Increasingly More Flagship Stores Remain Empty in Madrid & Barcelona

7 January 2020 – Eje Prime

There are an increasing number of large, vacant stores on the high streets of Madrid and Barcelona. Preciados 13, Sol 9, Paseo de Gracia 9, and Paseo de Gracia 77, to name just a few.

After several years of high demand for flagship stores in the two cities, when larger spaces become available, they are now standing empty. Operations have come to a standstill and real estate consultants are forecasting a decrease in rents.

Domestic and international retailers alike, particularly those in the fashion industry, such as Inditex, Mango, H&M and Primark, have taken the high street by storm in recent years, in their efforts to offer consumers a comprehensive experience.

In that context, demand has exceeded supply, and large premises have become the most sought-after. As such, prices have been rising and the family offices, which had traditionally owned the properties in the retail sector, were joined by large funds.

But now, the situation has changed. E-commerce is growing rapidly and most of the major operators have now opened flagship stores. With an excess supply in the market and fewer operators demanding large spaces, prices will have to decrease. Real estate investors are proving to be more flexible than opportunistic funds in terms of agreeing reasonable rental prices. Rental prices have not fallen yet, however, according to several sources, it is only a matter of time.

Meanwhile, a few months ago, H&M sent a letter to several of the owners of the premises it occupies in Spain (e.g. on Portal de l’Àngel in Barcelona and Gran Vía in Madrid) terminating their contracts. According to sources in the sector, “they sent those letters knowing that they would be able to stay in the premises paying half the rent”.

Original story: Eje Prime (Pilar Riaño)

Translation/Summary: Carmel Drake

Rental Prices Rising Throughout Spain

11 December 2019 – Rental prices in Spain’s less well-known provinces, such as Huesca, Ávila, Jaén and Burgos, are now rising at an above-average pace, compared to the rest of the country. Some of the greatest increases are coming in areas that have been known as the ’empty Spain’ and market watchers believe that the increases will continue during 2020.

According to Fotocasa, rents rose in 38 of Spain’s 47 provinces. The most pronounced year-on-year rises were in Santa Cruz de Tenerife (13%), Alicante (11.5%), Seville (11.3%) and Ávila (8.6%).

Original Story: El Boletin – Luis Suárez

Adaptation/Translation: Richard D. K. Turner

GMP Puts Huawei’s Offices in Castellana Norte Up For Sale

28 May 2019 – Eje Prime

The real estate group GMP has put the headquarters of the Chinese company Huawei in Madrid up for sale. The technology giant has occupied the offices, which span 21,000 m2, since Q1 2017. The premises are located in the Castellana Norte Business Park in Las Tablas, close to the headquarters of other groups such as Mediaset and Nokia.

The Castellana Norte Business Park has become one of the most important urban renovations projects in the Spanish capital. It offers office space measuring more than 1 million m2, with capacity for over 200,000 people.

GMP, which is owned by the Montoro family and the Singapore sovereign fund, specialises in the management of offices and retail parks. It owns 18 work centres in Madrid and generated revenues of €106.7 million in 2018, up by 8% YoY.

The office market in the Spanish capital is one of the most attractive for international operators thanks to the combination of low prices (€33/m2/month) and availability (10.5%).

GMP’s decision to sell the property was taken before the US named the Chinese company as a threat to national security and vetoed it from all business with US companies.

Original story: Eje Prime (by Marta Casado Pla & Marc Vidal Ordeig)

Translation/Summary: Carmel Drake

La Generalitat Approves a Law to Limit Rental Prices in Cataluña

21 May 2019 – Eje Prime

The executive led by Quim Torra has approved a royal decree to limit residential rental prices in Cataluña so that they will not exceed 10% of the reference index in neighbourhoods and cities with an “accredited lack of affordable housing”.

That percentage increases to 20% in the case of new or completely refurbished homes for the five years following the building work. Meanwhile, for flats with exceptional views, swimming pools or gardens, the percentage may rise to 25%.

The decree considers areas with a “tense housing market” to be those municipalities where the provision of affordable rental housing is at risk. In particular, it makes reference to towns where rental prices have grown sustainably by more than average and where the increase in the demographic density is not being matched by the growth in the housing stock, amongst other factors.

Original story: Eje Prime

Translation/Summary: Carmel Drake

Málaga Leads the Construction Sector in Andalucía with an Occupancy Rate of 88%

10 May 2019 – Expansión

Málaga is leading the ranking of house sales in Andalucía with 32,438 transactions and a market share of 32%, almost doubling that of its nearest rival, Sevilla (17.4%).

According to the participants of the round table organised by the Association of Property Developers and Construction Companies in Málaga (pictured above), the province is currently the driving force behind the construction sector and is home to some of the highest employment rates in the country (88.5%). That means that the sector now employs 62,700 people of the 70,200 surveyed in the Active Population Survey (EPA) when just five years ago, that figure amounted to just 57%.

In terms of the challenges facing the sector, the most important ones are rising rental prices and the generation of buildable land. In this context, the General Secretary for Housing at the Junta de Andalucía, Alicia Martínez, took advantage of the round table event to announce a new housing plan called ‘Plan Vive Andalucía’, which includes a greater commitment to affordable housing, the reactivation of obsolete urban areas and the promotion of R&D in the sector, amongst other initiatives.

Original story: Expansión (by Juan A. Gómez)

Translation: Carmel Drake

Valencia’s Logistics Market will Incorporate 6+ New Platforms in 2019

14 May 2019 – Valencia Plaza

The logistics real estate sector in Valencia is on a roll. At least that is according to a study conducted by Triangle Real Estate Management, which highlights the plentiful supply in the province, in particular in the Riba-Roja and Cheste areas.

Construction is currently underway on three new logistics platforms, spanning 53,000 m2 in total, in the town of Riba-Roja, which are expected to be completed in Q3 2019. Moreover, work has already been finished this year on three other logistics properties in Paterna, Torrent and Loriguilla, with a combined surface area of 40,000 m2.

In addition, there are eight other projects in the pipeline to build turnkey properties, spanning a total surface area of 261,123 m2, which will be ready 9-12 months after they have been signed.

Stock of properties

On the other hand, the report details that the total stock of properties available for storage in the Valencia area spans a surface area of more than 2.5 million m2, of which 60% is located in the Valencia Logistics Corridor, comprising the municipalities of Riba-Roja, Loriguilla and Cheste. However, most of the available surface areas are “old, small properties”.

Land under development

The Valencian logistics market also has 6 million m2 of land available for development, in other words, land that is buildable and classified as industrial but pending the completion of one or more urban planning procedure. 75% of that land will be developed over the long-term, in other words, in more than 5 years time.

Rental prices

Market prices have risen in recent months due to the shortage of supply. Asking prices in the prime areas along the A-3 (Riba-Roja, Cheste, Loriguilla and Quart de Poblet) amount to €4.5/m2/month, compared with €4.25/m2/month in the area around the Ford Almussafes factory and €3.75/m2/month in secondary areas and places such as Sagunt.

Original story: Valencia Plaza (by Begoña Torres)

Translation/Summary: Carmel Drake

JLL: Prime Retail Rents Grew During Q1 2019

23 April 2019 – Eje Prime

The rental prices of prime premises are growing in Spain. In 2018, the rental prices of retail parks rose by 5.4%, whilst high street rents increased by 5% and shopping centre rents by 2.6%.

According to a study by JLL, the growth in the rents of prime premises in Spain is forecast to be amongst the highest in Europe over the next five years, albeit more moderate than in previous years.

Investment in retail assets amounted to €208 million during Q1 2019, with Corpfin’s acquisition of the retail space in Edificio España (Madrid) accounting for the lion’s share (€160 million). Yields remained stable during the quarter.

Original story: Eje Prime

Translation/Summary: Carmel Drake

Bank of Spain Warns of Mismatch Between Housing Supply and Demand

11 April 2019 – El Confidencial

According to the Bank of Spain, there is a mismatch between the homes that buyers are demanding and those that are available for sale. Indeed, that is one of the main conclusions of the latest report published by the supervisory body entitled the “Recent evolution of the housing market in Spain”.

According to the report, one of the key characteristics of the Spanish property market is its high degree of heterogeneity by region, type of home (new and second-hand) and buyer nationality. “The characteristics of the homes demanded do not necessarily match with the available supply, in certain places, and may differ in terms of size, quality and location”.

In addition, the Bank of Spain warns about the difficulties that young people are facing when it comes to affording a home, as a result of their precarious working conditions. Their situation is further compounded by changes made in recent years regarding tax breaks (the removal of them) for buying a home and the growth of the rental sector.

The Bank’s analysis focuses on Madrid and Barcelona, which are both very close to the peaks of the boom in terms of rental prices. Meanwhile, house prices are currently around their 2006 levels.

Nevertheless, according to the report, it does now seem easier to obtain a mortgage or at least one with more favourable terms for the borrower. Interest rates have decreased and lending periods (mortgage terms) have increased. Approval criteria and general financing conditions have also been relaxed.

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

Translation/Summary: Carmel Drake

Average Rental Prices Rose by 6% in Barcelona in 2018 to €930/Month

19 March 2019 – Eje Prime

The average rental price in Barcelona amounted to €929.57 per month in 2018, up by 6% compared to the previous year, according to data from the Property Developers’ Association of Cataluña. In total, 53,524 rental contracts were signed in the Catalan capital last year.

By district, Sarrià Sant Gervasi recorded the highest average price, of €1,269 per month, ahead of Les Cortes and El Eixample (€1,090 and €1,038 per month, respectively). The lowest prices were recorded in Nou Barris and Horta Guinardó, where average rents amounted to €675 and €764 per month, respectively.

Average rental prices also increased in the other three Catalan capitals in 2018. Girona recorded an average price of €598/month, up by 6.5% YoY; Tarragona of €514/month, up by 7.8% YoY; and Lleida of €432/month, up by 6.2% YoY.

The Catalan municipalities with the highest average rental prices in 2018 were Sant Vicenç de Montalt, Cabrils and Sant Cugat del Vallès, with average prices of €1,251, €1,178 and €1,149 per month, respectively.

In total, 167,458 rental contracts were signed in the autonomous region, up by 7% YoY, and the average rental price amounted to €692/month.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Goldman Puts the ‘Edificio Mediterráneo’ in Valencia Up For Sale

11 March 2019 – Expansión

Goldman Sachs has put the ‘for sale’ sign up over the building that it owns on Avenida Cardenal Benlloch in Valencia, which used to house Bancaja’s calculation centre (Cemeca) and which has subsequently been renamed Edificio Mediterráneo.

Goldman considers that the recovery of the office rental market in Valencia and the increase in rental prices make now a good time to consider offers.

The US bank acquired the property at the end of 2014 from Bankia as part of a package of 38 real estate assets, which it purchased for €335 million.

Edificio Mediterráneo comprises seven storeys and has a surface area of 10,300 m2, with its own parking lot. Its tenants include Indra, Nedgia Cegas and Haya Real Estate.

Original story: Expansión (by A.C.A.)

Translation/Summary: Carmel Drake