Tag: overseas investors

Government & Podemos Agree to Allow Town Halls to Regulate Rental Prices

11 October 2018 – Eje Prime

The Government has said yes to public control of the rental market in Spain. The Executive led by Pedro Sánchez (below left) has agreed to the regulation of rental prices by Town Halls, according to explanations provided in a Budget agreement reached on Thursday by the PSOE and Unidos Podemos. The measure is established provided its application is “temporary and exceptional” and is carried out only in those urban areas where there has previously been an “abusive increase” in rents.

Rent has formed the focus of the new Government’s action plan in terms of housing. In parallel to the regulation of prices, the Executive has announced that it will advocate the extension of the minimum term of lease contracts from three years to five, and, in those cases where the owner is a legal entity, the lengthening of the commitment between landlords and tenants to seven years. Moreover, the tacit renewal of contracts will be increased from one year to three, provided the intention to not renew the agreement is communicated by either of the two parties at least six months before it is due to terminate.

In addition, the PSOE and Unidos Podemos have agreed that damage deposits (fianzas) to enter rental flats will be capped at a maximum of two months and that the signing of bank guarantees will no longer be demandable by landlords. In the event that an owner wants to recover his home before the term agreed with the tenant, then that scenario must be formally explained in the contract in force.

More funding for the development of rental housing

The agreement, which will now have to be approved by Congress, includes a measure that supports the development of public housing. In the event that it receives the green light from the chamber, the Government will increase the housing budget for next year to €630 million. In 2020, it will increase that pot further still to €700 million and in 2021, to €1 billion. According to the text, in ten years, Spain will invest between 1% and 1.5% of its Gross Domestic Product (GDP) in public housing.

One of the objectives of the public housing plan is “to avoid “homes” from being sold to vulture funds or sold for a profit”, so as to ensure that “particularly vulnerable people” have the possibility of accessing a rental home.

Original story: Eje Prime

Translation: Carmel Drake

Málaga Redeems Itself: the Capital Pushes the Costa del Sol towards Record House Sales

8 June 2018 – Eje Prime

Málaga is in the real estate news but this time not only because of its coastal towns. The boom in the Malagan capital looks set to push the Costa del Sol to maximum highs this year in the residential market. According to the report Vision 2018. The Real Estate Market in Málaga, compiled by the consultancy firm Savills Aguirre Newman, more homes will be sold this year than in 2007 (19,464), just before the start of the crisis, which affected the sector for almost a decade.

The director of the consultancy firm in Málaga, José Félix Pérez-Peña, explained that the city of Málaga has become one of the main focuses of attention for the real estate sector at the domestic level, and it is also positioning itself as an investment location for overseas clients. “This is something that never used to happen, the residential engine used to always focus, almost 90%, on the Costa del Sol”.

Nowadays, property developers and funds are investing in the capital, acquiring land in light of the existing demand. In this regard, large real estate groups, such as in the case of Gilmar, have also opened regional offices in the city, as revealed by Eje Prime.

Similarly, the report from Savills Aguirre Newman highlights that, within Andalucía, Málaga has positioned itself as the main powerhouse, ahead even of the capital, Sevilla. In this regard, the consultancy firm underlines that 5,236 new homes were started in the city on the Costa del Sol in 2017 compared with 2,980 in Sevilla. In terms of deliveries, Málaga outperformed Sevilla once again with the handover of 2,580 finished units compared with 1,511 in Sevilla.

23.8% larger residential supply in 2017

Another one of the key aspects in the growth of Málaga Capital is its residential supply. Last year, new builds grew by 23.8%, increasing the number of planned homes by 3,859 in the case of apartment blocks and 370 in the case of detached family homes.

In terms of the city’s neighbourhoods, Puerto de la Torre accounted for the highest proportion of stock, with 55% of the total. In total, across the province, 17,738 homes were sold last year.

In terms of prices, the centre of Málaga is where the price per square metre for homes in apartment blocks is most expensive, reaching €3,073/m2, whilst Málaga Este is becoming a reference in the market for detached family homes with average prices of €2,568/m2.

Original story: Eje Prime

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

Servihabitat: 9 out of 10 Non-Resident Buyers Prefer the Beach

18 December 2017 – Eje Prime

17% of the homes purchased in Spain today have a foreign accent. During the first half of 2017, 83,675 homes were acquired by foreign buyers, which represents an increase of 10% with respect to the same period last year. Nevertheless, that increase weakened slightly if we look at the previous quarter, according to the Servihabitat Trends report published by the national servicer.

The reason for this annual increase is found in the climate: 83.7% of non-resident buyers in Spain during the first six months of this year focused their attention on just seven provinces, all of which offer sun and sand. Málaga leads the ranking, exceeding even Alicante according to the latest figures. According to data from the Ministry of Development, 30% of all house purchases by foreigners were recorded in Málaga, compared to 23% in Alicante (…).

The data is clear. Almost nine out of every ten foreign buyers in the Spanish market values the quality of life offered by the Mediterranean climate. Another factor to take into account is the reason for the purchase. In this sense, the Government reports that 95.8% of new foreign house buyers in Spain are resident in the country, which accounts for 80,191 properties in total (…). ,

Besides Málaga and Alicante, the other most sought-after provinces by these investors are: Almería (9.6%), the Balearic Islands (9.2%), Las Palmas (5.2%), Tenerife (4.7%) and Murcia (3.5%). Beyond these coastal areas, the remaining 12.7% is spread over the rest of the country, with large cities such as Madrid and Barcelona accounting for a large share.

Influence in the regional market  

As well as the growing number of international investors, their influence in the regional markets where they are interested in buying homes is noteworthy. In regions such as Alicante and Tenerife, overseas investors account for almost half of all residential property purchases in the regions. Similarly, in the Balearic Islands, Málaga, Las Palmas and Girona, the figure exceeds 30%.

In Cataluña and the Community of Madrid, house purchases by foreigners account for 15.9% and 8.8% of the total number of operations, respectively.

At the other end of the spectrum, the regions where fewest foreign investors are active are Extremadura (2.2%), followed by Galicia (2.5%) and País Vasco (3.3%).

Brits lead the investor ranking

In terms of the country of origin of overseas investors in Spain, British buyers continue to constitute the largest community of house buyers in the country, although their market share decreased during the third quarter of this year, from 19% to 15.13%, according to data from the College of Registrars.

The collateral damage from Brexit may have led to that decrease, although the loss in the purchasing power of UK households will have also played its part, due to the depreciation of the pound against the euro, according to the servicer’s report.

After Brits in the ranking of foreign investors in Spain, come the French and Germans, although neither group manages to account for 10% of the total market. The Swedes, Belgians, Italians and Romanians, all with a percentage market share of around 5%, buy similar numbers of homes in the Spanish residential market, which is speaking more languages every day.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

International Funds Take Control Of Spain’s Real Estate Companies

6 November 2017 – Expansión

Together they own stakes worth €4.3bn / International funds and managers have become the largest shareholders of the listed companies in the sector. Seven of the top ten have foreign majority shareholders.

Seven of the ten large listed real estate companies are held in foreign hands. That is the new reality of the Spanish real estate market, which is enjoying a new period of growth ten years after the last boom.

Whilst during the previous upwards peak in the sector, the owners of the property companies were domestic businessmen, now it is the turn of the international funds to hold majority stakes in these companies in the sector. That is the case of the new leaders in the property developer sector: Aedas and Neinor Homes. These two companies made their stock market debuts this year, in October and March, respectively. In both cases, the property developers making their IPOs were owned by two large international funds: Lone Star in the case of Neinor; and Castlelake in the case of Aedas (…).

In the case of Aedas, which debuted on the stock market on 20 October with a valuation of €1.518 billion, two international firms became reference shareholders: T. Rowe Price, with a stake of almost 3.8%, and Fidelity Management and Research (FMR), with a 3.6% stake. It is not their first investment in a Spanish real estate company in either case. T. Rowe was one of the funds that participated in the IPO of the Socimi Axiare, in July 2015, acquiring a 9.7% stake; meanwhile, FMR is the third largest shareholder in another Socimi, Hispania, and in the property developer Neinor Homes. In the case of the latter, another international investor is the second largest shareholder, Wellington Management, which already owns 8.5% of the capital, worth around €120 million.

In the case of the traditional real estate companies, the status of the international funds varies. Realia (…) is currently controlled by Inversora de Carso, a firm owned by the Mexican businessman Carlos Slim. In addition to the Mexican magnate’s stake (70.77%), Polygon Global own 10.5% and JP Morgan own 6.026% (…).

By contrast, two of the classic real estate companies on the stock market still have Spanish businessmen as their main shareholders: Quabit, whose largest shareholder is its President, Félix Abánades, with a 21% stake (…); and Renta Corporación, in which Dinomen, a company controlled by its President Luis Hernández, holds a 29.97% stake. In the latter real estate company, Baldomero Falcones also holds a stake, of more than 5%, making him the fourth largest shareholder.

Quabit’s second-largest shareholder is a Spanish company: Sareb. The public company holds a 7.66% stake in that firm (….). By contrast, the second largest shareholder in Renta is Morgan Stanley, with an 8.1% stake.

In total, foreign investors hold shares worth more than €4.343 billion in the five main Socimis and four largest property developers.

Spanish shareholders

(…), the number of domestic investors who control these types of companies is much lower, but they have a very prominent weight.

Such is the case of the banks Santander and BBVA, the largest shareholders in the largest real estate company on the Spanish stock market: the Socimi Merlin Properties. (…). Currently, Santander holds a 22.26% stake in that company, worth €1.162 billion, more than half of all Spanish investment in the ten largest listed real estate companies (around €1.8 billion). BBVA’s stake is worth around €336 million.

Alongside the two large Spanish banks, two real estate groups stand out as prominent investors in the listed companies in the sector. Such is the case of Colonial, which holds a stake worth €200 million in Axaire (…). Meanwhile, Colonial is controlled by three overseas investors, after Villar Mir reduced its stake.

Moreover, the real estate group Lar, controlled by the Pereda family, is the third largest shareholder of the Socimi Lar España, with a stake of more than 5.6% (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Flagship Stores Become The Bastion Of Large Retailers

19 October 2017 – Expansión

The unstoppable rise of e-commerce, the tsunami of digitalisation and the new buying habits of consumers have revolutionised the retail sector forcing operators to adapt to the new times to stay competitive.

The e-commerce sector is now turning over €24,000 million per annum in Spain, with a growth rate of 20% p.a. In this context, consumers are increasingly using the internet to manage their purchases, resolve queries and optimise their visits to stores. As such, they are visiting stores less frequently but they are spending more time there when they do go, according to a report from CBRE about the retail sector.

In this context, large international brands are backing the flagship store model as a gateway into Spain; and operators that have traditionally based themselves on the outskirts of cities are now moving into flagship stores in the centre. By way of example, the French firm Kiabi opened a store on Paseo de Gràcia a few months ago. In the same way, operators who have traditionally had stores in retail parks are now making space for themselves in the city centre, such as Media Markt, which opened two stores in the centre of Barcelona in 2016. Before the summer, the electronics firm also opened its new its flagship store in Plaza del Carmen, Madrid, just a stone’s throw from Gran Vía.

Ikea is joining this trend too, with a store on Calle Serrano; as is Leroy Merlin, which is planning to open a shop on Calle Fontanella, next to Plaza de Catalunya in Barcelona

Interest in Spain

“Physical stores are still the favourite channel for consumers, but it is harder to get people out of the house. To attract them, retailers are opening large flagship stores focused on the shopping experience and expanding the range of services, supported by new technologies that allow marketing strategies to be customised”, explains Gonzalo Senra, National Director of Retail at CBRE España (…).

Given the interest from large brands in Spain and encouraged by the upwards cycle of the economy and the improvement in consumption, many overseas institutional investors have decided to back the Spanish market. For example, the US investor Hines has purchased four important prime premises in Madrid and Barcelona in the last year.

These types of investors are the main buyers of flagship stores in well-located premises, involving investment volumes of more than €20 million. Moreover, sources at the consultancy firm have noted a change in the trend in this market with the entry of several insurance companies bidding for large prime assets.

By contrast, the market for smaller acquisitions is dominated by Spanish private investors and family offices – they tend to be particularly interested in assets worth less than €10 million.

Overall, investment in high street premises amounted to €800 million in 2016. The rate of investment continued during the first half of this year, with an investment volume of €515 million, according to data from the consultancy firm (…).

The high level of demand has accentuated the typical shortage of well-positioned products and resulted in a reduction in returns. According to the report, the downward trend in yields continued in 2017 to reach 3.25% in some cases for the most prime products in Madrid and Barcelona (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Torreblanca Golf Attracts Swedish, Belgian & Chinese Investors

18 October 2017 – El Periódico Mediterráneo

Swedish, Belgian and Chinese investment funds have all expressed an interest in developing the Doña Blanca Golf de Torreblanca project, whose foundations were initially approved again by the Town Hall (of Torreblanca) last Tuesday, during an extraordinary plenary session. The expectation is that the project will be awarded at the beginning of 2018 and may become a reality in 2022.

