Tag: overseas investors

Invesco Buys A Building In Barcelona From Deka

24 November 2016 – Expansión

The German real estate manager Deka has earned around €10 million in just three and a half years from the sale of a 4,000 m2 building, containing office space and commercial premises, in the centre of Barcelona. The property, which is located on Ronda de Sant Pere, 5, next to the Corte Inglés in Plaza Cataluña, was acquired by the fund WestInvest InterSelect – managed by Deka – in May 2013 for around €19 million. Now, the US manager Invesco Real Estate has paid around €29 million for the building in a transaction brokered by Savills. Yesterday, the consultancy firm highlighted the interest that the Catalan capital is receiving from overseas investors and the “shortage of available products”.

Original story: Expansión (by J.O.)

Translation: Carmel Drake

Political Uncertainty Deters Real Estate Investment

31 May 2016 – Expansión

The political uncertainty in Spain is hanging over the real estate sector, which, despite continuing to be active, is not shining with the same splendour that it did in 2015. Specifically, real estate investment during the first quarter of the year exceeded €2,100 million, which represents a 25% decrease with respect to 2015, according to data from CBRE.

The segment most affected by this slowdown was offices, where investment declined by 70% during the first three months of the year, to €180 million. Meanwhile, investment in retail amounted to around €770 million, almost 45% less. By contrast, investment in the logistics sector amounted to €200 million, compared with €80 million in the same period a year earlier. In other sectors – residential and hotels – investment amounted to more than €1,000 million, compared with €885 million during Q1 2015.

Pedro Lacambra, manager at Ibercaja Gestión, explained that the Spanish real estate market is showing signs of a slowdown, which is accentuated in certain business segments, such as offices. The expert said that Socimis account for 40% of all investment in offices, and that they are having to raise new funds to grow and invest in assets. Moreover, he said that the office business requires greater demand for space from existing companies, as well as the appearance of new companies and multinationals arriving in Spain. For Lacambra, the current panorama of political uncertainty does not encourage any of these scenarios.

Meanwhile, Daniel Pingarrón, market strategist at IG, considers that the political uncertainty is weighing down more on the Socimis and real estate companies than on players in other sectors. “ The stock exchanges and financial markets are more globalised and depend a lot less on politics and local factors. By contrast, the real estate sector is more sensitive, as we have seen with Operación Chamartín and Operación Campamento”.

In this sense, the analyst thinks that some investors are waiting for the uncertainty surrounding the formation of the future Government to be resolved before entering Spain.

Taxation of the Socimis

The analyst at Selfbank, Victoria Torres, explains that the political uncertainty that currently exists in Spain is one of the factors that is significantly affecting the real estate sector, which is very sensitive to the legislation in force. “There is a fear that a change in Government could increase the tax charges for Socimis. For that reason, we are not seeing any massive sales, but rather defensive moves to reduce positions until after the General Election”, explains Torres.

Torres thinks that these companies are helping to boost a depressed sector thanks to the tax benefits that they enjoy, amongst other reasons. Socimis pay Corporation Tax at a special rate of 0%, receive a 95% rebate on Stamp Duty (AJD) and Property Transfer Tax (ITP) on capital gains, and do not retain the dividends distributed to their shareholders, which include both individuals and corporations.

For Torres, the new concerns over the sector come at a key moment for the firms, especially Hispania, which is preparing a €231 million capital increase. (…).

Gonzalo Sánchez, analyst at Gesconsult, shares the same view. For him a more or less similar Government would benefit these companies. “Behind the Socimis are overseas investors, who want to have their money where they can see it and to avoid the chance of any nasty surprises”, he added. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Supreme Court Cancels Plans For Marina d’Or Golf Macro-City

26 February 2016 – Expansión

The Supreme Court has ratified an earlier decision to cancel the urban plans for a second macro-city, known as Marina d’Or Golf, in Castellón. The project covers a surface area of 18 million m2 and negotiations were being held with several overseas investors.

Original story: Expansión

Translation: Carmel Drake

RE Funds Puts Their Investments On Standby

27 January 2016 – Expansión

The major European real estate funds have strict internal rules and so are not willing to make political assessments. But the firms that work with them confirm that these funds demand the same rigour that they apply internally from the governments in the countries in which they invest. Investors need stable legal frameworks and “are starting to feel nervous”, say their intermediaries in Spain.

Juan Antonio Gómez Pintado, President of the property developer Vía Célere, which has recently invested in Spain in partnership with several overseas funds, says that “operations are currently on standby”. “Given their Anglo-Saxon mentality” he says “since 20-D, investors think that the parties that received the most votes will join forces, but the issue is getting more complex and so they are getting nervous”.

