24 November 2017 – Cinco Días
The four large property developers that aspire to lead the residential market in Spain are going to hand over only 680 homes in 2017. The group comprises, on the one hand, two companies that are already listed, namely, Neinor and Aedas, and on the other hand, two that are likely to make their stock market debuts in 2018, namely, Metrovacesa and Vía Célere.
The real estate sector already regards these four companies as the largest in the sector; and on the stock market, they will have access to resources that many others will not. But all of them are at the beginning of the development of their businesses, in a joint bid to reactivate the residential market in Spain.
That reactivation can be clearly shown in the forecast of home deliveries to clients, which will rise from 680 in 2017 to more than 2,000 next year, according to data provided by the companies themselves. Normally, the process to sell homes off-plan and build them takes more than 24 months. And so these companies, which started to back the property development sector within the last two years, are likely to hand over the greatest number of homes from 2019 onwards.
In parallel, the sales business of the new companies is also growing. The four companies expect to sell almost 10,000 homes in total in 2018.
Moreover, for the last few months, Neinor, Aedas, Vía Célere and Metrovacesa have been creating their own land banks, making investments amounting to hundreds of millions of euros to acquire plots of land in Madrid, Barcelona and other capitals. The four companies own land sufficient to build 76,400 homes (…).
This year, work has started on the construction of 73,000 homes (versus 92,000 last year) in Spain, according to the construction permit figures compiled by the Ministry of Development. They are very modest volumes, which are still much closer to the minimum recorded in 2013 (58,740 homes) than the maximum recorded in 2006 (865,560 units).
The leaders of these four companies, which aspire to lead the sector on the stock market, have indicated on several occasions that the rate of house sales by its companies will reach 4,000 units once they are at cruising speed. That means that each one of them will have a market share of no more than 4% or 5% of a market that will exceed 100,000 new homes per year. Even the companies themselves consider those figures to be conservative and sustainable over the long term.
Neinor Homes is the most advanced in its business plan. It was the first to debut on the stock market in this new bullish cycle, in March, and now has a market capitalisation of almost €1,450 million (…). The company led by Juan Velayos plans to hand over the keys to 300 homes this year. It owns land with capacity to build up to 12,000 units, although the company is continuing to buy up plots of land. The four largest real estate companies will build around 38,000 homes over the next three years.
The next firm to debut on the stock market was Aedas Homes, which did so last month. It also has an international fund as its backer, in its case, the US firm Castlelake, which sold more than 45% of the capital in the IPO. (…). The company does not plan to hand over any homes this year, but will complete 230 in 2018. It also forecasts sales of 2,050 homes next year.
The company that is likely to be the next to make its stock market debut is the historical firm Metrovacesa (…). It is currently controlled by Santander (60% stake), BBVA (30%) and Popular (10%) (…). This year, it will hand over 160 homes and next year another 620 units, when it will also sell another 3,500 properties. It is expected to be the largest firm on the stock market and in the sector, given that it owns plots on which to build 40,000 homes.
Finally, the fund Värde Partners is working on bringing Vía Célere to the stock market (…). That company has not provided information about its forecasts, but in its annual accounts for 2016, it forecast the hand over of 223 homes this year and 201 next year (…).
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake