Growth of Socimis Expected to Fall by Half in 2020 from High in 2019

2 December 2019 – The director of Business Development at Gesvalt, Luis Martín Guiraldo, believes that approximately 19 new socimis will be created in 2019, up from 15 last year. That figure, however, is expected to fall by half in 2020.

The future of the investment vehicle has become somewhat less certain with the formation of a left-leaning government coalition by the PSOE and Podemos political parties. In his report, Mr Guiraldo notes how concentrated investments by socimis are in Madrid and  Barcelona, with only two listed socimis based in other cities (Valencia and Marbella). Total investments follow a similar pattern, with small groups of foreign investors behind the majority of the firms. Government regulators are now expected to take a closer look at the market, dampening the enthusiasm for the sector.

Original Story: Idealista – Carlos Lospitao

Adaptation/Translation: Richard D. K. Turner

UBS Publishes Report on Cities With Housing Price Imbalances

2 October 2019 – The Swiss investment bank UBS has published its annual report, the UBS Global Real Estate Bubble Index 2019, which analyses residential real estate prices in 24 major cities around the world. The bank stated that half of those cities are either facing the risk of a property bubble or are somewhat to considerably overvalued.  

For the first time, the investment bank added Madrid to its list, stating that, while there seems to be no immediate risk of a speculative bubble, the Spanish capital is suffering from an overvaluation. In 2017, an article in the Economist had already suggested that housing prices in Madrid were about 25% above fair value, and prices have increased steadily since then.

UBS’s index also noted that cities including Munich, Toronto, Hong Kong, Frankfurt, Vancouver, Paris and Amsterdam were at risk of a bubble. Zurich, London, San Francisco, Tokyo and Stockholm are also suffering from significant imbalances. Finally, prices are somewhat overvalued in Madrid, Los Angeles, Sydney, Geneva and New York.

Original Story: El Confidencial – Elena Sanz

Adaptation/Translation: Richard D. K. Turner

Christie & Co – Spanish Hotel Market: Urban Destinations

30 September 2019 – Christie & Co has just published a new report, titled “Spanish Hotel Market: Urban Destinations.” The report analyses 14 Spanish city destinations, including Barcelona, ​​San Sebastián, Palma, Málaga, Cádiz, Madrid, Seville, Bilbao, Valencia, Granada, Córdoba, Santander, Alicante and Santiago de Compostela, which the report’s authors selected according to their volume of demand, supply and profitability of the hotel sector.

The 14 cities had a total of 74.3 million overnight stays last year, 21.9% of the total overnight stays in Spain. The cities also registered a 2.9% growth in demand, even as the total number of overnight stays in Spain remained stable (-0.1%).

According to the report, Barcelona continued to have the highest RevPAR (€98.90), despite a year-on-year fall of 2.6%. San Sebastián (€97.20) and Palma (€84.90) were in second and third place, respectively. On the other hand, Seville, Bilbao and Valencia experienced the greatest growth in RevPAR, with increases of +7.2%, +12.2% and +12.1%, respectively. Madrid, after growth of +14.5% in RevPar in 2017, increased by just 1.6% in 2018, reaching €73.50.

Despite registering declines of -2.9% and -3.0%, Santander and Alicante positioned themselves as the tenth and eleventh city in terms of RevPAR, ahead of Córdoba. That city was able to increase its RevPar by +3.4%, despite a fall in the number of overnight stays of 3.1%. Santiago de Compostela had the lowest RevPAR levels (€37.80) of the fourteen selected cities.

Original Story: Christie & Co press release

Adaptation/Translation: Richard D. K. Turner

 

Investments in the Logistics Real Estate Market Skyrocket

31 July 2019

Total investment in the Spanish logistics market rose above 530 million euros in the first semester of 2019, a more than five-fold increase compared to the investment made in the same quarter of last year, according to Knight Frank ‘s latest report ‘Logistics Snapshot.’

Knight Frank’s logistics chief, Alegandro Vega-Penichet, believes that that the logistics investment market will “once again” exceed the €1-billion mark,  largely because yields in Madrid and Barcelona currently stand at 5%, compared to other markets such as London and Frankfurt, with a return of 4%, or Berlin and Paris, with 4.25%.

Original Story: La Vanguardia

Adaptation/Translation: Richard D. K. Turner

Hotel Sector Sees Continued Strength in Year to June

29 July 2019 – Richard D. K. Turner

According to the Hotel Sector Barometer, Madrid and Barcelona saw RevPAR growth of 15.1% and 12.7%, respectively, in the first half of 2019. The study stems from a partnership between STR, a global benchmarking, analytical and market knowledge provider, and Cushman & Wakefield Spain.Cushman & Wakefield

Continuing a trend that began at the beginning of the year, RevPar in the Canary and Balearic Islands fell by 4% and 3.6%, respectively. Brexit fears and increased competition from countries such as Turkey, Egypt, Tunisia and Israel have weighed on demand.

