Tag: rental prices

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

CBRE: Law Firms Conquer the Prime Business Districts of Madrid & Barcelona

5 March 2019 – Expansión

According to a new report from CBRE about work spaces in the legal sector, law firms are, in many ways, the perfect tenants. They seek iconic buildings, lease more space per employee than companies in other sectors and although they drive a hard bargain in terms of price, they are willing to pay a premium for the right property. What’s more, their businesses are stable, they seek long-term contracts and they pay their rent on time.

In this context, there has been a great deal of activity in the segment in recent years. In 2017, records were set in terms of transaction volumes and numbers, with Baker McKenzie and Allen & Overy leading the charge to move offices in Madrid. Last year was quieter, but several international firms leased new space, including Andersen, Latham & Watkins and Pinsent Masons). Moreover, international firms lease twice as much space as their Spanish counterparts, on average, although local firms account for most transactions in Madrid (6 out of every 10).

On average, over the last decade, law firms have leased 11,000 m2 of office space per year on average in Madrid, more than twice as much as in Barcelona (where 4,500 m2 per year is leased, on average), the second most active market.

In the Spanish capital, the neighbourhood of Salamanca is the most sought-after area, accounting for 43% of interest in the market, followed by the Cuatro Torres area, with 17%. In Barcelona, 9 out of 10 operations involve domestic firms and the most sought-after areas are Paseo de Gracia and Avenida Diagonal.

Average rental prices in Madrid have soared by 60% in the last six years from a low of €17/m2/month in 2012 to €27/m2/month last year, with highs of €35/m2/month in the most prime areas. In Barcelona, average prices have risen by 50% since their lows of 2013, with prime rates reaching €24/m2/month in 2018.

Original story: Expansión (by Sergio Saiz)

Translation/Summary: Carmel Drake

La Generalitat Approves a Law that Provides for the Expropriation of Vacant Homes

5 March 2019 – La Vanguardia

The Government of Cataluña has approved a decree law establishing around thirty urgent measures to improve access to housing in the region.

The objective of the law is three-fold: to address the lack of social housing available for rent; to facilitate instruments to combat emergency situations and evictions; and to moderate increases in residential rental prices.

The measures range from fines to the expropriation of homes that have been empty for two years (from large property owners at a reduced price, which is no case may exceed 50% of the market price), to forcing the banks to rehouse in social housing properties any residents that they choose to evict.

Another measure in the pipeline, for introduction later this year, includes a plan to increase the minimum rental term, which currently stands at three years, to increase it to between six and ten years, depending on whether the owner is a private individual or a real estate company. Moreover, efforts are being made to limit rental price increases to CPI.

Original story: La Vanguardia (by Luis B. García)

Summary/Translation: Carmel Drake

The Government’s New Rental Act Limits Annual Price Increases to CPI

1 March 2019 – Eje Prime

On Friday, the Government approved a new Rental Act containing urgent measures for the rental sector, including a limit on annual price rises for new contracts to CPI. However, in the end, no IBI rebate incentive was included to reward landlords for maintaining rental prices below the reference price index.

The measure to limit rental price increases will take effect for new contracts signed from the date that the law enters into force.  Moreover, the law provides for the preparation of a state-managed house price reference index within eight months, which will be updated annually.

In addition, the law extends the period for extending rental contracts to five years, from the current term of three years.

Original story: Eje Prime

Summary/Translation: Carmel Drake

Spain’s Real Estate Sector Condemns the Government’s New Rental Act

1 March 2019 – Ok Diario

The real estate sector has expressed its widespread disapproval of the Royal Decree Law approved by the Government on Friday containing urgent measures for the housing and rental sectors.

Investment funds, real estate experts and rental associations alike have all condemned the new law as discriminatory, restrictive and short-termist.

Claudio Boada, Head Consultant at Blackstone España, said that the new legislation will undoubtedly result in more upwards pressure on prices and a reduction in supply, whilst sources at Fotocasa criticised the lack of tax incentives for landlords who rent their homes at affordable prices.

If this royal decree is ratified, then “rental contracts will have been subject to three different sets of rules in less than three months”, observed Gustavo Rossi from Alquiler Seguro, which is both confusing and unsustainable.

Original story: Ok Diario 

Summary translation by: Carmel Drake

The ‘Mercado de San Miguel’ Goes up for Sale Again for a Record Price: €100M

1 March 2019 – El Confidencial

The Mercado de San Miguel is up for sale again almost two years after being acquired by the joint venture between Redevco and Ares, which paid more than €70 million for the property. After repositioning the asset and increasing the rents, Ares has decided to exit the operation and reap the rewards of its investment (…). Nevertheless, the Dutch manager is not willing to divest its stake in this unique asset.

The expectations of the US fund in terms of the market value of the asset amount to around €100 million, which would represent a gain of 30%. If achieved, that figure would once again shatter all of the records in the real estate market. It is worth noting that the previous sale was the most expensive transaction per square metre ever paid in the Spanish real estate market.

For each one of its 1,200 square metres, the purchasers paid €60,000 (…). If another sale is signed, the records would be smashed again: at more than €80,000/m2.

The sources consulted by this newspaper explain that Ares has decided to divest the asset and that if Redevco wants to continue, then it will have to find another partner or acquire the fund’s stake. There is not going to be an organised sales process, but rather the operation is moving off-market (…).

Revaluation of the asset

As both companies announced in a statement in October last year, the joint venture has improved the yield on the property through their active management and has added value to the asset by attracting new gastronomic offerings, such as Rocambolesc by Jordi Roca, a 3-Michelin star pastry chef; Paella, by Rodrigo de la Calle, another chef with 1 Michelin star (…); Kirei, by Ricardo Sanz (…) and Tacos, Margaritas & Punto, by Roberto Ruiz, chef at Punto MX (…).

Those gastronomic offerings are provided alongside the traditional meat, fish and fruit stands, which offer first-rate products for which the market is so well known (…).

Original story: El Confidencial (by E. Sanz & C. Hernanz)

Translation: Carmel Drake

Témpore Cut its Losses by 46% in 2018

27 February 2019 – Europa Press

Témpore, the rental home Socimi constituted by Sareb to provide an outlet for its residential portfolio, closed 2018 with a net loss of -€384,394. That figure represents a 46% reduction in the losses recorded a year earlier, according to reports from the firm, which is listed on the MAB.

The result also improves on the forecasts set out by the company in its listing prospectus by 13%.

Témpore’s portfolio of 2,249 homes and parking spaces generated revenues from rental income of €7.3 million last year, up by 1.3%, thanks to the renewal of contracts and the consequent increase in rents.

The increase in the firm’s housing stock, through a contribution from Sareb by a non-monetary capital increase, did not have any impact on last year’s accounts because it was not closed until the end of the period.

Nevertheless, it allowed Témpore to close the year with assets worth €339 million, a figure that almost doubles (+93%) the volume in the year of its constitution and, which, according to its data, consolidates the firm’s position as the third largest rental home company in the country.

Higher rents, lower defaults

In operational terms, the Socimi managed to reduce the default rate of its tenants to 4%, compared with 5.5% at the end of 2017.

Moreover, it achieved an average increase in rental prices of 12% for the new contracts it signed and its contract renewals (…).

Original story: Europa Press 

Translation: Carmel Drake

PSOE & Podemos to Save the Rental Reform without Price Limits

27 February 2019 – Cinco Días

Despite the initial disagreements and failures, all indications are that the Government and Podemos are going to end up rescuing the Rental Act. The Executive is expected to present new text to the Council of Ministers on Friday, which will not include limitations on rental prices, but which will reflect significant changes with respect to the text that was toppled a month ago. Those changes include: the compilation of an official price index in large cities; updates to rents subject to CPI; and greater guarantees against evictions, according to reports from El País yesterday.

The draft being finalised by the Executive does not include any measures regarding limits on rental price increases, but it does propose compiling some official price indices to serve as a tool for autonomous regions to establish their own housing policies, since they have the authority in this regard.

Podemos, a key partner to enable the validation of the Act regards this measure as insufficient but sources in the party acknowledge that they would have to concede to save the other improvements proposed by the text and reverse the harmful measures introduced by the PP in 2013. One option being considered is an 80% discount on the IBI charge for those owners who comply with the price index (…).

Another feature of the new text is that the update to rental prices during the term of a contract may only be subject to CPI, something that used to be included in the Urban Rental Act until the PP eliminated it in 2013.

The Act also recovers the increase in the duration of contracts from three to five years, or seven in those cases where the owner is a company, but also adds that all contracts will be valid, regardless of whether they are registered in the Property Registry (…). Another initiative included in the draft text, to provide greater security to tenants, are the notice periods for the non-renewal of contracts, which increase from one to four months in the case of owners and from one to two months for tenants.

The new regulation will also include enhanced guarantees against evictions (…).

Original story: Cinco Días (by E.C.)

Translation: Carmel Drake

Fotocasa: Residential Rental Yields Fell to 5.4% in January

26 January 2019 – El Economista

Residential yields in Spain fell by 7% in January 2019 with respect to the same month a year earlier to reach 5.4%, according to a report from Fotocasa.

The data obtained from the prices of house sales and rentals during the month of January show that acquiring a property to put it up for rent was “a bit more profitable” in 2018 than in 2019, according to Fotocasa.

The Head of Research at the real estate portal, Beatriz Toribio, explained that “this slight decrease in yields stands out because it is the first recorded in the month of January for the last 10 years. It is explained by the lower rate of growth in rental prices that we have seen since the end of 2018%”.

The report shows that Cataluña was the most profitable autonomous region, with a yield of 5.8%, compared to 6.7% in January 2018, which represents a decrease of 13% in that region.

In second place, the Community of Valencia had an average yield of 5.7%, compared with 5.9% in January 2018. Fotocasa highlighted that in just one year, the Community of Valencia went from being the 4th most profitable region to the 2nd.

It was followed by Murcia with a yield of 5.6%, compared to 5.7% a year earlier and Madrid (5.5% compared to 5.9% in 2018) (…).

The autonomous regions with the lowest yields were Galicia and La Rioja, with returns of 4.2% each; Navarra (4.4%) and Castilla y León (4.5%).

On the other hand, the most profitable city in the country was Hospitalet de Llobregat, which took the top position for the ninth year in a row, with a yield of 6.3%, the same percentage it obtained in 2018.

Original story: El Economista 

Translation: Carmel Drake

BNP Paribas: Valencia’s Logistics Stock Set to Rise by 100,000 m2

12 February 2019 – Valencia Plaza

The logistics capacity in the province of Valencia is going to increase by 99,457 m2 this year with the launch of five new platforms located in Riba-roja, Torrent, Paterna and Loriguilla, according to the latest report from BNP Paribas Real Estate.

Moreover, there are locations that will offer the possibility of “turnkey” constructions with a total constructed surface area of more than 200,000 m2.

The purchase price of logistics space has risen to €200/m2-€220/m2 in the most sought-after locations due to the interest in the purchase of land from property developers and investment funds, in an area where available logistics space currently accounts for just 2.8% of the total, and 77% of that surface area is located in Riba-roja.

Due to the lack of availability, maximum rental prices have increased slightly to reach €4.5/m2/month in Riba-roja.

In 2018, demand for logistics space remained high and 24 operations were signed, three more than during the previous year. The most sought-after area was Riba-roja, which accounted for 30% of the space leased.

Nevertheless, last year closed with 127,502 m2 of logistics space leased, a very similar figure to the average for the last four years although somewhat lower than in 2017 (by 30,000 m2).

The fourth quarter of 2018 saw high leasing activity and accounted for 43% of all of the surface area leased during the year.

Original story: Valencia Plaza 

Translation: Carmel Drake