The President of Vía Célere says that “the funds are extrapolating what has happened in Cataluña. “It is not that they doubt Spain’s economic viability, they are still evaluating operations, but they are waiting to see what the outcome of the (latest political) agreements will be”, he said.

And this question mark over the future Spain’s government is just one of several uncertain scenarios affecting the country, such as the Catalan independence process and the change in the local governments in Madrid and Barcelona.

The Managing Partner of Cushman & Wakefield in Spain, Oriol Barrachina, said that the political change that has caused the greatest concern for overseas investors has been the change in local governments. The arrival of Manuela Carmena and Ada Colau (last May) stalled projects, such as Operación Canalejas in Madrid and the (renovation of the) Deutsche Bank building in Barcelona.

The Vice-President of CBRE in Spain, Enrique Martínez Laguna, says that “any situations involving uncertainty, such as the one we are currently experiencing, impacts investor confidence, both in the real estate market as well as in other sectors. And the CEO of Neinor, Juan Velayos, says that “it would be much simpler and better for everyone if we could work in a more certain (political) environment”.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

JLL: Hotel Investment Exceeded €2,650M In 2015

12 January 2016 – Expansión

2015 was a record year for investment in the hotel sector, driven primarily by Spanish buyers. The Canary Islands and Madrid were the stars in terms of location. Last year, 143 hotels were sold in Spain worth €2,650 million, which represents an increase of 65.6% compared with 2006, the previous record-breaking year; and more than double the investment volume recorded in 2014 – €1,180 million.

Spain was the third most popular European country for investors, behind the UK and Germany, according to a report by the consultancy firm JLL Hotels & Hospitality Group. And Spanish investors returned to the spotlight, thanks to the improvement in the domestic economy. In 2015, 74% of total investment was made by domestic buyers, compared with 58% a year earlier.

In this regard, the Socimis were the great discovery of the year. Merlin and Hispania, the two largest Socimis by market capitalisation, spent €965 million on hotels, whereby accounting for 36.4% of the total volume invested in Spain.

In terms of Spanish investors, the Socimis and investment funds were followed by Spain’s hotel chains, which accounted for 13.5% of total investment. The Catalan hotel chains H10 and Hotusa were the most active in 2015. They were followed by private investors, such as family offices, which accounted for 8.9%.

In the meantime, overseas investors accounted for 26% of total investment in Spain, with buyers from France being the most active – Accor’s acquisition of four Novotel hotels was a key deal – behind those from Germany – IFA paid €48 million for two properties in the Canary Islands – and Hong Kong – Mandarin purchased the Ritz in Madrid, together with the Saudi group Olayan-.

By type of investor, the funds increased their weight significantly during the year, specifically, up from 30.4% to 53.6% of the total. Hotel groups and private investors lost steam, in contrast to the real estate companies, which recorded a slight rise.

The Canary Islands accounted for 29.6% of total investment, benefiting from the upturn that Spain’s tourism industry is experiencing at the moment due to (political) instability in other competing countries in the Mediterranean. 31 hotels were sold there in total, primarily as a result of the partnership between Meliá and Starwood Capital, as well as due to the creation of Bay, the first pure hotel Socimi, by Barceló and Hispania.

Recovery

Madrid was the second most popular destination, accounting for 23.5% of total investment. The price paid for the Ritz hotel – €778,000 per room – was the highest recorded in Spain. Half of the operations involved five-star hotels and 43% involved four-star hotels.

Occupancy rates have improved in the Spanish capital, but the average price there continues to fall below its pre-crisis levels.

In the Balearic Islands, hotels worth more than €445 million were sold – 16.8% of the total – , above Barcelona, where 14 transactions worth €340 million were signed – accounting for 14% – above all, involving four-star properties. Despite the moratorium imposed by the mayoress Ada Colau, the Catalan city is the country’s leader in terms of profitability and the outlook there is positive.

Another trend in 2015 was the sale of hotel portfolios. 78 of the 143 hotels that changed hands belonged to a larger batch. This year, more operations of this type are expected, albeit smaller in value; and overseas Socimis and investors are expected to play a more active role. According to JLL, investment in 2016 could reach similar levels to those seen last year.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Testa & International Funds Have Driven RE Inv’t In 2015

3 December 2015 – Expansión

According to the consultancy firm CBRE, investment in offices, commercial assets, hotels and logistics warehouses will amount to €13,000 million by the end of this year.

