Rental Contracts Will Be Governed by the Urban Rental Act Again From 23 January 2019

22 January 2019 – El Confidencial

Rental contracts that are signed from tomorrow will again have a duration of three years, regardless of whether the landlord is a physical person or a legal entity. Also, landlords may require future tenants to provide more than one month’s deposit, as well as any additional guarantees that they consider appropriate, either in cash or as a bank guarantee.

Royal Decree-Law 21/2018, dated 14 December, governing Urgent Measures in terms of Housing and Rents, published in the BOE on 18 December, has had a very short life, given that it has not been ratified by Congress today, in such a way that all of the rental contracts that are signed from tomorrow onwards will be governed once again by the Urban Rental Act (LAU) approved in 2013. The result of the vote was 103 votes in favour versus 243 votes against, plus one abstention.

In the way, the Government has today suffered its first major defeat in Congress, after the majority of representatives voted no to the law on rental, which was only supported by the PNV and PDeCAT in the end. The decree was completely rejected by Unidos Podemos, which was not happy that the Executive had ignored its main demand to move forward with the budgets: to limit rental prices in those markets with greatest tensions and highest prices. PP, Ciudadanos and ERC joined the Purple Party in their rejection of the decree (…).

All of this means that for practical purposes, the rental market will once again be governed in accordance with the legislation set out in the LAU of 2013, whilst all of those contracts that were signed following the approval of the royal decree in the BOE to date will continue in force in accordance with the provisions thereof.

Three-year contracts and larger deposits

The parties may negotiate freely regarding the duration of contracts, nevertheless, the obligatory extension of those contracts shall be three years. In other words, although a landlord and tenant sign a one-year contract, the tenant will have the right to extend that contract for a total of three years. The tacit extension, in other words, after those three years, and provided the parties are in agreement, shall be one year.

“The landlord can demand whatever deposit he wants for the rental of a home; the decree law limited that figure to two months. In this way, the owners of flats will be able to continue to ask for bank guarantees or bank deposits, as well as a normal deposit”, explained Francisco Javier Fajardo Fernández, Professor of Civil Law at the University of Navarra (…).

Regarding those parties who have signed a rental contract in the last 35 days, he indicates that “it would be normal for citizens to sign rental contracts for a year, but those that have signed contracts in the last 35 days could be subject to a mandatory extension of up to five years. The law would cover them, although it is possible that some landlords will want to modify their contracts to apply the current law (…).

“Contracts signed between 18 December and 22 January shall be subject to a special regime with respect to the contracts signed from tomorrow onwards (…)”, said the Professor from the University of Navarra.

The return of the law from 2013 also means that landlords will be able to recover their property to use it as a permanent home in certain cases after the first year of the contract term (…).

Rental updates

On the other hand, regarding updates to rental prices, another controversial topic, according to the royal decree, if the contract does not explicitly specify that the rent will increase each year, then there shall be no rent increase. By contrast, under the law from 2013, even though the contract does not specify it, rental prices are updated each year in line with CPI – the typical rate used – or the index specified – and, if there is no mention of any index, the consumer guarantee index (IGC), approved by the Disindexation Law of 2015 (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

BNP Paribas Real Estate: 85,500 m2 of Office Space was Leased in Barcelona in Q1 2018

24 May 2018 – Eje Prime

During the first quarter of 2018, 85,500 m2 of office space was leased in Barcelona and its area of influence, which represents 33% more than the quarterly average for the last 10 years (64,445 m2) and 5% more than the quarterly average for the last three years, according to research compiled by BNP Paribas Real Estate.

“The strong performance in terms of demand between January and March 2018 reflects the fact that the occupational market remains dynamic”, states the report.

During the first three months of the year, 84 new contracts were signed in total, below the quarterly average for the number of operations signed in the last three years (93), however, these contracts involved larger surface areas, thanks to expansions and the creation of new companies.

The three largest operations closed during the quarter were located in the decentralised and peripheral areas, specifically in the BCN Fira District multi-functional complex (6,467 m2), El Prat de Llobregat (5,000 m2) and Cornellá (4,863 m2).