The average daily rate per occupied room rose by 2.8% in Marbella, 6.5% in Barcelona and by 13.2% in Madrid. Malaga, Seville and Valencia also posted ADR growth above 5%, while the ADR fell by almost 2% in the Balearic and Canary Islands. ADR grew by 5.3% for Spain as a whole.

Original Story: Hosteltur

The Sometimes Overrated Boom of Spain’s Socimis

20 July 2019 – Richard D. K. Turner

BME and JLL recently presented a study of the state of Spain’s 73 socimis. From 2016 to 2018, a total of 54 socimis, 70% of the current total, debuted on the market. Last year, those same socimis paid an average dividend yield of 3.8%. The firms distributed €879 million in dividends in 2018, up from €581 million in 2017, +51.4% year-on-year.

While the total stock market capitalisation of the socimis increased by 19.6% last year, compared to the IBEX 35’s fall of 15%, the Spanish market is still relatively small compared to the rest of Europe.  Only four of the socimis listed on the continuous market. The Spanish market ranks fourth out of eleven, behind the United Kingdom, France and Holland. Moreover, while Spain accounts for 31.5% of the total number of socimis in the EU, their assets represent just 12% (26.740 billion dollars at the end of March). The average socimi in Spain is valued at 371 million dollars; compared to €1.371 billion in the United Kingdom; €1.99 billion in France and a whopping €5.35 billion in the Netherlands.

Foreigners also accounted for the lion’s share of investment in Spanish socimis. According to the study, 75% of the investment in the office sector came from outside of the country, 85% of that in logistics and 80% of the investment in retail.

Original Story: ABC Inmobiliário

Student Residences Leads Market with Yield of 5.5%

9 July 2019 – Richard D. K. Turner

According to a study by Jones Lang Lassalle (JLL) in April, a total of 47 student housing developments were currently underway in Spain. Of those, 7,500 will be ready by next year and another 10,000 by 2022. The estimated total investment is expected to reach €1 billion. However, the market needs another 400,000 beds to catch up with existing demand.

The report also highlighted the sector’s comparatively attractive yields.  Student residences have a yield of about 5% in Madrid and Barcelona and of 5% in smaller cities in the country. That yield equals the yields for logistics assets and geriatric residences. The yield for hotels (4%), retail premises (3.15%), offices (3.50%) and residences (3.50%) all lag behind.

The market for student residences in Spain is currently dominated by Resa and Nexo Residencias. U.S.-based Valeo, Temprano Capital Partners and Syllabus have also began operations in recent months.

Original Story: El Confidencial – Álvaro G. Zarzalejos

Commercial Real Estate Investment Takes Off in 2019

9 July 2019 – Richard D. K. Turner

Commercial real estate investment in the office sector in the first six months of 2019 has already exceeded last year’s total by 13%. Sales totalled €2.595 billion in the first semester, compared to €2.3 billion in all in 2018, according to a study by BNP Paribas. In turn, the sector accounted for 52% of total real estate investment during that same period this year. In particular, sales in the two largest cities in Spain, Madrid and Barcelona, have boosted the market.

Investments in the residential market reached €470 million during the first semester of this year, accounting for 17% of the total. The hotel sector brought in another 12% of investments, while the logistics sector accounted for 18% and the retail sector nearly 14%.

Original Story: Economía Digital

72 Socimis Have Made €50 Billion in Investments Since 2012

5 July 2019 – Richard D. K. Turner

A new study by the Bolsas y Mercados Españoles (BME) and JLL, called ‘Socimis. Stability and investment in the real estate sector. Market Report 2019,’ emphasised the growing importance of socimis in the Spanish economy and capital markets. Socimis have provided an alternate source of financing for the real estate market, coming at an opportune time after the financial crisis at the beginning of this decade.

Since the regulatory framework governing the investment vehicles, similar to REITs in the United States, was established in 2012, investors have created 72 socimis. Those firms have a total current real estate investment volume of 50 billion euros and a capitalization of more than 22.3 billion euros. Those same socimis have generated more than €2.1 billion in rents (+ 25% y-o-y) and net profits of 2.37 billion euros, with a dividend yield of 3.8% last year.

Original Story: Valenciaplaza

 

Logistics Sector Booming in Spain

25 June 2019

The logistics sector in Spain is booming due to the public’s ever-growing use of e-commerce. Investments in the sector reached 2.4 billion euros last year. According to a report by Solvia, the real estate servicer recently acquired by Intrum, the sector grew by 20% between March 2018 and March 2019 as more than 7 million square meters of logistics spaces were taken on. Solvia also warned that supply is beginning to tighten in the larger Spanish cities.

The rental market for logistic assets is still strong as well. Rental income in Madrid and Barcelona is currently close to 5 and 6 euros per square meter, respectively. Profitability also remains high, with average gross return rates at 7.3%.

According to Solvia, Madrid, Barcelona, ​​Zaragoza and Valencia accounted for 50% of the sales of logistics assets in the last twelve months. Just in Madrid, buyers acquired more than one million square meters between March 2018 and March 2019.

Original Story: ABC – Guillermo Giné