Spain’s Property Developers Glimpse the First Signs of a Moderation in Prices

29 May 2019 – Expansión

Yesterday, several of the largest property developers in Spain met for a Medcap roundtable event moderated by Deloitte to discuss the outlook for the residential market.

Specifically, representatives from Metrovacesa, Aedas, Quabit, Insur and Lar participated in the discussions, during which they observed that house prices in Spain are starting to moderate in some of the more mature markets, although they acknowledged that there are still many secondary cities where the new (growth) cycle is just beginning.

In this context, the representatives identified a number of focuses and challenges facing the sector, namely:

Licences: All of the property developers are pushing for great agility from the public administrations when it comes to the granting of construction permits.

Construction: The labour shortage in the construction sector is pushing up prices and leading to delays in project finishes.

Concentration: Property developers are larger and more professionalised now than before the crisis; they require critical mass to be resilient to real estate cycles.

Industrialisation: Prefabricated homes allow construction periods to be shortened and for greater control over the processes.

Access: Young people are finding it increasingly difficult to afford to buy a home.

Overall, the experts consider that the residential sector is still immersed in the early stages of the new cycle, but only time will tell whether they are right.

Original story: Expansión (by Rebeca Arroyo)

Translation/Summary: Carmel Drake

Iberia’s Former HQ in Barcelona is Being Converted into Luxury Apartments Costing c. €15,000/m2

4 April 2019 – El Confidencial

The fund Twin Peaks Capital is on a mission to convert Iberia’s former offices in Barcelona into 21 super luxury homes. The prices of the new properties at number 30 Paseo de Gracia are expected to go on the market for between €11,000/m2 and €15,000/m2. The penthouse might even fetch €19,000/m2, breaking all previous records in the Catalan capital and even higher than the most expensive prices in Madrid.

Twin Peaks Capital purchased the neoclassic style building from the former Agrupació Mútua in 2017 for €25 million. The property spans a surface area of almost 4,000 m2 distributed over five storeys, plus an attic, and the future homes will measure between 80 m2 and 270 m2, with first-rate finishes, plus common areas with terraces and a stunning swimming pool on the roof.

The properties will be marketed by BNP Paribas Real Estate and 25% of the development has already been sold, mostly to Catalan buyers and investors. The homes are expected to be ready during the second quarter of 2020.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

E&V: Co-working, e-commerce – New Niches Boom in the Spanish RE Market

2 April 2019 – El Confidencial

The Spanish tertiary sector is consolidating its position as one of the most attractive in the world. Investment rose by more than 10% in 2018 to €12.3 billion, boosted by overseas investors, who accounted for 65% of all operations, according to a report published by Engel & Völkers.

Moreover, this interest is set to maintain its momentum over the coming years. In 2019, logistics is expected to continue its upward trend in light of the unstoppable growth of e-commerce. In the office sector, experts forecast on-going diversification, with demand growing for regular offices on the outskirts of cities, as well as for co-working spaces in the centre of large capitals.

In the alternative asset segment, interest is also expected to continue, especially in nursing homes for the elderly and halls of residence for students. In the retail sector, multi-channel offerings are forecast to grow, with the most important brands concentrating their retail businesses into flagship stores in very central locations. Also, in the retail sector, the move by traditional out-of-town operators, such as Ikea and Media Markt, into downtown locations is expected to become more widespread.

In terms of rental prices for commercial premises, in Madrid, in the most sought-after areas of Salamanca, Chamberí, Sol, Chueca- Justicia and Malasaña, maximum prices amount to €90/m2/month, dropping to €55/m2/month in secondary areas and to €45/m2/month elsewhere.

Meanwhile, in Barcelona, prices are highest on the most sought-after streets, located in Ciutat Vella, Tapinería and Eixample. There, average prices range between €30/m2/month and €40/m2/month.

Original story: El Confidencial (by E.C.)

Translation/Summary: Carmel Drake

El Cabanyal Monopolises Foreign Investors’ Purchases in Valencia

28 March 2019 – Valencia Plaza

According to a report published by the German real estate firm Engel & Völkers, the neighbourhood of El Cabanyal was where the most operations were closed by foreign investors in Valencia last year.

The price per square metre in the neighbourhood soared as a result and now amounts to around €3,000/m2-€3,100/m2. In many cases, the purchased properties have been renovated for rental by tourists, given that the  VUT limitations imposed on other areas of the city do not apply in El Cabanyal.

Original story: Valencia Plaza (by Estefanía Pastor)

Translation/Summary: Carmel Drake

Traffic Restrictions in ‘Madrid Central’ Drive up Parking Space Prices

16 March 2019 – El País

The Town Hall of Madrid, led by Manuela Carmena, introduced new traffic restrictions in the city centre (Madrid Central) in November last year on a provisional basis. As of Saturday 16 March, fines are now being levied on vehicles that enter the area illegally.

Only those vehicles owned by people who own or lease a parking space within the designated area may access the area, regardless of the environmental label assigned to their vehicles, if they are not residents. As such, parking spaces are in demand and so their prices have soared in the last 4 months.

In fact, prices have risen by between 20% and 30% following the imposition of the traffic restrictions. For a parking space that used to cost €20,000, vendors are now asking €25,000, and for a space costing €40,000 previously, vendors are now asking between €45,000 and €48,000, according to Daniel Lucía, founder of the company ParkingYa!, created twenty years ago and which sells more than 250 parking spaces per year.

According to Pisos.com, the average price of a parking space in the Centro district is now €52,100. In the Spanish capital in general, the average price amounts to €21,300. Moreover, even though the prices of parking spaces rose by between 10% and 20% across Spain in 2018, they are still 30% cheaper than in the years before the real estate bubble, when parking spaces in Centro and Salamanca were sold for €90,000 or €100,000.

These assets generated stable returns of 6.2% across Spain in 2018, compared with 5.5% in 2017, according to Idealista. In Madrid, the yield was 3.4%, although that figure varied by district. Location is key, as that typically determines the ease with which a space can be leased. Parking spaces in the city centre are always less profitable (generating less than 4%) than those on the outskirts but they are safer investments as are rarely unoccupied.

Original story: El País (by Sandra López Letón)

Translation/Summary: Carmel Drake

ASG Homes Sets its Sights for Growth on Andalucía

12 March 2019 – ABC Sevilla

ASG Homes, which manages and develops projects for the British fund ActivumSG, owns a stock of land on which it could build 5,000 homes in Spain, making it the seventh or eighth largest property developer in the country by land bank. It largest regional presence is in Andalucía, where it owns land on which to build 1,700 homes, with Sevilla and, specifically, Sevilla Este, accounting for the majority of those plots, where it has capacity for 1,200 homes.

According to the CEO of ASG Homes, Víctor Pérez Arias (pictured above), his firm currently has 600 homes under construction in Sevilla, Estepona and Marbella, whose prices will range between €140,000 and €300,000. Moreover, it is also looking to repeat its activity in Sevilla and so is searching for land to purchase along the coasts of Málaga, Cádiz and Huelva. It is also interested in opening a hotel in Sevilla.

According to Pérez Arias, there is a shortage of buildable land across Spain, which is causing demand to exceed supply, and as such, prices to increase. The delays involved in processing building permits to convert developable land into finalist land is not helping either. In some cases, rather than taking up to 6 months, as permitted by law, those procedures are taking up to 14 or 15 months.

In light of the high level of demand in the rental market, ASG Homes is starting to work on projects in the residential rental market. Besides homes, ASG also promotes shopping centres, student halls, hotels and serviced apartments.

Original story: ABC Sevilla (by María Jesús Pereira)

Translation/Summary: Carmel Drake

Office Space in Barcelona’s 22@ District Will Grow by 335,000 m2 by 2021

11 March 2019 – La Vanguardia

According to a report by the consultancy firm BNP Paribas Real Estate España, the supply of office space in Barcelona’s 22@ district will grow by 335,000 m2 over the next three years, of which 77,800 m2 will be handed over during 2019, compared to 33,200 m2 in 2018.

In light of the scarce supply and high demand in the area, average prices rose by 20% in the second half of 2018 to reach between €1,500/m2 and €1,600/m2 in prime areas.

Rental prices also rose in 2018, by 8%, to reach an average of €16.7/m2/month. They are set to continue to rise this year headed for historical maximums.

Original story: La Vanguardia

Translation/Summary: Carmel Drake

Blackstone May Cease Investing in Spain if the Rental Legislation Changes

27 February 2019 – Idealista

The senior director of Blackstone’s real estate division, James Seppala, has indicated at a meeting that his firm will continue investing in the Spanish real estate sector, but only provided that the regulatory framework for the rental sector remains stable. The declarations come at a time when the Spanish government is negotiating approval, with support from Podemos in extremis, for a royal decree that seeks to modify the Urban Rental Act (LAU) and to limit rental prices.

At a meeting organised by Bloomberg (…), Seppala added that his firm will continue to back the real estate sector, especially in Madrid, Barcelona and their metropolitan areas, which offer returns of between 6% and 7%. He is convinced that there is no risk of prices overheating in those areas (…).

Original story: Idealista

Translation: Carmel Drake

CBRE: 1.9 million m2 of Logistics Space was Leased in 2018

29 January 2019 – Eje Prime

The logistics wave is showing no signs of letting up. Leasing in the sector amounted to 1.97 million m2 last year, a historical record, according to CBRE. The data includes Valencia, Zaragoza, Sevilla, Málaga, the centre of the country and Cataluña.

Meanwhile, investment in the sector amounted to €1.5 billion. The consultancy firm highlighted that the high demand and available supply is causing a boom in projects, above all in central areas of the country.

This mismatch between supply and demand is also driving up prices: prime rents in Madrid and its area of influence rose by 5% to €5.50/m2/month, whilst in Cataluña, they rose by 8%, to €7/m2/month.

Original story: Eje Prime 

Translation: Carmel Drake

Baraka Invests €60M in the Construction of 2 Skyscrapers in Torrevieja

21 January 2019 – Idealista

Trinitario Casanova is on a roll with Baraka. Baraka Properties, the group’s arm specialising property development, has invested €60 million in the construction of two skyscrapers in Torrevieja, which will house more than 130 homes and 250 tourist apartments, according to explanations provided by the company to Idealista News.

The project is going to materialise into two 26-storey towers. Whilst the first will be dedicated to housing in its entirety, the second will be dedicated to hotel use. “Right now, the approval of the project is in the evaluation phase, although our plans are to finalise this first phase during the first quarter of the year”, explain sources at the group, “and once the project has been approved, we will request the licence”.

The land on which the two towers are going to be built is located on Avenida Doctor Gregorio Marañon, on the seafront next to the Doña Sinforosa park. “It is 200 metre from the marina, and all of the homes from the first floor up will have views of the sea. The homes from the fifth floor up will have 360º views”, say sources at Baraka Properties.

According to the company, these will be the first towers in the city, and the tallest to date. The other enclave with towers of this calibre is Benidorm. “The trend for tourists in the area is to look for more unique properties, with higher quality finishes, where they can be offered services like in an American condominium, and this plot fulfils all of those characteristics, both due to its location, and its scale/volume”, they conclude.

In total, 32,000 m2 of space is going to be built in the two towers, and by way of reference, the price per m2 of the penthouse will amount to around €7,000/m2, making it one of the most expensive developments in the area (…).

Original story: Idealista (by Custodio Pareja & P. Martínez-Almeida)

Translation: Carmel Drake