The 22@ district retained its appeal, in fact, the fourth most significant operation, the rental of 3,500 m2 by the Town Hall of Barcelona, was signed in that district. In total, 28% of the surface area leased during the first quarter was located in 22@ and the district is expected to attract more demand, as new office spaces come onto the market. The availability rate of the market in Barcelona amounts to 10%.

The average rental price in the Barcelona market also continued its upward trend. Prime rents, which closed 2017 at €23.5/m2/month, had risen to €24/m2/month by March 2018. Behind that behaviour is the shortage of surface area available in the CBD as well as the scarcity of high-quality buildings.

Original story: Eje Prime 

Translation: Carmel Drake

McCann Leaves Edificio Planeta & Leases 3,000m2 in Barcelona’s 22@ District

18 May 2018 – Eje Prime

The office sector has moved into top gear in Cataluña. The publicity giant McCann Erickson has left its headquarters in the Edificio Planeta in Barcelona and moved into a building measuring almost 3,000 m2 in the 22@ district, owned by Laboratorios Kin. Meanwhile, the pharmaceutical company is going to leave that property and move its headquarters to number 201 Avenida Diagonal, with offices spanning 700 m2, according to confirmation from sources close to the operation speaking to Eje Prime.

Laboratorios Kin, owner of the building, ordered the complete renovation of the asset and its change of use, from industrial to offices. Having carried out that process, the owner decided to make the asset profitable, with the arrival of McCann, and also to put the property up for sale, although the asking price is not yet known. According to real estate sources, the advertising agency has been advised by JLL, whilst the sales mandate has been entrusted to Savills Aguirre Newman.

The building is located at number 123 Calle Ciudad de Granada, at the intersection with Calle Tánger. Following a renovation project that has lasted for more than 6 months, the asset has come onto the market with 2,740 m2 of office space spread over four floors measuring 650 m2 each and a loft measuring 140 m2. McCann will pay €16.5/m2/month to occupy the property.

Original story: Eje Prime (by Custodio Pareja & Jabier Izquierdo)

Translation: Carmel Drake

Ribarroja’s Logistics Stock Grows by 13,200m2

16 May 2018 – Eje Prime

The logistics market is continuing to grow in Valencia. The stock in the Ribarroja logistics area has grown with the incorporation of a new platform measuring 13,200 m2 built at risk. The plot where the warehouse is located, which is owned by a family office, has a surface area of 18,400 m2.

TPF Consultora has contributed to the project by performing both the market study and the conceptualisation of the product. It also prepared the marketing material and rental price for the property, according to Valencia News. On the other hand, Aspor signed off the plans and managed the construction work.

The constructed product is a logistics platform divisible into three modules with storage space of approximately 4,200 m2 each, and a ratio of loading docks that has been adapted to logistics use and the manoeuvre yard.

Original story: Eje Prime

Translation: Carmel Drake

Esteve Leases 12,000 m2 Of Office Space In Torre Marina From Iberdrola

6 September 2017 – Expansión

Record-breaking operation in the office market in Barcelona.

The pharmaceutical and chemical group Esteve has reached an agreement with the real estate division of Iberdola to transfer its corporate headquarters to Torre Marina, a property owned by the energy company.

Esteve has leased 12,000 m2 of space (out of a total surface area spanning more than 19,000 m2) spread over 10 of the 13 floors that make up the property. Following the agreement, the building will be renamed Torre Esteve, according to an announcement by Iberdrola.

The change of office will happen in 2018, and will bring together the c. 400 employees and collaborators that the pharmaceutical company currently has spread over several locations in the Catalan city.

In addition to the 12,000 m2 of office space, Torre Marina is home to a retail and services arcade, known as the MarinAtrium, and 1,000 parking spaces.

By volume, this is the largest corporate move in Barcelona in the last 10 years. During the first half of the year, 220 new office rental contracts were signed in the Catalan capital, of which only 11% were operations involving more than 2,000 m2, according to the consultancy firm Cushman & Wakefield. In terms of rents, the average price of office rentals in the prime area of Barcelona amounts to €22.50/m2/month, up by 7% compared to a year ago.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Mercadona Leases New 23,000 m2 Logistics Centre From Prologis

7 June 2017 – Expansión

The supermarket chain Mercadona has just strengthened its logistics network by leasing a new warehouse from Prologis. The warehouse, measuring 23,000 m2, is located in Ribaroja de Túria (Valencia), the town where the supermarket chain already has one of its major logistics centres. The distribution group has occupied the site since the middle of May. Sources at the chain explain that this warehouse will serve to support the major block that it already has in Ribaroja, which has seen its needs increase.

The warehouse is located on one of the two plots of land that Prologis acquired a year ago from the Generalitat Valenciana in the Valencia Logistics Park.

The rental price is estimated to range between €4/m2 and €5/m2. After finalising construction work in April, the logistics group reported that it was going to be the first building that it has inaugurated in Spain since 2009 and that it represented a symbol of the reactivation of its property development activity. Prologis’ plans include beginning construction on a second twin centre on the adjoining plot. The logistics company has invested €13 million in these facilities.

Original story: Expansión (by A.Z., J.B. and A.C.A.)

Translation: Carmel Drake

Price Rises Continue To Rock Spain’s Rental Home Sector

6 June 2017 – El Mundo

The housing market is trembling and not, like in the past, because of the high degree of sale and purchase activity. The residential sector in Spain is facing an unprecedented phenomenon: a boom (not a bubble) in the rental sector. In a short space of time, this residential regime has gone from being almost residual to accounting for more than 20% of the housing market. And that figure is rising. This leap is driving up prices, significantly. Above all in Madrid and Barcelona.

According to the experts, a change in the mentality of young people and employment mobility are the main factors driving this formula for accessing a home. (…).

Not since the 1960s has the percentage of rental properties been so high in Spain, but, despite the increase, the figure is still well below the levels seen in other European countries – which reach 50% in some places – although it is moving closer to the Eurozone average – 30%. (…).

The cornerstone of this growth in rental properties has been the spectacular boom in demand, which has come up against an unprofessionalised sector, with minimal supply owned, primarily, by individuals. The real estate portal Fotocasa now registers more searches for property rentals than it does for property purchases. The result of this imbalance? An earthquake in terms of prices. How long will this earthquake last? Where are its epicentres? What intensity will it reach? What measures should be taken to soften its effects? (…).

The latest evidence of the rental earthquake has come in the form of the Fotocasa’s price statistics for April, which show that the average rent in Spain rose by 10.2% in one year, to €8.04/m2/month. That cost takes the market back to its 2011 levels but it is still well below (-20.7%) the peaks of 2007 (€10.12/m2/month). (…).

“It is a question of supply and demand”, said Economist and Director of the Masters in Real Estate Development and Management Advisory at the Universidad de Barcelona (UB), Gonzalo Bernardos. “Demand is increasing due to the recovery. There are more jobs and, therefore, more families and young people as potential tenants. By contrast, the supply is decreasing (…)”. In his opinion, this situation will change when the banks start lending again en masse to families who earn less than €2,500/month. “From then on, maybe from 2018 onwards, the rental sector will suffer, as demand will transfer to the purchase market”, he said. (…).

Fotocasa has prepared a seismic map of the rental market. It reveals the evolution of rental prices by autonomous region. Prices decreased in YoY terms in Galicia only (in April) (by -0.7%), whilst they rose in all of the other regions, with marked rises in Cataluña (17%), Madrid and the Balearic Islands (12.1% in both). Together with the Canary Islands (11.9%), these regions are undoubtedly the large epicentres of the increase in rental prices.

“The increase in rental prices is happening across the whole country, but the strong average increase is due to Cataluña and Madrid”, said Beatriz Toribio, Head of Research at Fotocasa. “According to our Real Estate Index report for 2016-2017, these two regions account for 43% of the activity relating to demand”, she said.

In absolute terms, the most expensive rental prices are also in Cataluña, where the price per m2 stands at €11.96/month. In other words, a typical apartment measuring 90 m2 costs around €1,075/month. Next in the ranking, and still in the double digits, are Madrid (€11.36/m2/month), País Vasco (€10.59/m2/month) and Baleares (€10.05/m2/month). These values are even higher in the main municipalities.

Barcelona – the great tip of the iceberg

(…). In the city of Barcelona, the average rental price amounts to €15.14/m2/month. That amount is higher than the figures registered in Sant Cugat del Vallés (€13.61/m2/month) and Castelldefels (€13.58/m2/month), the next two most expensive towns for rental properties in Spain. In Madrid and San Sebastian, rental prices stand at €12.81/m2/month and €11.96/m2/month, respectively. (…).

The analyst at Fotocasa thinks that rental prices will regulate themselves over time. “We are still well below the peaks. The market is normalising”, she concludes. Meanwhile, Bernardos predicts that the rate of growth in rental prices will gradually calm down in Barcelona and Madrid. He forecasts price rises of 12%, 9% and 5%-6% over the next three years in the capital and of 8%, 5% and 3%-4% in Barcelona. (…).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

Rentalia: Tourist Rental Homes Break Records Over Easter

19 April 2017 – Expansión

(…). Over the last few days, Spain’s large cities have experienced occupancy rates of 90.5%, i.e. 9.6% percentage points higher than last year, when the occupancy rate reached 80.9%. That is according to a study of prices and occupancy rates conducted by Rentalia (a company that belongs to the Idealista group). Sevilla, San Sebastián and Barcelona were the cities with the highest occupancy rates.

The cities with the highest occupancy rates over the Easter break were: Sevilla, with 98.3% (+14.6 percentage points higher than last year); San Sebastián, 98.1% (+9.1 points); and Barcelona, 96.6% (+13.9 points). Those with the lowest occupancy rates, but still above the national average were: Granada, 94.7% (+1.4 points); Valencia 93.9% (+12.5); Madrid, 92.7% (+1.2); Gijón, 91.5% (+3.8); Córdoba, 91.4% (+27.1); and Málaga 91.4% (-0.5).

“Beyond the large cities, other areas also recorded good occupancy rates”, said Rentalia. 67.5% of tourist homes on the coast were occupied over Easter, which represents an increase of 19.7 percentage points with respect to last year. Homes in rural areas had an average occupancy rate of 68.7%, which is almost identical to the figure recorded in 2016 (68.6%). “Of all the tourist homes in Spain, including homes in all areas, the occupancy rate amounted to 69.1% in 2017, whereas last year, it stood at 58.2%, which means it has grown by 10.9 points”, said the report.

The average price of tourist homes over the Easter break amounted to €30.40 per person per night. The most expensive cities for renting a tourist apartment between 12 and 16 April were: Ibiza, at €65.20 per person per night; Palma at €50.90; and Barcelona, at €42.30.

The best value-for-money destinations over Easter were Gijón at €20.80 per person per night, Alicante (€21.30) and Valencia (€22.80). In other cities, prices ranged between €24 and €40 per person per night: San Sebastián (€40.60); Málaga, €40.50; Sevilla, €39.30; and Granada €36.10, amongst others.

“In terms of the nationality of visitors, it seems that domestic tourists travelled the most during the Easter holidays, above all, given that 89% of reservations were made by domestic tourists and 11% were made by foreigners”, according to the report.

According to Almudena Ucha, Director at Rentalia, “the occupancy rate this year is the best since 2008. The good weather forecasts and the possibility of going to the beach and enjoying the (traditional Easter) processions without rain means that this Easter broke records for holiday rentals”.

Original story: Expansión (by J. M. L.)

Translation: Carmel Drake

Bankinter: House Prices Will Rise By 3%-4% In 2017 & 2018

20 February 2017 – Idealista

The rise in house prices is starting to run out of steam and will become more moderate over the next two years. That is according to forecasts from Bankinter, which explains, in a report about the real estate sector, that the limitation on the upwards potential is the consequence of several factors.

On the one hand, prices are now reaching their pre-crisis levels in many areas, primarily in prime locations and, on the other hand, the financial effort that families are having to make to acquire a home is starting to increase once more.

As a result, the capacity of families to access the residential market will be limited if prices rise at disproportionate rate. In this way, Bankinter estimates that house prices will grow by between 3% and 4% in 2017 and 2018. Moreover, the entity insists that, despite the moderation in price increases, the residential market will continue to rise.

One of the reasons is the shortage of supply, given that the number of finished homes is still at historical lows (40,000 homes were completed in 2016) and the fact that that figure cannot cover the normalised demand of around 200,000 new homes per year. “The combination of the scarcity of supply and the increase in house sales (which exceeded 400,000 operations in 2016) will continue to put upwards pressure on prices”, said the bank, which insists that, in this context, prices will continue to rise.

On the other hand, the report highlights the appeal of large cities, primarily Madrid and Barcelona, which are registering YoY price increases of between 4% and 7% and which have now recorded increases for eight quarters in a row. By contrast, average prices are still adjusting downwards slightly in YoY terms in other cities such as Bilbao and Sevilla.

Another factor that is also affecting prices is the increase in rental prices, which are also being driven upwards by the evolution of leases in the large cities, where, like in the case of the purchase market, there is a shortage of supply and high demand.

Demand for 500,000 homes.

The financial institution predicts that residential demand will continue to rise. “The upwards trend will continue for the next few years. We expect growth of almost 10% in 2017 and for demand to reach 500,000 homes by 2018”, explains the report.

But what is behind this increase? As sources in the sector have been commenting for several months, the drivers of demand are economic growth and the creation of employment, as well as the fact that housing is becoming more attractive as an investment opportunity and that financing conditions are still accessible.

Nevertheless, and this is where the experts are focusing, none of these drivers are reducing the effort that families are having to make to buy a home.

“The effort (that families are having to make) has risen again to 6.6 years of annual household income (compared to 6.2 years at the end of 2014) and there is no scope for improvement in terms of financing conditions. Finally, Sareb’s marketing of discounted homes located in areas characterised by oversupply will continue to limit the increase in average prices”, said Bankinter. (…).

Original story: Idealista

Translation: Carmel Drake

Torre Rioja Builds Large Office In Julián Camarillo Area (Madrid)

7 February 2017 – Cinco Días

Madrid is going to have a new large building in the Julián Camarillo area of the capital, where many cutting edge companies and technology divisions of large businesses are choosing to concentrate their operations. “The neighbourhood is becoming an area similar to the 22@ district in Barcelona, full of innovative companies” said José Miguel Setién, Director of Offices at the consultancy firm JLL. (…).

The new building, on Calle Julián Camarillo (number 31) is being constructed by the property developer Torre Rioja, which is led by the businessman Ángel Soria. The property, which is currently in the initial phases of construction, will have a surface area of 36,000 m2 spread over six open-plan floors, measuring 8,000 m2 each. The property is expected to house around 3,500 employees. (…).

Now that Torre Rioja has started the initial phases of construction, the search has begun to find a company to move into the property. JLL and possibly one other agent have been engaged to this end. (…). The design may be modified slightly to suit the needs of the future tenant. (…). In any case, the property developer expects construction to be completed within two years. Moreover, the building will have a retail area, with more than 1,000 parking spaces, as well as service areas. (…).

The JLL Director believes that this property in the Julián Camarillo area will primarily be of interest to technology, engineering and communications companies, as well as to back office divisions of large companies and banks.

The Julián Camarillo industrial estate was created between the 1950s and the 1970s as a base for industrial companies. (…). But, it has gradually transformed into an area for offices and even homes. Certain divisions of firms such as IBM, Tecnocom, Atos, the German firm ABB, the engineering firm Eptisa and the University Alfonso X el Sabio have their offices there.

In recent months, Torre Rioja been overseeing renovation work at two of its major office buildings in an area adjoining the A-2 motorway. The insurance company Axa will move into a 23,600 m2 property and the bank BNP will move into an adjoining 20,000 m2 building, now owned by the real estate company, which previously housed the R&D division of Telefónica. Meanwhile, the property developer has seen its sales decrease in recent years, from €27.8 million in 2010, compared with €18.7 million in 2014 (the most recent accounts filed in the registry).

The main drawback for the property developer in this operation in attracting a high profile tenant to the area, given that the building is located relatively far away from the city centre and the industrial estate lacks the services on offer in the centre. Nevertheless, tenants pay considerably lower rents here. Whilst along Paseo de la Castellana, rents in the best buildings can be as high as €25/m2/month, they cost less than €10/m2/month on this industrial estate.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake