Century 21 Analyses Inorganic Growth Opportunities

25 January 2018 – Expansión

Century 21, one of the largest networks of real estate brokers in Spain, wants to take advantage of the upward trend in the real estate cycle to grow in size, and so is analysing the purchase of regional operators and is even considering merging with one of the national chains.

“Spain is one of the countries in which the broker segment is most fragmented. We are starting to see a trend towards consolidation, which is both inevitable and necessary. We believe that an organised network, with defined working and behavioural criteria and self-regulation, are fundamental for the professionalization of the sector”, said Ricardo Sousa, CEO of Century 21 for Spain and Portugal, speaking to Expansión.

Sousa explains that, although his firm is not currently holding any advanced negotiations in this regard, the company is “mindful” of acquisition opportunities. “There are regional players that may enhance the synergies and allow for more rapid and consistent growth. That is something that appeals to us”, he said.


Sousa also opens the door to alliances with players that compete on the national level: “We are continuing with our organic strategy of value creation with the opening of new branches and through our network of collaborators. In parallel, we are watching the market to find the ideal partner”.

The director gives the example of the “success” of the merger between Century 21 Portugal and Fitamétrica – two of the largest networks in the Portuguese market – five years ago.

Century 21 arrived in Spain in 2010, at the height of the crisis in the real estate market. Eight years later and, with the residential sector now booming, the company has 70 branches and 1,150 collaborators.

The director considers that “there is too much optimism in the market”, which is being translated into certain “irrational” investment and purchase decisions. And he adds: “People need to be more careful because the cycles are becoming increasingly faster and shorter”. For Sousa, there is a clear need in Spain for new-build and renovated properties and there is a segment of the population, the middle and low-middle class, that has been “forgotten”.

Last year, the company recorded turnover of €15.7 million, which represented an increase of 37%. In 2018, Century 21 plans to increase its revenues by 27%, to €20 million. Barcelona will account for 30% of total turnover, a similar percentage to that recorded in the Canary Islands, whilst Madrid is expected to represent 25% of total revenues. The company plans to focus its growth efforts on peripheral areas in those regions.

Last year, Century 21 brokered 5,414 transactions, which represents an increase of 22% with an average value of €199,598, down by 6.3%.

In terms of Cataluña –the chain’s main region, which currently accounts for 41% of turnover -, Sousa acknowledges that the political tension led to a deceleration during the months following the referendum. “Many buyers delayed their purchase decisions in October and November, and decided to close those operations in December and January instead, meaning that those months have reached record highs”, he said.

In this regard, Sousa says that whilst the domestic market has been reactivated, international firms are leaving their investment operations on standby, for the time being.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

La Liga Puts Its HQ Up For Sale For €3.5M

9 October 2017 – Eje Prime

La Liga is hoping to receive a bonus before Christmas. The football league association will complete its move to a new corporate headquarters before December and so plans to complete the sale of its current offices during the final stretch of 2017 or beginning of 2018, according to Palco23. The football clubs’ delegated commission approved the sale of the building at the beginning of the year and has now commissioned the valuation of the building before it puts it on the market: €3.52 million.

The valuation has been performed by an independent third party and has forced the entity chaired by Javier Tebas to recognise a loss amounting to €1.04 million. That is because the price that has been assigned to the property, located at number 10 Calle Hernández de Tejada, is lower than its net book value in the accounts.

The building has a surface area of just over 1,100 m2 and La Liga tried to squeeze into the various floors as it continued to grow. Nevertheless, two years ago, the association decided to rent some additional offices around the corner, and in the end, has decided to concentrate all of its activity in a single building, located just 800m away from the historical headquarters.

As such, the association that represents first and second division clubs will occupy four of the seven floors in Edificio Murano, located at number 60 Calle Torrelaguna. That building is owned by the real estate group Hispania, which has secured the occupation of more than 50% of the property’s surface area (7,574.6 m2) thanks to Spanish football.

The move will not only result in an improvement in the conditions of the 158 workers that La Liga employs, it will also allow the body to offer a more modern image. Compared to the antiquated facilities at Hernández de Tejada, the new headquarters will be located in a glass building with views of Avenida de América and Calle Arturo Soria.

The office market in Madrid

The office market is one of the most active in the Spanish real estate sector. During the first six months of the year, 275,037m2 of office space was leased in the capital, a very similar figure to that recorded during the first half of 2016. According to the real estate consultancy Aguirre Newman, activity has been improving throughout the 6 months.

Another significant feature in the market has been the recovery of large volume operations: 25 deals were signed for spaces spanning more than 3,000 m2, which accounted for 42% of the total volume of operations closed. Those figures include La Liga’s new building on Calle Torrelaguna.

The overall office availability rate in the market in Madrid has decreased significantly over the last six months, from 11.4% in January 2017 to 10.8% in July 2017, as the volume of available space decreased by more than 74,000 m2.

In terms of prices, during the first half of the year, average rents grew in all areas, to reach an average half-year a rise of 3.9%. The average rental cost in the capital’s business district rose to €28.94/m2/month, whilst average rents in the peripheral areas amounted to €12.61/m2/month.

The most significant increases in rental prices by area were recorded in the central business district, with an average rise of 7.7% in six months. That mainly occurred as a result of a change in companies’ requirements, since they are now prioritising location and building quality over rental cost.

Original story: Eje Prime (by M. Menchén and C. Pareja)

Translation: Carmel Drake

RKS Prepares Its Residential Socimi To Debut On The MAB

10 March 2017 – Expansión

The Socimi boom continues unabated. Ores, the listed real estate vehicle backed by Bankinter and Sonae Sierra, which debuted on the Madrid stock market a few weeks ago, was the thirty-first company of its kind to list on the MAB. And, all indications are that this phenomenon is going to continue to grow.

Socimis specialising in offices, hotels, shopping centres and the residential sector. In this environment, and in the face of investor interest in the real estate sector, a Socimi backed by RKS, specialising in residential assets in peripheral areas and going by the name of Ktesios Properties, is also planning its debut on the stock market. The intention is for this Socimi to make its stock market debut with assets worth around €20 million and a portfolio of approximately 250 homes.


The Managing Partner of RKS, Henry Gallego, explains that this Socimi, which is backed by the fund RKS Real Estate as an anchor investor, will be ready to debut on the stock market by the end of this year and will offer investors “better returns” by focusing on cheap rental properties with high occupancy rates.

“We are looking for opportunities with potential. Prime areas are not our core focus because they already have too many suitors and their yields are not as attractive. Whilst rents in prime areas amount to €1,000/month, our products are rented out for around €400/month”, said Gallego. The fund currently owns 136 properties – homes and garages – worth around €11 million, and the aim is that by the end of this year, it will have acquired new properties to double that valuation. In this sense, the company has selected more than 2,500 properties that are suitable for including in its portfolio of assets.

Gallego explains that its process for incorporating assets includes: searching for properties, analysing them, updating the assets and negotiating with creditors. “The fund identifies property developers that have bank debt, acquires the right to operate their properties and, in parallel, begins conversations with their creditors”, he said.

Gallego explains that the portfolio includes properties with non-performing mortgages (overdue portfolio) that are overvalued (…).

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Idealista: Garage Rental Yields Averaged 5.6% In Q1 2016

13 June 2016 – Expansión

Investment / Buying a parking space for rent generates an annual gross yield of 5.6% in Spain. That figure is even higher in the most sought-after neighbourhoods of the large cities, where it reaches up to 8%.

Now that debt and deposits are offering such meagre returns and the stock exchange is trading well below the levels seen a year ago, alternative investments are gaining strength. That is the case with housing, and also with garages. In this sense, the central areas of Madrid and Barcelona are full of very attractive opportunities to buy parking spaces and rent them out, with yields of more than 6% gross per annum.

The average return on garages in Spain is 5.6%, according to a study from Idealista, compiled using data from Q1 2016. That is, no less than 1.1 percentage points higher than the figure a year ago (4.5%) and four times the yield on 10-year government bonds (1.4%).

The highest average returns are obtained in Murcia (5.7%), followed by Málaga (5.5%), Almería (5.4%) and Castellón (5.1%). Parking spaces in Pamplona (4.6%) and Guadalajara (4.5%) also perform well. At the opposite end of the spectrum, the (regional) capital cities with the least profitable garages are Barcelona, with 2.1%, Oviedo (2.3%) and Salamanca (2.6%). In Madrid, the return is 2.8%.

But the arithmetic means are not representative in the two largest cities, as the markets there are very heterogeneous. In peripheral areas, there is hardly any demand for garages and there they generate minimal returns, whilst in prime areas of Madrid and Barcelona, parking spaces generate yields of more than 6%. (…).

Original story: Expansión (by Juanma Lamet and Rebeca Arroyo)

Translation: Carmel Drake

Real Estate Invesment In Madrid Tripled In 2014 To €3,600M

16 March 2015 – Yahoo Finance

Real estate investment in Madrid tripled in 2014, to reach €3,600 million, compared with €976 million in the previous year, according to a study conducted by BNP Paribas Real Estate.

In addition, office rentals in the capital have risen for the first time since 2008, with an increase of 10% with respect to the previous year, due (mainly) to “prime” income, which reached €312/m2 per year at the end of the year.

In the meantime, investment in Barcelona also increased, although to a lesser extent (by +9%), to amount to €1,300 million in 2014. Similarly, the city registered record office rental figures, exceeding the levels achieved in 2007 by 18 basis points.

In this line, the study highlights the recovery in the markets that were hit the hardest by the crisis: in Dublin and Madrid, for example, investment increased by 120% and 278%, respectively (last year). London, which recorded a slight decrease with respect to 2013, attracted the highest volume of investment in Europe, with almost €30,000 million, followed by Paris, where investment amounted to €17,000 million.

(Across Europe), investment in non-residential real estate increased to €108,000 million, of which €74,000 million related to offices, a volume that made last year the best year since 2007.

Office leases increased by 10% in Europe

Office leases in Europe increased to reach 11.7 million square metres in 2014, i.e. 10% higher than in the previous year, driven by growth in Paris, Berlin and Brussels.

The study reflects that the improvement in economic conditions and the labour market in 2014 had a positive affect on the office market in Europe. In this way, the return of large transactions has contributed to good results in most markets.

As in previous contexts, the main drivers of demand were reductions in costs and rationalisation; similary, users maintained their preference for new buildings in good locations.

Despite the significant increase in office leases, the average vacancy rate in the 35 cities analysed decreased by 10 basis points only and is still above the threshold of 10%. These levels are possible because the reduction in available space was in partly offset by a higher volume of new developments and the freeing up of second hand space as users relocated, according to the real estate consultant.

However, the lack of supply in central areas has kept rents under pressure in the case of ‘prime’ category buildings. As a result, average ‘prime’ (rental) income increased by 3%, driven by increased activity in rising markets, such as London and Dublin.

By contrast, rentals in peripheral districts evolved in the opposite direction, as they continued to suffer from high vacancy rates, which forced owners to offer incentives to prevent price decreases.

Original story: Yahoo Finance

Translation: Carmel Drake