In fact, the government’s team says that even before launching the tender for the program, it already has half a dozen companies and investors on the table, who have registered their interest in the urban planning project. Three of them are backed by foreign capital.

In the opinion of the councillor responsible for Town Planning, Rosana Villanueva, that fact reflects the interest that the golf project has sparked. The plan is to maintain intact the characteristics of the initial program, created in 2005, and for the project to be put out for tender for around €58 million, which will represent a saving of €3.5 million with respect to the initial plan, which exceeded €61 million in total.

The PAI (‘Programa de Actuación Integral’ or Comprehensive Action Program) is considering extending the site by 1,910,254 m2, with 600,000 m2 allocated to the 18-hotel golf course and an urbanised area spanning 1,233,255 m2, with 4,410 homes, as well as hotels, tennis courts, a football pitch, shopping centres, 125,000 m2 of green space, a promenade and a coastal park measuring 80,000 m2. And the companies have expressed their interest in the complete development.

In fact, the PAI is one of the Town Hall’s priorities. That has been highlighted by the socialist mayor, Josefa Tena, since the beginning of her term and, now past the half-way point, she is continuing to back the golf course as a generator of employment and driver of tourism in the municipality. Its launch would represent one of the highest aspirations of the local government, “along the creation of employment”.

“Moreover, it would foster tourism and develop a coastal space with green, sustainable and controlled urbanism. Given its location and proximity to the airport “the seasonality of local tourism could be evened out; moreover, it will be the only beachfront golf course (in the country), which makes it a very attractive prospect indeed”, said the mayor.

The document to be presented to the plenary session will include an appendix with the foundations for the tender work for the construction firms, in order to speed up the process and ensure that the megaproject is given the green light as soon as possible.

Original story: El Periódico Mediterráneo (by Merche Martinavarro)

Translation: Carmel Drake

Gentrification Drives Up House Prices In Barcelona

13 March 2017 – El Periódico

It never rains but it pours: property prices in Barcelona are rising in a continuous and alarming way; a bullish process that echoes the trend seen in residential rental prices in recent times. Only those who are very optimistic – or very cynical – will be able to argue that these price rises are not a reflection of the improvement in the economy and that the laws of the market are as follows: the more pressure in terms of demand (from property buyers), the more the supply benefits (owners and real estate companies alike). According to all indications, the worst of the crisis is over, but the reality of the daily economy is far from the one seen during the years before the bubble burst, in 2007-2008 (and probably will not be in the next few years): average salaries have decreased, employment is more precarious and young people looking to emancipate themselves are finding it very difficult to put a roof over their heads.

But Barcelona is fashionable, a phenomenon that seems unlikely to end (nor would that be desirable) – and moreover, available land for new homes is in short supply. The combination of these two factors is fuelling the purchase of properties as investments, in many cases by foreigners and, is leading to a price spiral that, according to reliable samples, means that 80% of the homes currently up for sale cost at least €200,000. Below that price, properties abound only in the neighbourhoods of Nou Barris, Sant Andreu and Horta-Guinardó.

The Town Hall, led by Ada Colau, has taken some initiatives to alleviate these perverse effects of Barcelona’s appeal, but its legal and economic capacity is limited. The problem requires coordinated action with other administrations if a mockery is not to be made of the Constitution, which establishes that: all Spaniards have the right to decent housing and that the public authorities must ensure as such, “by regulating the use of land in accordance with the general interest to avoid speculation”.

Barcelona, at the forefront in many periods in history, still has time to show that success does not have to denaturalise a city to the point of turning against its inhabitants and driving them out through a large-scale gentrification process. Nobody wants Barcelona to end up like Venice, a paradigm of a city, with lots of glamour and many visitors but with increasingly little soul.

Original story: El Periódico

Translation: Carmel Drake

C&W: RE Inv’t In Retail Sector Exceeded €4,300M In 2016

2 February 2017 – Finanzas

Real estate investment in the retail sector – commercial assets – in Spain exceeded €4,300 million in 2016, up by 22% compared to the previous year, thanks to the completion of 45 operations, according to the Marketbeat Retail España report, compiled by the real estate consultancy firm Cushman & Wakefield.

The study indicates that much of this investment came from overseas investors, particularly in the case of shopping centres.

Nevertheless, overall, domestic capital increased to account for 67% of financing in 2016, compared to 8% in 2007, due to the rise of the Socimis.

The CEO of Cushman & Wakefield in Spain, Oriol Barrachina, said that retail is one of the “clearest” indications that the market has become globalised.

Moreover, Barrachina commented on the need to increase “transformation” and “diversification” to generate wealth “in other neighbourhoods”.

In relation to retail complexes, the report indicated that they covered a total surface area of 16.8 million m2 – 66% of the total “stock” – spread across 672 locations.

More specifically, shopping centres covered a surface area of more than 11 million m2, with the addition of 175,000 m2 in 2016.

Regarding this year, the Director of Retail Leasing at Cushman & Wakefield in Spain, Cristina Pérez, highlighted the “positive trend” expected in the sector, thanks to the construction of another 100,000 m2 of space, with two centres in Madrid (Sambil and Plaza Río 2) and another one in Barcelona (phase 2 of Glòries).

In terms of retail parks in Spain, the supply now exceeds the European average, with a total surface area of 2.8 million m2.

In terms of high street premises, the head of the area, Robert Travers, explained that it has reached “historical highs”, thanks to the improvement in the economy, growth in tourism and rising consumer confidence.

Moreover, Travers noted that the luxury sector is suffering from a “major” change, following “eight years of euphoria”, due to the effect if terrorism, concerns over the Asian markets and a rise in taxes in China.

In this sense, the Head of High Street confirmed that the growth in luxury stores in Spain is going to be “moderate”.

Cushman & Wakefield’s report also contains information about the boom in e-commerce – which has grown globally by30% since 2007 – and its effect on the real estate sector.

Pérez underlined that it is now necessary “to offer a different social experience” to get “people out of the house” and visiting shopping centres in person.

The Head of Retail Leasing acknowledged that 77% of Spain’s shopping centres “need some kind of improvement”, including modifications to bring them closer to the e-commerce segment.

Original story: Finanzas

Translation: Carmel Drake

CBRE: House Prices Will Grow By 3%-6% In 2017

16 January 2017 – El Mundo

One out of every two directors in the real estate sector in Spain believe that house prices at the national aggregate level will rise by between 3% and 6% in 2017, compared with only 21% that thought the same in 2016. That is one of the main conclusions of the Real Estate Trends Barometer compiled annually by CBRE, the largest international real estate consultancy and services firm. For the preparation of the Barometer, CBRE has surveyed the 100 main experts in the sector in our country.

This indicator is particularly important because it is the first time since the outbreak of the crisis that experts in the sector forecast an overall increase in prices in the Spanish residential market. That, together with other data, is evidence of the recovery in the housing market. In fact, 56% of the experts surveyed believe that the absorption of housing will gradually increase and half of them think that prime yields will grow in the residential sector.

Similarly, after property developers experienced a revival in 2016, 36% of those surveyed consider that most opportunities will be found in renovations within the residential segment in 2017, followed by new build homes, which means that the number of cranes should continue to follow the rising path that has already begun.

The awakening of property developers and real estate companies

Almost 60% of the experts consulted forecast that private investors and family offices will be more active in 2017 than last year, followed by core plus funds (according to 44%) and institutional investors (30%). Moreover, 58% of the directors in the sector think that opportunistic investors will decrease their activity in the market in 2017, an important change compared to recent years.

Nevertheless, the most striking conclusion is the perception that the people surveyed have of the role that property developers and real estate companies will play this year. In fact, 32.2% of those surveyed think that property developers will play a key role, compared with 6.6% who thought the same last year. Similarly, 44.4% (compared with 26.3% last year) think that their role will increase although in a less marked way.

Meanwhile, in terms of other players, the Socimis are expected to continue to play a key role according to one out of three experts. International investors will also be significant players in 2017, according to 31.5% and finally, domestic investors will remain stable with respect to last year or may even slightly increase their presence according to the vast majority.

Adolfo Ramírez-Escudero, President of CBRE Spain, added that “these forecasts seem to show a continuous line with respect to 2016, a year in which, according to our data, more than 40% of the €13,850 million invested in the real estate sector in our country came from overseas and when Socimis accounted for around 40% of the total capital invested”.

Offices will continue to attract most attention in the market

Like in the previous two years, the office sector will continue to be the most attractive in 2017. Whilst last year, 32% of those surveyed focused their real estate activity in Spain on that segment, this year 35% expect to do so, followed by 19% who are committed to the residential sector. Moreover, interest in the industrial-logistics sector has increased, up from 12% last year to 16% this year. (…).

Original story: El Mundo

Translation: Carmel Drake