Real estate investment will close 2015 at record breaking levels. The arrival of international funds and the launch of the Socimis have driven the purchase of assets to levels exceeding even those seen at the height of the boom in 2007, and are expected to close the year with a total volume of €13,000 million. “2015 has not only seen a strengthening of the recovery that started in 2014, it has also seen growth of 25%, resulting in record levels (of investment)”, explains Mikel Marco-Gardoqui, Head of Investment at the real estate consultancy firm CBRE.

By type of asset, offices continue to be the preferred asset, but all of the sectors have experienced growth in 2015, according to the experts at CBRE. “All of the sectors, including offices and shopping centres, as well as hotels, have grown significantly this year and are now at record levels”, says Lola Martínez, Director of Market Analysis at CBRE.

By type of investor, 70% of the investment volumes have come from overseas investors, including those who have entered Spain by acquiring shares in Socimis.

Some the operations that have most boosted volumes include: the purchase of Testa by the Socimi Merlin Properties for €1,800 million, the acquisition of Torre Espacio by the Philippine businessman Andrew Tan for €558 million and the purchase of Gran Vía 32 by Amancio Ortega for €400 million.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Foreign Investment ‘Pulls Up’ House Prices In 8 CCAA

15 April 2015 – El Economista

The housing phoenix is rising from the ashes, but, as yet, it is not soaring with equal force across the whole country. After 2014, which was year zero for the sector after seven years of hard-hitting decreases, the foundations are being laid in 2015 for a new cycle. Whilst in the large cities, such as Madrid and Barcelona, (the recovery) has taken off, fuelled by foreign investment, tit is still weak and flighty in areas with lower demand; nevertheless it is still a recovery.

The revival of the mortgage market, accompanied by an environment of low interest rates, a good overall economic climate and the outlook for growth both in terms of consumption and production, has generated the ideal breeding ground for the real estate sector to return to our economy, although in terms of size it is still well below its pre-crisis levels.

According to data from the National Construction Conference (Conferencia Nacional de la Construcción or CNC), in 2007, construction accounted for around 22% of GDP. Today, it represents approximately 5%. Leaving the excesses of the real estate boom aside, the prudent return of construction activity is important to enable proportional feedback between the Spanish economy and housing.

Where is real estate taking off?

After the hangover of the crisis, the housing sector is starting to record its first price increases. According to Sociedad de Tasación (ST), the average price of new and used homes increased by 3.3% during the first quarter of 2015 to record nine consecutive months of increases. With the latest rise, the (average) price per square metre amounts to €1,316, according to the Trends in the Real Estate Sector report. Nevertheless, the evolution is very uneven across Spain.

The value of properties in eight autonomous communities has increased. Navarra, led the ranking with an increase of 6.7%, followed by the Balearic Islands (6.5%), Valencia (5.7%), the Canary Islands (5.4%), Madrid (3.8%), La Rioja (3%), Andalucía (2.8%) and Extremadura (0.3%).

Fluctuations are still expected

Nevertheless, as Juan Fernández-Aceytuno, CEO of ST, notes, this data should be interpreted with caution, given that it comes in the context of a decrease of around 45% in the price of homes; as such the downward trend has less distance to travel. Moreover, if we focus only on the price of new homes, then the decrease has not bottomed out yet.

All of this, he explains, draws a picture that is characterised by “stabilisation, but with a serrated edge”. In recent months, positive and negative data has been recorded and the distribution of the recovery is uneven. Therefore, although the majority of the experts agree that house prices have bottomed out, it is too early to talk about a full recovery. For that, the CEO of ST says, the figures for the number of transaction and mortgages granted will need to return to the levels last seen in 2001 and 2002. And he adds that those two variables are the ones that are really going to shape the evolution of the real estate sector. “A market the size of Spain should be granting around 750,000 mortgages and closing 800,000 house sales per year”, he says.

Who is buying?

Despite the opening up of the credit market and the improvement in conditions, the level of financing continues to be low and does not stop flowing between families; this brings us back to a position of prudence, says Fernández-Aceytuno. “The stored-up demand will have to be released at some point”, but decisions to buy are still being postponed. Price decreases and greater employment stability may provide a boost for all of those latent buyers.

So, who is behind the increase in the number of house sales? José Luis Ruiz Bartolomé, expert in the real estate sector and author of the book ‘Return, property, return’ (‘Vuelve, ladrillo, vuelve’) explains. After the necessary price decreases, there has been a strong inflow of foreign investment, both by funds as well as individuals, especially in the coastal regions. Moreover, as this expert indicates, more homes are being sold, but “location is becoming very important”.

The outlook, therefore, is that the evolution (of prices) will be very different in some areas than in others. This is confirmed by the report about the residential market in Spain issued by Maxxima REA, which states that 2014 was the turning point for real estate investment in Spain. According to the study by that real estate consultancy firm, transactions to date have been concentrated in Madrid and Barcelona, and have focused on prime assets, whose supply is scarce. As a result, the prices of higher quality assets in better locations have increased.

More properties are being bought and sold

What is undeniable is that the evolution of prices is supporting the revival of house sales. According to the latest statistics from the National Institute of Statistics (INE), house sales increased by 15.5% in February with respect to the same month last year, to reach a total of 29,714, whereby recording six consecutive months of increases.

Another positive statistic, but again, one that needs to put in perspective, since it is still a comparison against minimum real estate activity. In terms of the geographical distribution of house sales, the map is uneven. Whilst sales are soaring in Aragón (49.2%), followed by Madrid (28.4%), Barcelona (23.2%) and the Balearic Islands (21.7%), other regions are suffering from a decrease in the number of house sales, including (-22.7%) and the Canary Islands (-5.5%).

The return of the cranes

(…) Refer to article dated 30 March 2015 for these details.

The risks

In this overall market context, the obvious question is “Is this recovery stable”? All of the experts agree that it is. The change in the cycle is here to stay, but they also call for caution because money is “very easily frightened”, according to Ruiz Bartolomé, who warns against two risks: political instability, with the rise of parties such as Podemos, “which scare off overseas investors” and the danger that Spain becomes complacent and puts the brakes on its structural reforms.

At the Sociedad de Tasación, they are more optimistic in this sense and they believe that the risks of destabilisation are remote. “Not even the electoral calendars will have a direct impact on the market”, explains its CEO. However, any sharp rises in interest rates would impact the recovery, however such a move is highly unlikely, especially given the latest monetary policy measures undertaken by the European Central Bank.

Original story: El Economista (by Silvia Zancajo)

Translation: Carmel Drake

Belgian Interest In Spanish Holiday Homes Skyrockets

6 April 2015 – El Mundo

Last year Belgian citizens purchased 21% more homes in our country (than during 2013), attracted by the low prices.

The Belgian group Stella predicted it in the early 90s, in one of the most popular songs in the country’s history: “on ira tous, tous tous a Torremolinos” (we will all, all all, go to Torremolinos). That omen is now a reality since Belgians are coming to Spain in increasingly large numbers and not just for one-off holidays, but also to become homeowners. During 2014, the citizens of the country acquired 3,507 homes on Spanish soil, almost 21% more than in 2013 and, although at the time they had a certain predilection for the Malaga town, the truth today is that their interest has spread across the whole country.

“Prices have risen so much in Belgium and have fallen so much in Spain that it has become very affordable (for us) to buy a home on the Mediterranean (Coast)”, says Bertrand Florent, resident of Woluwe-Saint-Pierre, one of the most expensive neighbourhoods in Brussels, where it costs more than €300,000, on average, to buy a home.

This reasoning has led him to think about investing his money in a second home in Spain where, for less than €100,000, he could increase the statistics that show how (interest in) our domestic market has become an authentic boom for Belgian citizens.

The increase in house prices in Belgium, together with the decline in the Spanish market during the crisis, has converted the Belgians into the main non-resident foreign purchasers of homes in Spain, on a proportional basis.

They are only slightly exceeded (in absolute terms) by the citizens of the United Kingdom and France, two countries where the number of inhabitants is several times higher than the Belgian population of just over ten million.

Nevertheless, “several factors should be taken into account”, says Antoine Bourgeois, real estate advisor in Brussels. “Belgians used to spend time on the Belgian coast or in the South of France. However, real estate prices have risen sharply there, and so Belgians have decided to focus on other destinations”. This exodus has also been helped by the evolution in the means of transport and the fact that now there are more – and cheaper – flights than ever linking Belgium with various locations in Spain.

The rise in prices has been observed across the whole country, where the market has grown like wildfire in recent years, to the extent that average house prices doubled in Belgium between 2002 and 2012.

This development has led the OECD – Organisation for Economic Cooperation and Development – to consider Belgium as one of the countries in which house prices are most over-valued in the world, with rates that, in 2013, significantly exceeded the averages in other western countries, both in terms of the differences between prices and wages, as well as between sales and rentals. This data led the credit ratings agency Standard & Poor to warn about the creation of a real estate bubble in the country although, since last year, the market has shown signs of stabilisation.

Original story: El Mundo (by Alberto F. De Quer)

Translation: Carmel Drake

Overseas Funds On The Hunt For Holiday Hotels

26 March 2015 – Expansión

Socimis (‘socidedades cotizadas de inversión inmobiliaria’ or listed real estate investment trusts) and the appetite of overseas investment funds are driving the professionalization of the hotel sector in Spain, to separate the ownership of properties from the management of establishments, in line with the Anglo-Saxon model.

That is one of the conclusions to come out of a conference held in Madrid yesterday about the evolution of the hotel sector over the last decade. The conference was organised by Magma Hospitality Consulting and the Intercontinental Hotels Group (IHG), the largest hotel group in the world by size.

Liquidity

“Socimis are an essential tool that Spain has needed for a long time, to provide liquidity to a portfolio of assets, respond to generational renewal and professionalize management”, said Luis Migual Martín, Investment Director at Azora.

This company launched a Socimi (Hispania), which formed an alliance with Barceló at the start of the year to create the first listed investment vehicle specialising in the hotel sector (Bay Hotels), which has assets of more than €420 million.

For his part, Alejandro Hernández Puértolas, CEO at HI Partners, the hotel fund driven by Solvia – Banco Sabadell’s real estate arm – added that “the Socimis could bring together assets in Spain amounting to €8,000 million”. In the USA, the REITS – equivalent to Socimis – that specialise in the hotel sector have (assets under management amounting) to more than €70,000 million.

Nevertheless, there is still room for improvement. For Martín “there needs to be a change to the current legislation to reflect the management model, which now falls outside of (the scope of) the Socimis”. Arturo Díaz, CEO of Business Development at Renta Corporación, added that “other instruments will be created besides the Socimis”.

In the case of international funds, the focus has shifted from the city to the beach. “Institutional investors are starting to get involved into the vacation segment. The main difficulty is obtaining a portfolio of assets, but the appetite is there”, said Díaz, who called for restraint when it comes to changing the use of office buildings and homes into hotels.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

CBRE To Invest €600M In The Spanish Market In 2015

16 March 2015 – Expansión

Real estate assets / The former subsidiary of ING is looking to improve its portfolio through refurbishments and asset purchases.

After more than two decades in the market, the fund manager CBRE Global Investors has become a major player in the Spanish real estate sector thanks to its intense asset rotation policy.

The company, which manages property in this market (primarily shopping centres) worth €2,000 million, closed the sale of various assets last year: Urbil, in Guipúzcoa, which it sold to Axa Reim for €60 million; Alcalá Magna, in Madrid, which it sold to Incus Capital for €85 million; Gran Vía de Vigo, which it sold to the US fund Oaktree for €100 million and Modoo, in Asturias, which it sold for €45 million.

In 2013, CBRE Global Investors was involved in the first major sale of a shopping centre following the outbreak of the crisis, when it sold Parque Principado in Asturias for €141.5 million to the British real estate company Intu Properties. “Between 2008 and 2014, we rotated the portfolio we had created during the previous two decades. Thus, we sold Parque Principado, which was a mature asset, but we purchased other assets. In total, we bought and sold assets worth €1,000 million last year”, explains José Antonio Martin-Borregón, CEO at CBRE Global Investors in Spain and Portugal.

The (property) management company made its first investments in Spain between 1992 and 1993 and three years later, it opened its first offices. Through its five funds, it currently manages 19 shopping centres, including Bilbondo in Bilbao; Vallereal in Maliaño (Cantabria) and Parc Central, in Tarragona. “We started out as the investment vehicle for National Nederlanden, which wanted to invest in properties outside of Holland that were not for its own use. We have maintained this philosophy for 20 years. Our traditional clients are institutional investors”. The latest addition to the portfolio was La Zenia in Alicante, which was acquired using money from the Alaska pension fund.

Advantages

The goal of the Head of CBRE Global Investors is to repeat the transaction volume (recorded last year) during 2015 but with a greater focus on purchases. “We would like to close transactions amounting to €1,000 million this year with a 60:40 split in terms of purchases and sales”, he says. “We have a portfolio of mature assets and therefore we are interested in buying properties that we can add value to”.

In total, the (property) manager expects to invest €930 million in Spain and Portugal. “Demand exceeds supply, which means that prices have increased and new rules are in play. It is not going to be as easy (as it once was) to target successful investments”.

Nevertheless, the Head of CBRE GI does not fear competition from the multitude of investors and institutional funds that have arrived in the Spanish market attracted by the decrease in real estate prices and the expected economic recovery. “As a (property) manager, we try to maximise the opportunities that the market offers, leveraging on our competitive advantage, which is our local knowledge”, says Martín-Borregón. “As a (property) manager, we have more access to capital, which allows us to move (more) quickly to close transactions”, he adds.

The (property) manager is also considering investments in premises (shops/stores) on the street and in strengthening its logistics platforms (it already owns 15). “We will buy logistics assets in new areas and we will sell old warehouses”, he explains.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake