Tag: residential land

The Spanish Real Estate Sector Is Getting Ready For A “Digestion” Of The Investment Made In 2016

12 February 2016 – Expansion

After a record year in asset transactions, the Spanish real estate sector is getting ready for a “digestion” of the investment made in 2016, according to the the forecasts of the consulting company Irea, which considers that, despite the total volume of investments will decrease at around 15% -as it already happened in 2015-, the sector will maintain the pulse thanks to the strong activity in residential land and hotels.

Residential land and hotels shall lead the real estate sector

“It is not that the party is over but that, rather than a race for the massive investment, it will be a year of “digesting what was purchased “explains Irea CEO, Mikel Echavarren to EXPANSION.

Record year

By business segments, Echavarren emphasizes activity in hotels and residential land, which will remain as supports of the sector. The hotel investment volume reached 2,614 million euros in 2015, 142% more than in 2014. “It is not expected to be so high, but it will still be awesome, after consecutive years of tourists entry record, due to the euro devaluation, the instability of North African rivals and the price of oil hitting rock-bottom,” he explains .


Regarding residential land, Echavarren remarks that there are areas in Spain where demand is “undeniable” and prices are even rising. “Investment in construction, finalist and well located land at last has a controllable risk,” he added.

However, all in all, this year Irea foresees a reduction in assests investment (residential property, offices, shopping centers and hotels, among others). In 2015, the total investment volume of assets was 12.848 million euros, representing an increase of a 33%. “This year could be between 8,000 million and 9,000 million euros,” he anticipates. 
As for the sale of debt portfolios, which started strongly in 2013, the number of transactions is expected to be reduced, as well as its volume, following last year’s trend. Thus, if the volume of debt transactions decreased by 36% up to 8.117 million euros in 2015, for next year forecasts are that the figure does not to exceed 6,000 million. 
Echavarren explains that the reason for this reduction is that the assets backing the debt held by banks and SAREB are more fragmented so, to place homogeneous packages, these should be smaller.

Political concern

Regarding the political situation, Echavarren recognizes that some Spanish funds are already more reluctant to invest in some segments, such as city councils of “uncertain political management or high urban risk”. “They are not considering leaving Spain, but certainly being more selective,” he adds. In contrast, international investors are more concerned about the situation of the global economy, but “they are certainly not happy “with the current situation. 
With regard to the involvement of certain political decisions, such as the hotel moratorium, both in investment and real estate, Irea CEO recalls that in Barcelona, hotels prices have increased significantly. “Buying a five star hotel knowing you’re not going to have new competition for several years increases the interest of investors.” He says. 
As for similar measures in Madrid, “it makes no sense” to Echavarren, since the problem in the capital is not the  excess of offer but the demand attraction. “In Madrid we do have cruises coming in by the Manzanares” he jokes.

Original story: Expansion (by Rebeca Arroyo)

Translation: Aura Ree

Pryconsa Buys 14 Plots In Valdebebas For €56.7M

23 December 2015 – El Confidencial

With just one week to go until year end, Madrid has witnessed one of the largest land operations ever seen in the capital. The veteran Madrilenian property developer, Pryconsa, has acquired 14 plots of land from the Valdebebas Compensation Board for €56.7 million, according to a statement by the Board itself. The plots have a buildable surface area of 92,000 m2 and between 900 and 1,000 social housing properties (VPPL) will be constructed there.

Pryconsa has paid approximately €600/m2 for the land, a price that is significantly below the price received by the Compensation Board (€800/m2) for one of the VPPL plots it put up for auction after the summer and which was awarded to the cooperative Esta Gestión 100, which is backed by the architect Enrique Taboada.

“Given that we are selling such a large batch of plots, it is normal to offer the buyer a discount on the price”, says Hernando de Soto, the Director of Business Development at the Valdebebas Compensation Board. “Half of the plots will be transferred in January and the other half will be transferred in a year’s time”. (…).

This operation involves the sale of the final residential land assets owned by the Compensation Board and uses up practically all of the land allocated to social housing in this urban development, since less than 5,000 m2 is left now. Moreover, following this transaction, only one third of the residential land in this area will remain available. The awarded plots are located next to one of the main squares in the new neighbourhood, alongside the planned shopping centre and JOYFE school, which will be built on land that also forms part of the Compensation Board’s assets and where construction is expected to start soon.

The Madrilenian property developer is one of the great survivors of the real estate crisis and is, moreover, one of the most solvent and least indebted companies in the sector. This position has enabled it to take on what is undoubtedly the largest land operation in recent years, using its own funds. (…).

Valdebebas, under the spotlight

Valdebebas is one of the most sought-after urban developments amongst managers, property developers and investment funds. In light of the scarcity of land in popular developments, such as Arroyo del Fresno, Montecarmelo, Sanchinarro and Las Tablas, this new neighbourhood in the North of Madrid, with its sizeable supply of land, has sparked a great deal of interest.

In fact, multiple land transactions have been closed in Valdebebas during the last year. At the beginning of September, for example, Amenabar Promociones Residenciales, another one of the most active players in recent years, submitted the highest bid for four of the residential use plots – private (unsubsidised) housing – in Parque Empresarial del Olivar, which had filed for bankruptcy. The developer acquired the plots of land for €45 million.

Another one of the plots was awarded to Premier España, which also recently acquired a plot for the construction of private (unsubsidised) housing from the Compensation Board. (…).

Valdebebas is an urban area measuring almost 11 million m2, located in the north east of the capital – between La Moraleja, el IFEMA, Sanchinarro and Barajas Terminal 4. (…). Land (covering a surface area of 1 million m2) is going to be developed there for use as offices and hotels, along with 13,500 homes.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

The Major Players In The New RE Sector

11 June 2015 – Expansión

Since Colonial’s exit from the Ibex 35 in March 2008, none of the major players in the Spanish real estate sector have been listed on the stock exchange. However, in parallel to the return of large international investors, some real estate companies are starting to emerge, and are knocking on the door of the selective Madrid index. They are the new giants in a sector, which is gaining strength and becoming fashionable again.

These companies include several newcomers, such as Merlin Properties. The Socimi, which went public on 30 June, has managed to create a portfolio of properties worth €2,322 million and has just purchased Testa, the real estate subsidiary of Sacyr, for almost €1,800 million. The operation will create a group with assets worth €5,500 million and a market capitalisation of €4,000 million. Another example of a new company success is Hispania.

The real estate company, which has a Socimi subsidiary, has a market capitalisation of €1,120 million. After purchasing assets worth €422 million and creating a hotel Socimi with the hotel chain Barceló containing 16 properties, it has launched a takeover bid over another listed company in the sector, Realia.

Lar España and Axiare are the other two large Socimis, with portfolios worth around €500 million each.

Traditional giants

Some of the traditional real estate companies are looking to regain the status they lost when the real estate bubble burst. The survivors include only companies whose main activity is the rental of buildings and not property development. This is the case of Testa (which will soon be integrated into Merlin), Realia, Colonial and Metrovacesa.

In the case of the latter, its main shareholders (Santander, Sabadell, BBVA and Popular) excluded it from the stock exchange in May 2013 in order to clean up the (balance sheet of the) company, which had debt of almost €6,000 million. At the end of 2014, Metrovacesa had reduced its net financial debt to €3,285 million and cut its losses by half.

Realia should undertake a similar exercise when the takeover war between Hispania and Carlos Slim for control over the entity has been resolved. The Mexican businessman is already a shareholder in the real estate company, after he purchased the 24.5% stake that Bankia held and he is also a major shareholder in FCC, which owns another 36.9% stake in Realia. In both purchase proposals, the objective is to get rid of the housing and residential land stock held by Realia to focus on the management of office buildings and shopping centres.

In the case of Colonial, the restructuring is much more on track, after the Villar Mar Group became its major shareholder. The real estate company owns office buildings across Madrid and Barcelona worth more than €1,290 million, and also holds a majority stake in the French real estate company SFL.

Original story: Expansión

Translation: Carmel Drake