The Sun Shines On Spain’s RE Estate Sector Once Again

4 May 2017 – Expansión

The Spanish real estate sector is smiling again. After years of crisis and an on-going cleanup, the main listed companies in the property sector have reported more positive figures: the earnings of these firms tripled in 2016 with respect to the previous year and their operating profit rose by 64%, driven by an increase in the number of sales and an appreciation in asset values.

Two factors are converging to generate the improvement in the real estate sector: an acceleration in the number of sales – both in the residential sector, as well as in the office and retail segments – and an increase in transaction prices and in rental costs. In 2016, 404,421 operations were registered in the housing sector, up by 13.7% compared to the previous year, but nevertheless, just over half as many as in 2007. In the same way, average house prices rose by 11% from the minimums registered in 2014, but they are still 30% cheaper than in the year prior to the burst of the real estate bubble. (…).

The combined profit of all of the companies in the RE sector – Socimis and traditional real estate companies alike – reached €1,395 million last year, compared with €407 million in 2015. In other words, their earnings tripled in just twelve months and came close to the combined profit recorded in 2007 of €1,592 million, albeit generated by very different players.

Only 29.6% (€414 million) of the total amount was generated by traditional property companies, in other words, those that managed to emerge intact from the worst years of the crisis: Colonial, Realia, Inmobiliaria del Sur, Quabit, Renta Corporación, Grupo Urbas and Montebalito. If we take into account Reyal Urbis – which filed for creditor bankruptcy in 2013 – and Neinor Homes, the latest property developer to debut on the stock market, that percentage decreases to 18.98%, in other words, €264.8 million.

Therefore, most of the profits (70.4%) were generated by activity carried out by the Socimis, which multiplied their earnings almost five-fold in one year, from €244.6 million in 2015 to €1,131 million in 2016. (…).

The tax benefits that the Socimis enjoy, their obligation to distribute dividends annually and the attractive returns they generate compared to other investment options, have boosted their number and weight in the market.

In Spain, shares in four Socimis are traded on the main stock market and together they generated a gross operating profit of €388.5 million in 2016, up by 85.4% compared to twelve months earlier (…), with the largest, Merlin, accounting for the lion’s share of that figure (€260 million).

Large family fortunes are increasingly choosing this investment vehicle in recent times. In total, 17 Socimis debuted on the stock market in 2016 and there are currently 32 companies on the Socimi-specific segment of the MAB. (…).

The future strategy for all of these entities involves rotating their non-strategic assets and specialising in non-residential segments, specifically in: offices, retail and logistics. According to a recent report form the real estate management company Laborde Marcet, Spain closed Q1 2017 with investment in non-residential real estate assets amounting to €3,520 million.

The retail sector accounted for 42.5% of that figure and whereby recovered the high profile that it had previously ceded to the office segment; hotels accounted for 22.2% and logistics assets for 10.6%. Given these proportions, the plan that Merlin has just presented (to invest €200 million over five years on the renovation of its office and shopping centre portfolio) makes sense. Hispania is also planning to sell off its offices to concentrate on its hotel business.

Original story: Expansión (by María Hernández and Víctor Martínez)

Translation: Carmel Drake

Segro Expands Its Logistics Park In Martorelles

27 April 2017 – Eje Prime

Segro is fuelling its business in Spain. The British investment fund, which specialises in the real estate-logistics sector, has expanded its logistics park in Martorelles, its first development in Spain, to 54,000 m2, according to a statement published by the company.

Segro’s tenant for the majority of the plant will be Amazon, which will occupy 34,000 m2, according to the group. Segro has announced the acquisition of a plot of three hectares, located in the same industrial area of Can Roca, in Martorelles. The company will allocate that land to the development of another 20,000 m2 for logistics warehouses.

The park is strategically located by the northern entrance to Barcelona, close to the A-7 motorway and just 15km away from the city centre. The project has been designed and constructed as a logistics facility, with loading capacity on both sides, and a high degree of flexibility in terms of its uses.

Since Segro began its activity in Spain in September 2015, it has acquired a logistics park measuring 16,000 m2 in Coslada (Madrid), in March 2016, another space spanning 50,000 m2 in Castellar del Vallès in September last year, and the new plot that it has recently acquired in Martorelles. In total, Segro’s portfolio contains 120,000 m2 of land (…) in Spain.

Original story: Eje Prime

Translation: Carmel Drake

Solvia: 71% Of Spaniards Think Now Is A “Good Time” To Buy A Home

19 April 2017 – El Mundo

71% of Spaniards think that now is a “good time” to buy a home, according to a study conducted by Solvia, a subsidiary of Banco Sabadell, and the research institute Kantar TNS, which have prepared a real estate confidence index to quantify the perception and expectations of Spaniards regarding buying a home.

According to the results of the index, which ranges between values of zero (for the most unfavourable perceptions) to 200 (for the most favourable), the situation in terms of real estate confidence amongst Spaniards is “positive”, since the index value currently stands at 112. The index, which has been prepared on the basis of interviews with 1,000 people, reveals that 71% of those surveyed believe that, in general, now is a “good time” to buy a home. The report’s authors highlight the following main arguments as justification for respondents’ answers: “the decrease in prices that the housing market has seen; the notion that buying is a good investment; and the fact that the market is currently offering some genuine opportunities”.

By contrast, the study adds that the interviewees’ perception changes when they are asked about their personal circumstances. In this sense, 61% of Spaniards consider that from their own individual perspective, now is a “bad time” to buy a home.

In this regard, employment conditions and the limited capacity to save, with the consequent difficulties involved in accessing financing, explain the negative perception held by Spaniards when it comes to acquiring a home now. Nevertheless, the people interviewed hope that, within two years, they will be in a better position financially to buy a home, thanks to improvements in their employment conditions.

In terms of the evolution of house prices over the last year, 35% of Spaniards think that prices have risen, compared with 43% who believe that house prices have remained stable and 22% who consider that they have decreased.

Finally, buying a home is the option that the majority of those interviewed (55% of the total) would recommend to family and friends thinking about their primary residence.

Original story: El Mundo

Translation: Carmel Drake

Laborde Marcet: RE Inv’t Amounted To €3,520M In Q1

19 April 2017 – Eje Prime

The retail and office segments are driving investment in the real estate sector in Spain. Real estate investment amounted to €3,520 million during the first quarter of the year, in terms of non-residential real estate assets, of which more than half were located in Madrid and Barcelona, according to the real estate consultancy firm Laborde Marcet.

By sector, retail accounted for 42.5% of investments, amounting to €1,495 million, whereby recovering the starring role that it had ceded to the office segment in recent months. Offices accounted for 24.7% of total investment (€868 million). Meanwhile, the hotel sector accounted for 22.2% of the market (€783 million) and logistics the remaining 10.6% (€374 million).

“The real estate sector is reaching exorbitant levels in terms of the final prices of operations because there is a clear mismatch between the demand that exists and the available supply” – said Miquel Laborde, Managing Partner at Laborde Marcet -; “cities such as Barcelona and Madrid have very attractive real estate assets for both real estate investment purposes, as well as for commercial objectives, but there are only a handful of assets available for the large number of domestic and overseas investors interested in acquiring them, which means that rental and purchase prices are rising and asset yields are reducing”.

In this sense, domestic investors closed four out of every ten transactions completed during the first three months of the year, which represented an increase in Spain’s weight in the non-residential real estate market with respect to 2016.

By nationality, British, US, French and German investors were the main representatives from overseas, and they were particularly active in large operations in the offices and shopping centre segments.

If investment continues in this vein for the rest of the year, the tertiary real estate sector will register a record real estate investment figure of €14,000 million, which would represent an increase of 21.7% with respect to the data obtained in 2015 and of 25.8% with respect to 2016.

Original story: Eje Prime

Translation: Carmel Drake

Inversis Puts Bancoval’s HQ In Madrid Up For Sale

7 April 2017 – Expansión

Inversis – owned by the Banca March Group – has engaged Deloitte to sell Bancoval’s headquarters – located at number 20 on the Madrilenian street Calle Fernando el Santo – , which runs perpendicular to Paseo de la Castellana, in the heart of the capital’s financial district.

The property has an above ground surface area of almost 2,700 m2 and is seven storeys tall. It also has two underground parking floors covering an additional 700 m2.

The asset is expected to be worth more than €15 million, according to market sources.

The building, constructed in 1967, was renovated in 1998 and received a special mention in the prizes for urban planning, architecture and public works from the Town Hall of Madrid in 1999, in the refurbished building category.

Moreover, the sale and purchase agreement will include a lease contract with Bancoval, which assures the buyer that the tenant will continue to occupy the property.

Investor interest

Inversis, which purchased the Royal Bank of Canada (RBC)’ Spanish subsidiary last year – and subsequently renamed it Bancoval – is taking advantage of the boom in the real estate sector and investor interest in the sector, in general, to generate some cash from the sale of a non-strategic asset. (…).

The building that houses Bancoval’s headquarters is expected to spark interest amongst the Socimis, as well as with family offices, property developers and international investors, given its excellent location (in the Almagro district) in one of the most sought-after areas of Madrid, given the shortage of prime products there.

Moreover, this building could be renovated for office or residential use given that it already has licences for both.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

CBRE: RE Inv’t Amounted To €3,417M In Q1 2017

6 April 2017 – Expansión

Investors’ appetite for real estate assets in Spain is continuing in 2017. After two record-breaking years, the pace has been maintained during the first three months of this year, with real estate purchases amounting to €3,417 million, according to the consultancy firm CBRE.

This figure represents an increase of 50% with respect to the same period last year. “The figure in 2017 reflects the fact that interest in buying in Spain has not slowed down at all and that although 2016 closed with a fast pace, there are still a lot of investors out there and a lot of liquidity in the Spanish real estate market. Moreover, the political and economic uncertainties of 2016 have now disappeared”, explained Mikel Marco-Gardoqui, Head of Investment at CBRE España.

Amongst this buyer furore, international investors are playing a leading role, accounting for 70% of the total volume disbursed during Q1, according to the consultancy firm’s report.

Of those, the most active have been the US funds, such as GreenOak, CBRE Global Investors (which acquired the Barclays offices in Plaza de Colón), Hines (the new owner of Popular’s headquarters in Barcelona) and HIG Capital, in terms of tertiary assets, and Värde (the majority shareholder of the property developers Vía Célere and Aelca) and Blackstone in the case of purchases in the residential sector. “International investors are primarily looking for opportunities in retail (both shopping centres and high street stores) and offices, although increasingly more funds are looking for opportunities in residential land and logistics”, said Marco-Gardoqui.

After the US funds, investors from the United Kingdom have been the most active in 2017, accounting for 29% of the total investment figure. Of those, Intu Properties stands out the most. The British company, which specialises in shopping centres, starred in the largest ever purchase in the Spanish retail market, by paying €530 million for the Madrid Xanadú shopping centre, in Arroyomolinos. “Core and core plus investors account for around 40% of the money invested in Spain, whilst those dedicated to adding value represent another 40%; by contrast, opportunistic funds now account for the remaining 20%.

By type of properties, retail assets (shopping centres and high street stores) have been the star products in the investment market, accounting for purchases amounting to €1,365 million in Q1. The sale and purchase of offices amounted to €646 million, according to CBRE’s figures, whilst investment in hotels stood at €564 million, followed by residential assets (€457 million) and logistics properties (€241 million) – the remaining €124 million corresponds to individual assets. “The figure in the hotel sector is noteworthy, given that during the first three months of 2017, the sector has achieved almost 30% of the record-breaking figure it registered in 2016 (€2,000 million)”, said Lola Martínez, Head of Research at CBRE.

Socimis

The Socimis, the other active profile alongside the foreign funds, spent €643 million buying up assets during the first quarter of 2017. Of that figure, Merlin accounted for almost half (around €300 million), with two significant operations: the purchase of a logistics portfolio from Saba and the acquisition of Torre Agbar, after the project to convert that property into a five-star hotel failed to materialise. “The Socimis continue to be major players in the investor market, and they will continue that role, with their respective specialisation strategies”, predicts the expert from CBRE.

Whilst international funds have starred in operations amounting to more than €100 million, domestic investors (primarily family offices) have become the major competitors against the insurance companies in operations ranging between €30 million and €40 million, accounting for 11% of the total volume, according to Marco-Gardoqui.

After a record investment volume of €14,000 million in 2016, the experts believe that this year, the figure will amount to around €10,000 million, which was the volume achieved at the height of the boom (2007).

Original story: Expansión (Rocío Ruiz)

Translation: Carmel Drake

ST: House Prices Rose By 2.5% In 2016

4 April 2017 – El Mundo

The average price of housing in Spain experienced an average annual increase of 2.5%, to reach €1,469/m2, according to the Real Estate Sector Trend Report from ST Sociedad de Tasación. In the second half of 2016 alone, house prices rose by 1.5%. Despite this YoY increase, the average salary required to acquire a home remained stable at 7.4 years.

According to Juan Fernández-Aceytuno, Director General of the appraisal company, “the positive variation experienced over the last 18 months confirms the recovery that we have been predicting since 2015”. “Nevertheless”, he clarified, “the average behaviour of prices is not the same across every province”.

In this way, by province, Barcelona experienced an annual increase of 5.5%, followed by the Balearic Islands, with an increase of 4.6% and Madrid, 4.4%. By contrast, Teruel with a reduction of -2.1% and Álava with a fall of -1.6% experienced the highest price decreases, followed by Pontevedra (-1.4%), Zamora (-1.3%) and Burgos (-1.1%).

By autonomous region, the price of new and second-hand homes are still decreasing in some areas, led by Asturias with a decrease of -0.5%, followed by La Rioja (-0.4%) and Castilla y León (-0.3%). Meanwhile, Cataluña (4.8%), the Balearic Islands (4.6%), Madrid (4.4%) and Melilla (3.3%) recorded the highest annual increases.

7.4 years of salary to buy a home

ST Sociedad de Tasación’s Real Estate Effort Index, which defines the number of years of full pay that an average citizen needs to buy an average home, did not change, remaining stable at 7.4 years in the first quarter of 2017.

The Balearic Islands continued to be the region where it takes the longest to acquire a home (14.4 years), although that figure has decreased with respect to 2016. By contrast, La Rioja is the region where it is easiest to access housing (4.9 years), followed by Murcia, where it takes 5.1 years of full pay to buy a home.

Meanwhile, the Accessibility Index prepared by ST Sociedad de Tasación reflects a slight improvement at the state level for the third consecutive quarter. Based on a benchmark of 100 points for those cases in which the capacity for indebtedness is sufficient, the average level in Spain in the first quarter of 2017 amounted to 107 points, three points above the level in the previous quarter. The state average remained above the minimum salary level for the acquisition of an average home for the fifth consecutive quarter.

By autonomous region, Madrid, Cataluña and the Balearic Islands continued to register insufficient levels for the acquisition of a home, with Cantabria moving into positive territory.

Confidence increases in the real estate sector

ST Sociedad de Tasación’s Real Estate Confidence Index continued its upward trend during the first quarter of 2017, registering an increase of 0.9 points, to reach 55.4 points, out of a total of 100. The index hit its lowest ever value in December 2012, at 30.6 points.

By autonomous region, La Rioja exceeds sixty points, with 60.2, followed by Madrid (58.4) and the Balearic Islands (57.6), which reported the highest confidence indices. By contrast, Castilla y León (50.7), País Vasco (51) and Murcia (51.2) recorded the lowest levels.

Original story: El Mundo

Translation: Carmel Drake

Knight Frank: UHNWIs Invest In Spanish RE Again

30 March 2017 – El Mundo

The large fortunes are looking towards Spain once more as a destination for their real estate investments. Political stability, rising prices and high returns mean that it is now ranked as the sixth most attractive country for ultra-rich people or UHNWIs (ultra-high-net-worth individuals), in other words, those whose wealth exceeds $30 million (around €27.7 million), excluding their habitual residence.

It is the first time that Spain has reached the ranking’s top ten. The list has been compiled for the last ten years by the real estate consultancy Knight Frank as part of its “Wealth Report 2017”. The United Kingdom, the United States and Germany lead the classification, which is prepared on the basis of a survey of the individuals themselves.

According to the data, real estate investment in Spain amounted to €8,300 million in 2016, of which more than €1,200 million – almost 15% compared to 12% the previous year – came from private investors.

Legal certainty and the stability that economic growth has shown in recent quarters have been decisive in attracting new UHNWIs, according to Carlos Zamora, Director of the company’s Business Space.

The residential sector is still the market of choice, accounting for 36% of all private investment. (…).

The PIRI index

The price of luxury homes rose by 3% in the Spanish capital last year, in other words, by half as much as in Barcelona (where prices increased by 6.6%). An increase in the supply of new luxury properties contained the price rises in Madrid and, by contrast, generated upwards pressure in the Catalan capital.

Both cities form part of the PIRI index, which is presented in the report and which monitors house prices in the 100 largest luxury home markets in the world. Other locations in Spain include Ibiza, Marbella and Mallorca; the indexis led by Shanghai, Beijing and Guangzhou with y.o.y growth rates of more than 26%. Monaco is still the most expensive city per square metre in the world. By way of example, the consultancy firm points out that with $1 million, an investor can buy 17 m2 in Monaco, 20 m2 in Hong Kong, 55 m2 in Paris and 134 m2 in Madrid.

Another trend that has been detected is that investors have become more demanding, which has led to the sophistication of supply: luxury is still luxury, but now that also includes characteristics and services that set them apart from their peers.

Segments

Residential is the segment that sparks the most interest amongst investors, although, in recent years, the tertiary sector has gradually been gaining prominence too, including offices, retail, logistics assets and hotels.

In this context, flagship stores are also in demand, in emerging and established shopping areas alike, with a dual purpose: to be located in areas that facilitate their operation and to reinforce their brand images. The recent opening of the Mango megastore on Calle Serrano in Madrid and the inauguration on Paseo de Gràcia in Barcelona of the largest H&M store in Spain are both examples of this. (…).

Original story: El Mundo (by María Hernánez)

Translation: Carmel Drake

Bantierra Finalises Sale Of RE Assets Worth €320M

27 March 2017 – Cinco Días

Bantierra, comprising the former entities Cajalón and Multicaja, is finalising the sale of a batch of non-strategic real estate assets to the Spanish Association of Rural Savings Banks, in an operation that has an approximate volume of €320 million.

Sources at the credit cooperative, which is headquartered in Aragón, reported on Friday that the aforementioned sale will allow the entity to fully cover the needs resulting from the implementation of the Bank of Spain’s new regulations.

In this way, according to the sources, Bantierra will definitively reduce its exposure to the real estate sector, which has been weighing down heavily in recent years, in order to ensure the firm’s future viability.

Original story: Cinco Días

Translation: Carmel Drake

Bain Capital Sells Bancaja Habitat’s Former HQ

14 March 2017 – Expansión

Activity is continuing in the Valencian real estate market, although this time, the deal is more symbolic than significant. The headquarters of what used to be the largest real estate company and landowner in the Community of Valencia, Bancaja Hábitat, has a new owner. The US investment fund Bain Capital has sold the property located on Paseo de Alameda 7 in Valencia, which had been the operational headquarters of the former real estate subsidiary of the former savings bank.

Bain Capital took control of the commercial property, which has a surface area of 1,870 m2 spread over two floors, as part of a large batch of assets and debt that it acquired from Bankia in 2016. In turn, Altamira Asset Management had been entrusted to manage the property.

According to comments made by the real estate consultancy Inmoking, which participated in the operation as the marketer of the premises, the building has now been purchased by a Valencian investment group, whose identity has not been revealed. The new owner plans to look for a tenant for the premises, which are currently closed.

Catering and gastronomic businesses have proliferated in this area of La Alameda in recent years, which had been dominated by office buildings before the crisis. One example includes the recent opening of a Ginos restaurant by the Vips chain, on the ground floor of the La Pagoda building.

Original story: Expansión

Translation: Carmel Drake