Tag: rental

Colonial Earns 64% Less & Neutralises Effect Of Asentia

30 July 2015 – El Economista

The real estate company Colonial has closed the first half of the year with earnings of €202 million, down by 63.8% with respect to the same period last year, when it recorded earnings of €559 million, due to the deconsolidation of Asentia, its bad bank.

In a statement, Colonial said that its recurring net profit for the first half of the year, i.e. the profit generated by the real estate company’s ordinary activities, amounted to €11 million in H1 2015, an increase of 39.2% compared with the first six months of 2014.

Although Colonial’s accounts for H1 2014 included a positive extraordinary item for Asentia amounting to €704 million, the accounts in H1 2015 also included a €348 million revaluation of the company’s assets. Colonial said that the value of its assets has increased by 21% in twelve months.

Colonial’s business model is simple – essentially, it purchases buildings in prime areas of Barcelona, Madrid and Paris, renovates them for rental and then collects the corresponding rental income. Most of the company’s assets are leased as offices.

In terms of revenues, the real estate company, whose main shareholder is Grupo Villar Mir with its 24% stake, earned €111 million during the first six months of 2015, up by 6%.

So far this year, Colonial has invested €165 million in the acquisition of buildings, including three properties in the centre of Madrid and one in the centre of Paris.

To illustrate the strong performance of the business, Colonial highlights that during the first six months of the year, it has signed rental contracts for space covering 107,692 m2, which is equivalent to the entire surface area that it signed contracts last year as a whole.

Original story: El Economista

Translation: Carmel Drake

Massimo Dutti, H&M & Uniqlo Seek Premises On Passeig De Gracia

22 June 2015 – Expansión

Rental prices are soaring on Barcelona’s Golden Mile / The three fashion chains have been negotiating with the owners of premises on the street for months to open mega-stores.

Barcelona’s Passeig de Gracia is one Spain’s most important retail streets, and store rental prices there have increased significantly in recent years. The luxury boulevard of the Catalan capital was the Spanish street where prices rose the most in 2014 (by 6.4%) to €215/m2/month, according to data from the retail-specialist consulting firm Ascana.

The tourism boom in Barcelona is continuing to drive demand in this street, and it is still one of the areas where international brands “must” have a presence. And the shortage of available stores means that prices are continuing to rise. All of this, despite the fact that the retail surface area on Passeig de Gracia has increased in recent years, since the first floors of many buildings have been incorporated into the stores. “And despite the fact that large premises mean lower average rental prices”, explains Eduardo Rivero, Managing Partner at Ascana.

Negotiations

As a result, rental agreements are taking longer to finalise. That is the case of the three mega-deals that have been under negotiation for months and which have not yet been agreed. The Japanese firm Uniqlo has been trying to lease premises on Passeig de Gracia for several years and has been negotiating with the owners of number 18 for months.

Massimo Dutti’s negotiations to lease the store that Vinçon will vacate, at number 96, have also been going on for months. And the other mega-store, created by sacrificing office space at number 11, is where H&M has been trying to open its flagship store since last year.

The volume of transactions on Passeig de Gracia, both in terms of investment and rental, has slowed down in recent months. According to Rivero, the number of retail property purchases has decreased for two reasons: the fall in profitability for the purchaser and, above all, the shortage of assets for sale. (…). The same is happening in the rental market. (…).

New brands are still arriving on the street, although to a lesser extent than a few years ago. In 2014, a total of 23 transactions were signed and 15 new brands arrived, most of them fashion industry names.

New stores

The upper end of the Paseo de Gracia is the real golden mile of the city. There, twelve deals were closed last year, all of them involving luxury brands such as Dior, Versace, Rabat, Frey Wille, Carmina Shoemaker and Wolford.

The extension of the time to close operations has driven the proliferation of temporary shops, known as pop-up stores, such as those run by Brandy Melville, Levi’s and Twin-Set. According to Ascana, these temporary incursions allow companies to verify the degree of consumer interest in a brand and evaluate the success of any possible permanent facilities. And whilst they all continue to look for space, rental prices continue to rise.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Investors On The Hunt For Prime RE Assets

20 April 2015 – Expansión

Opportunities / The Spanish real estate sector has aroused interest from all types of purchasers, from those that are more opportunistic in nature to those that are seeking lower risk. Offices, shops and shopping centres are the most sought-after assets, but hotels and logistics centres offer the best returns.

The volume of investment has increased from just over €3,000 million to more than €8,500 million in only 12 months. That has been the evolution recorded by the non-residential real estate segment, which reflects the highest level of interest from all kinds of investors in Spain. Thus, the Spanish market has become the second most attractive country for investment in Europe, according to the consultancy CBRE.

But, what are these investors looking for in Spain? Based on the nature of the deals closed last year, offices and commercial assets (both shopping centres and high street stores) are the most sought after. “The transactions that spark the most interest have a value of between €40 million and €50 million, rely on financing for 50-60% (of the price) and generate an initial return of between 5% and 7%. Investors are looking for buildings with: occupancy rates of more than 70%; solvent tenants; and (lease) contracts lasting for around 6 years”, explain sources at JLL, based on data collected in a survey prepared together with the Iese Business School from more than 100 investors.

Excess demand for buildings, and for offices and shopping centres in particular, has led to “very competitive processes for star assets, i.e. those that are best placed in terms of location or that have high rentals, as well as good buildings that require management to improve their profitability”, explain sources at Catella. “Socimis and US funds are very active, along with institutional funds. All of them are creating strong investor pressure”, they add.

The fierce competition has meant that offices and commercial assets no longer offer such high returns, and so many investors have started to invest in other kinds of assets, such as logistics and industrial centres and hotels. Thus, whilst deals involving offices in prime locations offer a return of 5.5%, well-located industrial assets generate a return of 8.25% and logistics centres in secondary areas produce returns of up to 9.5%, explain sources at Deloitte Real Estate.

In the hotel segment, the experts predict that the volume of investment in 2015 will exceed that recorded last year (€1,081 million) thanks to deals involving distressed assets and the activity of debt portfolios, given the shortage of attractive assets.

Renovation

Another possibility being considered by investors looking to enter the Spanish market and make a good return is the recovery of out-of-date properties or those without good lease contracts, through their renovation. “On the one hand, Socimis are looking to purchase offices, logistics assets and shopping centres that guarantee a return of between 6% and 7.5%. On the other hand, we have the real estate funds owned by private equity firms, which are looking for riskers assets that offer higher returns, such as properties that require renovation or land that needs developing. The expected returns in those cases can exceed 15%”, explain sources at Deloitte RE.

“Investors are becoming increasingly sophisticated and demanding. As has happened in other European countries, the most efficient buildings are going to be the key and, in the case of the financial district in Madrid, they have the lowest availability rates in Europe for that type of asset, which opens an important niche, both for investment as well as for the renovation of existing properties”, say source at Knight Frank.

Original story: Expansión (by R. Ruiz and Y. Blanco)

Translation: Carmel Drake

Office Rents In Barcelona To Grow By 30% In Three Years

18 February 2015 – Misoficinas.es

Barcelona is one of the cities with the greatest potential for real estate growth in Europe. At least, it is according to the 2015 Trend report, prepared by CBRE.

The international consultancy firm’s 2015 Trend Report says that the office segment is the main driver of Barcelona’s (real estate) market, and it estimates that rents will grow by between 25% and 30% between now and 2018.

Significant investment was made in offices in Barcelona in 2014, amounting to €844 million in total, i.e. 139% more than in 2013. In total, 19 transactions were closed (an increase of 31%) and more than 340,000 m2 of properties changed hands (112% more than in the previous year). This data clearly shows that investors’ appetite for this type of asset has returned to its pre-crisis levels.

In terms of occupancy rates, tenants leased 258,000 m2 of office space in 2014, the highest figure since the start of the crisis, and very close to the annual average for the past 10 years, with new business areas (Plaza Europa, 22@) accounting for 45% of the total, recovering their domination over the city centre.

An important factor to take into account is the progressive decrease in stock in the city centre, which resulted in 90,000 m2 less (available) office space in 2014. The main reason for this change was the conversion of offices into hotels, such as in the cases of Torre Agbar and the former headquarters of Cuatrecasas, as well as demand by tenants for higher quality, efficient spaces.

The report includes a Real Estate Barometer, which has been calculated for more than 10 years, based on a survey conducted with almost 200 industry executives. According to the majority of these executives, the most interesting development is that the role of vulture funds in Spain will decrease in 2015 with respect to last year. In fact, 64% confirm that this year will be dominated by ‘core’ funds and investors, i.e. those that invest on a long-term basis and are looking for greater security.

In terms of investment, the main players in the sector consider that the office and retail outlet segments will account for the majority of investment in Spain, whereby continuing the trend observed in previous years.

Original story: Misoficina.es

Translation: Carmel Drake

Housing: Rental Prices Increase By 2.6% In 2014

21 January 2015 – El País

Barcelona is the most expensive regional capital in Spain and Lugo is the most economical.

House rental prices in Spain closed the year (2014) with a slight increase of 2.6%, to reach €7 per square metre per month. During the last quarter of the year, prices continued to rise, up by 0.2%.

“The data shows a stable outlook for the rental market, which although is now recovering, is not showing any signs of a sudden increase in prices. In any case, as with the market for house sales, we have to recognise that the rental market has two speeds. Thus, the increases recorded in markets such as Madrid, Barcelona, tourist areas and specific areas of the País Vasco have sparked interest from investors towards these regions, however this has been at the detriment of other less profitable areas”, says Fernando Encinar of idealista.com.

By autonomous region, the greatest increase was recorded in Cataluña, where landlords are now charging 9.8% more to let their properties than a year ago. It is followed by the regions of Extremadura (3.9%) and the Balearic Islands (2.4%).

By contrast, Murcia and Galicia have experienced price reductions of around 4% and 3%, respectively.

Madrid continues to be the most expensive autonomous region, at €10.20 per square metre. It is followed closely by the País Vasco (€10.00/m2) and Cataluña (€9.20/m2).

Barcelona consolidated its position as the most expensive regional capital in Spain, with an average price increase of 11% to take it to €12.50 per square metre; it is followed by San Sebastián (€11.80/m2) and Madrid (€11.40/m2). At the opposite end of the table, we find Ourense and Lugo, as the cheapest regional capitals, with an average price of around €4.10/m2 in both cities.

Notably, Jaén was the regional capital that saw the highest increase in rental prices in 2014, which grew by 10.4%.

Original story: El País (by Paula Cossío)

Translation: Carmel Drake

ST: Housing Becomes Investor Safe Haven Once More…

20 January 2015 – Cinco Días

…in the face of stock exchange volatility.

Experts forecast more sales in the future but do not expect significant price rises.

Refurbishments, rental and tourism are the three key niche areas for housing.

The housing market is preparing to emerge completely renewed from its worst crisis in recent history. Or at least that is the view of the latest study conducted by one of the main real estate valuation companies, Sociedad de Tasación. All of the parameters that drive the market are in better shape today than they were a year ago and that, coupled with the challenges facing this activity, means that forecasts are much more optimistic.

The CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, said today that property prices are showing a clear trend towards “stabilisation”. Particularly, in used homes, where the growth in demand has caused smaller price decreases and even the first annual price increases. “In resale homes, we are seeing very clearly that prices have bottomed out, whereas for new homes, if all of the other variables fall in line with our expectations, then prices should reach their minimum levels at some point this year”, said the CEO of the real estate valuation company.

Refurbishment and rental

Speaking of variables, Fernández-Aceytuno, cited three key parameters: employment, purchasing power and finance. Continued improvement in the labour market will be crucial for ensuring that demand for housing continues to increase, now that the banks deem determined to re-establish the flow of credit. “In fact, all indicators show that, as at the end of previous crises, demand is building, as potential buyers wait for prices to come down to the desired level or to the level that they consider they can afford. As soon as that happens, sales will increase” said the CEO of Sociedad de Tasación.

This indicates that over the short to medium term, the market will see more sales without necessarily having to raise prices. And this does not even take account of the fact that some of the circumstances that occurred in the early 2000s, when the last boom in property prices began, are now repeating themselves.

And it is now, like then, that experts believe that housing is regaining its traditional appeal as a safe haven in the face of low returns on deposits and the high volatility of the stock market. With the euro, oil and other commodity prices all in decline, it is inevitable that investments in property and gold, amongst others, become more attractive, explain analysts. In addition, uncertainty exists overseas.

“We see more clouds on the horizon outside of Spain that within it. We are concerned by the situations in Russia and Greece, by terrorism, by how the deflationary situation in Europe will develop in the face of economic and price growth in the US. In Spain, the evolution of the economic situation is critical”, noted Fernández-Aceytuno.

Asked whether international investors seem concerned about the rise in political groups such as Podemos, the CEO of Sociedad de Tasación was keen to minimise the effect that such factors have on the decision-making of companies investing in Spain. “As you would expect, they ask about Podemos, Cataluña and corruption, but we are not aware of any project that has been halted for any of those reasons”, he said.

In terms of future challenges, refurbishment, rental and tourism are the three areas in which experts at the real estate valuation company expect to see the highest growth. In refurbishment, because 90% of existing homes do not meet the requirements of the 2006 technical code. In rental, because buy-to-let is one of the fastest growing trends in the market given its high yields (depending on the area, yields can exceed 6%). And finally, tourism because statistics show that up to 12 million travellers will stay in houses instead of hotels every year, “tourism represents a huge niche in which hotels can compete by buying homes, refurbishing them and offering them up for rent”.

Original story: Cinco Días (by Raquel Díaz Guijarro)

 Translation: Carmel Drake

Klépierre Earns 18% Less In Spain On The Renting Of Its Shopping Centres In The First Half

08/08/2014 – Europa Press

The group as a whole earns €702 million in the first six months, 18 times more than in the prior period.

Klépierre, a Company dedicated to shopping centres, retail and offices, has earned 24.2 million euros in the first half of 2014 from the rental income of its shopping centres in Spain, 18% less than the 29.5 million euros in the same period in 2013.

According to a company statement, this decrease is a consequence of the sale of a portfolio of 63 shopping centres in Spain to Carrefour, a transaction which was completed last April.

Nevertheless, the company points out that in Spain, the net income per lease increased 3,5% in like for like terms, boosted by the trends in Madrid’s La Gavia shopping centre and the Meridiano centre in Tenerife, which benefitted from the opening of a Primark store in February.

Furthermore, the Company underlines that the economic outlook has become positive in all the countries in which it operates, including Spain and Italy, which are emerging from their respective recessions.

In Spain, it highlights that sales in shopping centres have shown a “consistent” improvement since the beginning of the year, which led to an increase in sales of 3% in the first five months of the year, thanks to the boost of the shopping centres of La Gavia(+4.9%) and Meridiano (+10.3%).

Meanwhile, the total revenue of the group in Spain in the first six months of the year was 28,4 million euros, which represents a decrease of 20,4% compared with the 35,7 million euros of a year ago.

The group earns 18 times more.

As for the group as a whole, it had a net profit of 702,8 million euros in the first six months of the year, which represents 18 times more than the 39 million euros which it earned in the same period of the prior year.

The net income from the group’s leases reached 398,7 million euros, a decrease of 4,8% compared with the 418,7 million euros a year ago.

The president of Klépierre, Laurent Morel, stressed that the company has recorded “solid” results in the first half, thanks to its strong leasing activity and the operating efficiencies in all of its regions. “Klépierre has clearly emerged much stronger from the recent thorough restructuring of its portfolio”, he added.

Original article: Europa Press
Translation: Aura REE

The profit of rentals in Spain reaches 4,6% during the second quarter.

The acquisition of a property in Spain with the intention of renting it offered a gross profit of 4,6% during the second quarter of 2013, as informed by the website idealista.com.

According to the figures provided by the real estate website, the gross profit of a rented property in Madrid reached 4,2%, while this was of 4,1% in Barcelona.

Among the biggest cities in Spain, Seville is the one offering the best profit, with 4,4%, followed by Saragossa, with 4,3% and Valencia, with 4,2%. Bilbao and Valladolid are the least profitable big cities, with 3,9% and 4%, respectively.

From the rest of Spanish capitals, Lleida is the most profitable, with 6,2%. Las Palmas de Gran Canaria, Huesca, Alicante (4,7%, in all three cases) and Córdoba with 4,6%, follow. Cuenca, Badajoz and Huelva, with 4,5%, are behind.

The lowest profits can be found in A Coruña (3,1%), Ourense and San Sebastian (3,2%), followed by Lugo (3,3%) and Santander (3,4%).

“The prices of properties on sale and to rent are falling at different paces, while the selling price falls at a constant pace and everyone thinks it will continue falling, rentals are much more stable”, the chief of studies of idealista.com, Fernando Encinar, declares.

“It is true that the difficult access to credit is forcing many people to rent instead of buying, which is making the “buy for rent” more and more interesting, to negotiate the buying price of a property well in order to place it in the rental market”, Encinar concluded.

 

Source: Idealista