JLL: Foreign Investment in Catalan Real Estate Rose by 137% in 2018

15 June 2019 – La Vanguardia

According to data published by the real estate consultancy JLL, overseas investment in the Catalan real estate sector rose by 137% during 2018, despite the fact that total investment fell from €1.13 billion in 2017 to €995 million in 2018.

In fact, domestic investment plummeted by 85% to €363 million from €859 million, but almost all of that decrease was offset by the arrival of funds from overseas. Of those, investment funds deposited 57% YoY more in 2018 (€574 million) and Socimis invested 47% YoY more (€326 million).

Having overcome the political uncertainty seen in 2017, international investors showed their commitment to Cataluña in general and Barcelona in particular, not least because the city has been declared as one of the world’s influencer cities by JLL.

In the business context, the city is particularly attractive for investment in the office, logistics and commercial sectors, ranking in first place in all 3 markets when compared with its European counterparts.

Specifically, the Catalan capital’s offices generate yields of 3.75%, whereby outperforming Milan (3.6%), London, Madrid and Stockholm (all 3.5%). Its logistics assets generate returns of 5.10%, compared with 5% in Madrid, and its shops in central locations generated yields of 3.25% in Q1 2019, compared with Madrid (3.15%) and Paris (2.75%).

All of this is welcome news for the region that has been hit hard by the political uncertainty of recent years.

Original story: La Vanguardia (by Pilar Blázquez)

Translation/Summary: Carmel Drake

C&W: Investors Spent €300M on Student Halls in Spain in 2018

25 March 2019 – Eje Prime

Investors galore have set their sights on the market for student halls in Spain. Three major institutional investors, Axa, Invesco and Nuveen, have launched themselves into the construction and management of these types of properties, which they consider are reliable bets that generate high returns.

According to Cushman & Wakefield, investment in student halls in Spain amounted to almost €300 million in 2018. And the consultancy firm expects that figure to be exceeded in 2019.

Spain currently has 1.6 million students, of whom around 15% are potential users of student halls. Nevertheless, the accommodation stock comprises just 95,000 beds, which represents 6% of all matriculated students. As such, there is a lot of potential in the market.

In summary, demand is growing, supply is limited and returns are high, currently averaging 5.25% in Spain. As such, the market has captured the attention of global investors.

Indeed, investors in Spain generally fall into one of two categories: institutional investors with an international profile, such as the three players mentioned above; and European investors specialising in student halls, particularly those from the North of Europe, such as the British firms GSA and Collegiate, the Dutch firm The Student Hotel and the German company Corestate.

Meanwhile, the consultancy firm Savills Aguirre Newman calculates that around twenty major operations could be closed in this segment in 2019, which could result in investment of more than €2 billion over the next few years.

Original story: Eje Prime (by Roger Arnau)

Translation/Summary: Carmel Drake

Mapfre to Invest in Property due to Low Interest Rates

7 March 2019 – Expansión

Mapfre has announced its intention to invest in more real estate in light of the low interest rates in the global markets. The insurance group ended 2018 with real estate investments worth €2.9 billion, accounting for 4.3% of its total investments, having invested heavily in the renovation of its asset portfolio during the year.

Given the scarce supply and illiquidity of the real estate markets in Madrid and Barcelona, the firm has already created two companies headquartered in Luxembourg to invest in properties in Paris and Germany. It also plans to acquire real estate in Amsterdam, Brussels, Milan and Luxembourg.

Moreover, it has teamed up with the German real estate fund manager GLL, with whom it aims to invest up to €300 million in properties in some of the main European cities.

The objective of the insurance company is to generate returns of between 4% and 6% p.a. on a recurring basis and to diversify its portfolio.

The firm did also divest some properties last year, in Portugal, Chile and Palma de Mallorca, which together with the appreciation of other assets, resulted in net gains for the group of €47 million.

Most of Mapfre’s investment portfolio comprises public and corporate fixed income securities, which had balances of €49.3 billion and €8.9 billion, equivalent to 56% and 18% of its total portfolio, respectively, at year end 2018. Equities accounted for €2.4 billion (4.9%) and investment funds €1.3 billion (2.7%).

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

INE: One Third of House Purchases in León in 2018 were Financed by Cash

2 March 2019 – Diario de León 

According to Spain’s National Institute of Statistics (INE), 3,128 homes were sold in the province of León in 2018, of which one in three were paid for in cash. This is a growing trend in the real estate market, as savers look for investment alternatives in the face of instability in the financial markets and the high returns being offered by property, due to house price rises and rental price increases.

In the province of León, 2,024 mortgages were signed in 2018, up by 4% YoY, whereas 11% more house sales were recorded compared to 2017.

Original story: Diario de León (by María J. Muñiz)

Translation: Carmel Drake

Fotocasa: Second-Hand House Prices Record Their Highest Increase Since 2006

24 January 2019 – Expansión

Second-hand housing is continuing to spearhead growth in the residential market. Not only because it accounts for more than 80% of all house sale operations, but also because it is the segment where prices are increasing by the most.

The price of second-hand homes rose by 7.8% at the end of 2018, recording the highest increase in 13 years, since 2006, before the crisis, according to data published yesterday by Fotocasa. Taking into account the fact that the online portfolio started monitoring house prices in 2006, it is the largest annual increase in the historical series. Although the prices of second-hand homes have not stopped growing in month-on-month terms for 27 months – more than two years – in 2018, they rose at a rate never before seen.

The awakening of latent demand, investor appetite and the profitability of rental properties in the context of low interest rates explain why interest has returned to property purchases, with the consequent impact on prices”, explained Beatriz Toribio, Head of Research at Fotocasa.

Despite the increases, the average house price stands at €1,869/m2, the level last seen in 2013, when the residential sector had not yet started to recover. House prices peaked in April 2007, when the price per square metre reached €2,952/m2, 36.7% higher than it is now (…).

Even though prices are still well below their historic maximums, the evolution of the market varies by area. Although the increases were widespread across almost the whole country in 2018, Toribio explains that “the intensity of the increases is very different, and there are even areas where slight decreases were registered”. Madrid is the province where prices increased by the most, specifically, by 19.5%, followed by Las Palmas (13.8%), Santa Cruz de Tenerife (12%), Alicante (11.3%), Barcelona (10.5%) and the Balearic Islands (10.4%).

The Spanish market continues to grow at various speeds, with large cities driving prices and sales. Guipúzcoa, Barcelona and Madrid are the most expensive provinces in Spain, with prices per square metre of more than €2,880/m2.

By contrast, the provinces that are suffering from depopulation and ageing demographics are recording significant price decreases (…). Toledo is not only the province that has recorded the largest decrease in prices since the peak (-55%), it is also the cheapest, with prices of €948/m2. It is followed by Ciudad Real, where second-hand homes are going for €990/m2.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Habitat Completes the Purchase of 4 Plots of Land for €14M

21 December 2018 – Eje Prime

Habitat is also going Christmas shopping. The property developer, in which Bain Capital holds a stake, is going to complete the acquisition of four plots of land next week, with a combined investment of €14 million, according to a statement from José Carlos Saz (pictured below), the CEO of the company, speaking to Eje Prime.

With these transactions, the company is planning to end the year with €127 million of investment in the acquisition of buildable land for the construction of 2,800 homes. “We have exceeded the forecasts that we announced in October”, said the Executive, who also added that the company has focused its efforts beyond “the areas where everyone else is building, such as the Costa del Sol, Madrid and Levante”, especially during the final stage of the year.

Proof of that includes two of its latest land purchases: one in Sevilla, announced yesterday and involving the acquisition of two plots, and the other in Oviedo, which has resulted in the company’s debut in Asturias. “We have no predilection for any city or region in particular, rather we expand to wherever there is demand and we can generate returns on our investment”, said the director.

Rigour and realism are the two factors that are governing this new phase for the property developer, which starred in Spain’s second largest bankruptcy proceeding in 2008. “The arrival of Bain Capital has represented a critical boost for the re-launch of the company”, confessed Saz. In fact, the company aims to invest €500 million in the purchase of land across the country between now and 2021.

Despite the property developer’s ambitious plans, its CEO clarified that its objectives do not include “becoming one of the largest firms” or being the company that sells the most homes. In this sense, the executive confirmed that “under no circumstances”, does his firm want to return to having a workforce of 900 workers, like it did with the first Habitat. For Saz, the ideal team would comprise around 130 people, 77 of which have already been recruited during 2018.

Similarly, expansion into Portugal does not form one of the company’s objectives either. In fact, Habitat has opted for a policy of divesting the assets located overseas that it inherited from its first phase.

Challenges (…)

For  José Carlos Saz, the major challenges facing the property developer sector at the moment are the lack of buildable land, the increase in construction costs and the need to finish professionalising and standardising the industry (…).

By the end of 2018, Habitat’s land portfolio will comprise a surface area of 1.1 million m2, with capacity for the construction of 10,000 homes. Currently, the company has 33 developments under construction, corresponding to 3,000 homes in total. Of those, 800 units are in the construction phase and the rest are in the planning phase. This year, the company has started to market 1,700 homes and has handed over 270 residential assets distributed across three developments.

Original story: Eje Prime (by Berta Seijo)

Translation: Carmel Drake

Corestate Teams up with Medici Living to Invest €200M in Co-Living Homes

17 December 2018 – Eje Prime

Corestate Capital is launching itself in the residential co-living market in conjunction with Medici Living. The Luxembourg-based fund manager has joined forces with the German provider of spaces to invest €200 million in the development of shared residences across Spain, according to explanations provided by sources close to the operation speaking to Eje Prime.

The plans of the two groups in Spain form part of an expansion target at the European level. In fact, over the next three to five years, Corestate and Medici Living are planning to invest €1 billion in the development and purchase of around thirty co-living properties, containing 6,000 rooms in total, located in Austria, Poland, Switzerland and Spain.

Barcelona, Madrid and Sevilla are the cities that the joint venture has chosen for its debut in the Spanish market. In those regions, they forecast investment of between €20 million and €60 million. For the time being, the intention of the companies involves acquiring seven buildings in Spain, with 1,190 rooms in total.

Corestate is responsible for the investment, project development, financing and management of its assets. Meanwhile, Medici Living takes care of the design and operation of the properties, according to reports by the company, which already has a portfolio of 1,800 rooms and a presence in Germany, the United Kingdom and the Netherlands.

It is the largest operation undertaken to date in the European co-living market. In fact, it is a sector with a great deal of potential on the Old Continent, aimed at people looking for professional environments and collaborative lives, where they can share ideas and experiences. Currently, most of these assets are located in Anglo-Saxon countries and they are expected to become one of the alternatives for affordable living in large cities.

“The arrival of investment to the shared accommodation sector represents a great step forward for the European residential market”, said Gunther Schmidt, CEO at Medici Living, who stresses in a statement that, as a company, they have set themselves the objective of becoming the WeWork of co-living.

Meanwhile, the CEO of Corestate Capital, Michael Bütter, confirmed that “demand for shared residential spaces is increasingly motivated by the desire of young people to work and live in different cities and to do so in a community”. Moreover, according to the executive, “they are low-risk operations that generate great returns”.

In addition, with this agreement, the Luxembourg fund manager is diversifying its commitment in Spain after announcing its investment plan for student halls of residence next year. Corestate is planning to allocate €100 million to the construction of those types of assets and is currently searching for land in Valencia, Sevilla and Bilbao, as revealed by Christopher Hütwohl, the head of the company in the country, speaking to Eje Prime.

Original story: Eje Prime (by Berta Seijo)

Translation: Carmel Drake

Aena Mobilises Mega-Investments in Barajas & El Prat Amounting to €4.2bn

29 November 2018 – El Confidencial

The largest property developer in Spain is not a real estate company, it is AENA, a company that does not depend on the real estate sector for its business, on the contrary. It has started a race, together with external partners, to mobilise investments worth more than €4.2 billion focused on two projects: the urban development of Barajas and El Prat, annexes of the airports in Madrid and Barcelona. Together they represent the largest real estate project in Spain, and they are very focused on logistics due to the proximity to both airport centres, but also on offices. In office space, alone, the firm wants to promote almost 1 million m2 across the two urban areas.

This contradiction that the largest property developer is not an agent of the real estate sector is due to the fact that AENA is a very large landowner. For years, all of its plots have aged as if they were wine. The airport city in Barcelona, for example, was projected more than 14 years ago. But only now has Deloitte been engaged to look for international funds to mobilise that investment and Garrigues been contracted for legal advice about the monumental project.

And it is a long-term project. In the case of Barcelona, the most advanced of the two, it plans go out 20 years. In Barajas, the proposal is twice as long, 40 years. Moreover, according to sources in the sector, of the 622 hectares of net plots in Barajas, 396 hectares are awaiting development.

Given that the blocks of land are so close to the airports of the two capitals, logistics is the fundamental basis of the proposals. According to the latest report from Jones Lang Lasalle, logistics assets are generating yields of between 6% and 7%, a high rate when interest rates are so low. In the case of Barajas, for example, the planned logistics development represents the bulk of the project, 1.2 million m2 of constructed space, which will be the largest logistics centre in Spain, with the added synergy of connecting the current airport cargo area with the so-called Corredor del Henares.

In terms of office space, the plans also involve enormous dimensions. At El Prat, 362,000 m2 of constructed space is planned, almost as much as in the whole of the 22@ district promoted to date (…). And in the case of Madrid, it is even larger. At Barajas, the volume of planned offices is triple that figure, although it will have to be constructed over four decades.

In addition, there will be hangars, commercial areas, hotels and cargo services for aeroplanes. In practice, it will be like building two new cities, one in Barajas and the other in El Prat.

The immediate plans

The closest projects are the phases that have been planned for the next five to eight years. At the airport in Barcelona, the phase that AENA has called “catalysing” spans the first five years, during which time €387 million will be invested in total to promote almost 400,000 m2 in different types of urban planning projects.

These investments will run in parallel to the airport projects that have already been approved. In this way, AENA has already committed investments amounting to €690 million in El Prat, which include a new satellite terminal (…), to be carried out over the next four years.

This phase is longer at Barajas. It will last for eight years and will involve a forecast investment of €953 million, according to the Adolfo Suárez Madrid-Barajas Real Estate Plan. During this phase, more than 500,000 m2 will be constructed (…).

Original story: El Confidencial (by Marcos Lamelas)

Translation: Carmel Drake

Registrars: 400,000 Homes Sold During 9 Months to September 2018

16 November 2018 – Expansión

The housing market is showing a dynamism during 2018 not seen since the years before the crisis. The boost in demand in the last few months has resulted in the sale of almost 400,000 homes during the 9 months to September, the highest figure since 2008, which is driving prices up.

House sales amounted to 396,481 units between January and September, up by 12.5% compared to the same period in 2017, and the highest figure recorded since 2008, when 448,146 units were sold during the first 9 months to September, according to Real Estate Registry Statistics for the third quarter, published yesterday by the College of Registrars.

Data for the first nine months of the year also came close to the figure recorded for 2017 as a whole, bearing in mind that last year 464,223 transactions were closed in total. This year, it is likely that a record figure will be registered, which could reach half a million operations. During the third quarter, 133,295 operations were closed. “These results confirm the notable strength of the housing market (for sales)”, explained sources at the College of Registrars.

The strong dynamism responds in large part to the demand for investment. Buying a home for rent has become an alternative refuge for domestic and overseas investors alike, who find returns in the real estate market that other assets, such as deposits and public debt cannot offer. Moreover, during the last 12 months, the initial interest rate for taking out a mortgage has been at a historical low (2.27%).

The strong activity in the sector is also raising house prices, which increased by 6.7% in YoY terms in the last quarter. The recovery of the sector has allowed prices to rise to 26.5% above their minimum levels. Over the next few months, the registrars expect prices to continue to evolve in line with their current performance, albeit at single-digit rates. The rises will be greater in the main capitals.

These increases are being favoured by the heating up of the sector in certain areas. The largest increases during the third quarter were recorded in Teruel (37%), Huelva (34.8%) and Castellón (33.8%), but Madrid, Barcelona and Málaga led the activity in the market in absolute terms, with 20,048 homes sold in the case of Madrid, 14,217 in Barcelona and 9,828 in Málaga (…).

Foreigners are buying more homes than ever in Spain. According to data from the General Council of Notaries, during the first half of the year, they closed 53,359 operations, the highest absolute figure in the historical series, which began at the start of 2007.

By segment, second-hand homes continue to account for the majority of the market, with 82.4% of sales, compared with 17.57% for new homes (…).

Sources at the College of Registrars detect a possible “scenario that is running out of steam following the intense upward path that has been seen over the last few quarters”, and they warn that we “may have reached a maximum point in the current cycle in terms of the number of house sales”.

That is partly due to the increase in prices, which “is not sustainable or desirable in the current economic situation”. The intense double-digit growth in prices seen in recent months “cannot be borne by a market comprising potential buyers whose incomes cannot absorb such an intense increase in prices”.

But they clarify that it does not mean that we are going to see a correction (reduction) in prices in YoY terms, rather that we can expect more moderate increases (…).

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

BMB Launches a Socimi to Invest €100M in Industrial Warehouses

16 October 2018 – Eje Prime

BMB Investment Management is betting on the tertiary sector. The fund manager is finalising the launch of a new Socimi to invest €100 million in the purchase of industrial warehouses.

After entering the residential market with two Socimis (Optimum Re Spain and Optimum III Value-Added Residential), the company led and chaired by Josep Borrell is now looking for higher returns with its latest firm, Optimum Rentals Socimi. This new investment vehicle will focus on the acquisition of assets that offer returns of between 6.5% and 10%, according to reports from Expansión.

The intention of BMB is that 80% of the budget will be allocated to the purchase of industrial warehouses, leased to solvent tenants and located in the industrial parks of Madrid and Barcelona.

Similarly, although Borrell rules out investing in logistics, he does not shy away from the idea that the fund may also take advantage of an opportunity or two in the residential sector or even in the hotel or retail markets.

Optimum Rentals Socimi is starting life with an initial budget of €100 million, of which €50 million will proceed from own funds and the remainder, from bank financing. Sources at the manager confirm that the plan is to maintain the fund in an independent way so that it will live off of its own income. Investors in BMB’s third Socimi are expected to include both institutional and real estate players, and the percentage of international capital is expected to be high.

Original story: Eje Prime

Translation: Carmel Drake