the northeast and northwest areas of the region, and with more than 75,000 m2 of buildable surface area in the tertiary sector. Levitt is going to provide the buying company with a contribution of land and housing under development in prime areas of Madrid.

According to the latest information available in the Mercantile Registry, Levitt-Bosch Aymerich had net assets worth €162 million at the end of 2016. The company recorded turnover of €61 million last year.

Besides Baupost, some of the other US investment funds that are very active in Spain also submitted bids for Levitt, such as Lone Star, Värde and Castlelake; they all expressed their interest in the property developer in recent months.

Levitt, founded in 1929 to construct luxury homes in New York, arrived in Spain in 1971 at the hand of José María Bosch Aymerich. In 1973, the company completed its first development, the Monteclaro urbanisation, on the outskirts of Madrid. Since then, it has constructed various high-standing developments in Madrid and Barcelona, as well as several office developments.

Original story: Eje Prime

Translation: Carmel Drake

Urban Land Shortage Shatters Property Developers’ Dreams

15 January 2018 – Eje Prime

There is not enough land in the city for so many opportunities. That is the complaint that is increasingly being heard amongst experts in the real estate sector and above all, amongst residential property developers in the country, who warn that this problem is starting to take on a more serious tone. Not in vain, in the midst of the economic recovery, in one of the most critical moments of the upwards cycle (that has given confidence back to the house-building sector), available buildable land is scarce.

Real estate specialists like Anna Gener, Director General in Barcelona of the consultancy Savills Aguirre Newman, warns that “the sector is heating up a lot”, due to the shortage of land, given that property developers “by definition, can only purchase buildable land”, according to comments made in a recent interview with Eje Prime. In the opinion of the Catalan executive, “it is starting to become a matter of urgency for the public administration to take sides and streamline the procedures because, in certain areas of Spain, there is a genuine need for new homes…(…)”.

Whilst making her comments, Gener may have had in mind regions such as Madrid, Barcelona and Málaga. All three provinces are experiencing high demand for housing and they accounted for more than 50% of the total investment in land in Spain in 2017, with €3.5 billion spent there on urban land purchases. That figure represents an increase of 19% in recent quarters in relation to the number of property developer operations formalised, according to the Solvia Market View report compiled by the Spanish servicer, which analyses the real estate brokerage situation in the country.

Over the last twelve months, property developers have strengthened their presence in the Spanish residential market, starring in 74% of transactions, supported in many cases by investment funds that hold stakes in them. That fact, together with the aforementioned lack of land supply, has resulted in a 6.2% YoY increase in land prices.

Newly created companies such as Neinor Homes, Aedas Homes, Vía Célere and Aelca have led the current boom in domestic housing with ambitious land purchase plans. Their residential projects have breathed life and confidence into an activity that had been in decline following the real estate bubble of not so long ago, but they have caused the market to become more expensive again due to the increased competition to acquire the limited supply of buildable land available in the most sought-after areas.

In terms of amounts, operations of this kind were closed with prices ranging between €500,000 and €10 million in 60% of cases, whilst 15% of transactions exceeded the €10 million threshold (…).

Generating buildable land: a new line of business for 2018

In the Community of Marid, for example, the most sought-after buildable urban land is that allocated for residential use, above even that allocated for logistics use. As the main market in Spain for the buying and selling of land, the Madrilenian case exemplifies the constraints that the residential sector will have to battle against in 2018.

Firstly, the report from Solvia indicates that property developers will have to leave the city in search of buildable land on the outskirts. Areas such as El Cañaveral and the Corredor de Henares were the most sought-after places last year by companies in the sector (…). There is hardly any land left inside the M-30 (…).

The same applies in Barcelona. Buildable land is scarce both in the Catalan capital, and in its surrounding metropolitan area, which is leading some property developers to return to investing in towns in the second ring of the city’s outskirts, such as Sabadell, Terrassa and Granollers, amongst others, according to the report from the servicer owned by Banco Sabadell (…).

For this reason, one of the challenges for property developers this year is going to be to attract demand to new provincial capitals and markets. On the national map, the Solvia Market View report highlights cities such as Jaén, Pamplona, Oviedo and Valladolid. Regardless of where, what is in no doubt, is that the search for and acquisition of land for house building will continue for the next few months.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Catalana Occidente Buys Castellana, 55 From Standard Life For €60M

22 December 2016 – El Confidencial

Real estate investors are making the most of the last few days of 2016. The Catalana Occidente group, through its subsidiary Plus Ultra Seguros, has purchased the building at number 55 on Paseo de la Castellana from Standard Life. The asset is located on Madrid’s most important thoroughfare and represents an geunine object of desire for all of the major real estate investors. The group has paid almost €60 million for the building, which represents a yield of around 3%. For Standard Life, selling the building for this amount signals the finishing touch to a perfect operation, given that the insurance company invested €35 million when it acquired the property.

The building has a surface area of 5,625 m2, distributed over seven above ground office floors of 734 m2 each. Moreover, it has a garden for exclusive use by its employees and 27 parking spaces. The property was completely renovated in 2007, but its main architectural and protective features were respected, such as the façade that overlooks Paseo de la Castellana, the entrance hall and the main staircase.

The process has been advised and managed by CBRE and Cushman & Wakefield – the consultancy firms that have conducted a competitive process involved a restricted number of investors.

Castellana 55 is one of the most iconic buildings in the prime area of Madrid and its surface area is leased out in its entirety. Moreover, it is one of just a handful of assets that has gone up for sale in the most prime area of Madrid. Sources familiar with the operation say that the process has received a lot of interest, given the vast shortage of prime products in the market.

Sales and Brexit

The sale of Castellana 55 is the second major divestment that Standard Life has made in Spain this year, after it sold the Las Mercedes Business Park to GreenOak for €140 million. Las Mercedes is an office complex measuring almost 80,000 m2, comprising 10 buildings. It is located on the outskirts of Madrid, next to the A-2 highway and close to the Campo de las Naciones Exhibition Centre and Barajas airport.

The manager completed this operation in June, just one month before it was hit by Brexit and was forced to announce the suspension of trading of its fund Standard Life Investments UK Real Estate Fund. The vehicle, which has funds amounting to GBP 2,900 million (€3,420 million), focuses exclusively on investments in the UK, although in October it announced that it has returned to normality.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Madrid: 26% More Office Space Was Leased In Q2 2016

7 July 2016 – Expansión

Despite the decrease in investment in the real estate sector and, specifically, in the office segment so far this year, leasing of office space in Madrid is continuing to rise; and it exceeded the threshold of 100,000 sqm in Q2 2016.

Specifically, leasing of office space in the capital rose by 26% during the second quarter of the year, to 110,000 sqm. In half year terms, that figure represents an increase of 14,000 sqm, to 219,500 sqm, according to a report from BNP Paribas Real Estate. For BNP Paribas Real Estate, this leasing trend reflects the “good health” of business activity in Madrid, which is driving further forecast increases in office space leases.

During the second quarter, approximately 110 operations were signed, which means that more than 100 operations have been signed per quarter for the last seven consecutive quarters, compared with the average of 88 contracts per quarter registered between 2009 and 2014.

In terms of average rents, the real estate consultancy firm notes an increase in four sub-areas of Madrid (the financial district, the centre, the decentralised area and the outskirts). Specifically, overall average rents have increased by around 13% in annual terms, to €15/sqm/month.

BNP Paribas Real Estate highlights the behaviour of the decentralised area of Madrid, which accounted for 42% of the new leases during the quarter and recorded the highest increase in rents, with rises of almost 30% YoY. “The trend seen during the crisis, when most lease contracts were signed in areas inside the M-30, is now being reversed”.

The consultancy firm highlights in its report that the amount of available surface area is still decreasing, in light of the shortage of new offices and the flurry of new leasing activity over the last two years. Specifically, at the end of June, the availability rate stood at less than 15%, with further decreases forecast.

In terms of predictions for the rest of the year, BNP Paribas Real Estate expects the leasing figures in the second half of the year to be in line with those seen during H1, and it forecasts that rental prices will increase “slightly”.

“These figures are backed up by a labour market that is continuing to recover, with the most recent employment figures showing positive results. The number of people registered as unemployed is at its lowest level since September 2009 and that figure is expected to fall further still”, say sources at the consultancy.

Original story: Expansión

Translation: Carmel Drake

Fitch: House Prices Are Bottoming Out

24 March 2015 – Idealista

…but no rapid rises are expected.

The ratings agency Fitch considers that the decrease in house prices in Spain is coming to an end, but warns that the recovery will be slow. According to the company, one of the main reasons for the improvement in prices is the return of mortgage lending.

Fitch says that Spain faces a slow recovery in the housing market. It considers that prices have practically bottomed out, but rules out any rapid price increases. In fact, it points out that the high level of unemployment, together with the high supply of unsold homes constructed between 2006 and 2007, are two of the factors that will prevent a rapid rebound in prices.

It recalls that house sales increased by 19.6% year-on-year in 2014, according to data published by INE, but that despite that, the number of homes sold amounted to less than half the sales recorded in 2007. The agency expects the number of house sales to increase to move than 400,000 homes this year.

But it also believes that there will be a two-speed recovery. The slowest recovery will be seen in coastal areas and on the outskirts of large cities where there is a larger supply of homes. By contrast, in the centre of large cities, such as Madrid and Barcelona, prices will increase.

Original story: Idealista

Translation: Carmel Drake