Savills: RE Investment in Europe will Amount to €230 bn in 2019

17 March 2019 – Expansión

Real estate investment in Europe will amount to €230 billion in 2019, according to a report by Savills Aguirre Newman and as such will exceed €200 billion for the sixth year in a row.

The main focus continues to be placed on Germany, the UK and France, but other markets such as Poland, Denmark, Finland and Portugal are expected to exceed their average investment volumes over the last five years in 2019.

Savills predicts that the main investors from outside Europe will come from the USA, Singapore and South Korea, like in 2018.

Investors are particularly interested in the logistics segment, and the residential sector in Europe’s major cities.

Original story: Expansión 

Translation/Summary: Carmel Drake

Asian Funds Seek Local Allies to Enter Spanish Real Estate Sector

19 January 2019 – Expansión

Asian investors are joining forces with firms such as UBS, AXA and Savills IM to gain weight in the office, logistics and retail segments, where they still have a limited presence.

Spain has become a key destination for international investors interested in real estate assets, and Asian capital is no stranger to this buying fever that has boosted the sector in the country over the last five years. These investors, who are used to large volume operations, are now trying to gain a foothold in Spain through alliances with large European managers, such as UBS, Rockspring, AXA and Savills Investment Management, which will allow them to participate in smaller-sized operations and enter other sectors such as the office, logistics and retail segments.

The incorporation of new investors, capital funds and Chinese, Japanese and Korean family offices, amongst others, at the hand of the large European managers that are already present in Spain and know the local market well, offers them the possibility of arriving in the country by assuming less risk.

One of the most recent examples is that of the Korean fund manager Igis Asset Management, which, through Savills Investment Management, closed the purchase of Nestlé’s headquarters in Esplugues de Llobregat (Barcelona) last October for €87 million. That operation followed others such as the purchase of the Madrilenian Zielo Shopping Pozuelo and that of the office building located at number 2 Calle Santa Bárbara, both through funds managed by UBS, in turn, financed by Asian capital, amongst others.

Indirect investment

(…). These alliances followed the trickle of mega-operations undertaken in Spain in recent years. The most significant include the deal involving the Philippine group Emperador, which purchased the Torre Espacio building in Madrid, one of the skyscrapers that forms part of the Cuatro Torres complex, from Villar Mir, for €558 million.

Another operation that revolutionised the market involved the Chinese holding company Wanda, albeit ephemerally, as it had to abandon the project just three years later. The group purchased Edificio España (Madrid) from Banco Santander in 2014 for €265 million and sold it in the summer of 2017 to RIU, its current owner (…).

Those two Asian investors were joined by the sovereign fund of Singapore GIC, which, through the Socimi P3 Logistics Parks, acquired a foothold in the logistics market in Spain, one of the segments with the most potential.

Investors from Asia are therefore one group of overseas players who are committed to the country, but they are not the only ones. According to a report compiled by Savills Aguirre Newman, international capital was the major star in 2018, accounting for 70% of the €10.8 billion transacted, the largest percentage since the start of the market recovery five years ago (…).

By origin, investors from Europe and the USA account for almost 57% of the domestic and international investment total and 85% of the volume of operations from overseas. Asia is ranked in third place (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Savills & HomeAway: Spain is the Most Attractive Market for Buying a Second Home

29 September 2018 – Finanzas.com

According to an international study compiled by the real estate consultancy Savills and HomeAwayTM, a global expert platform for holiday rentals, Spain is the most attractive destination for investing in a second home, according to 19.3% of those surveyed, followed by Portugal (13.2%) and France (13.1) in third place.

Spain is attractive for overseas investors

According to the survey, 44% of owners of second residences in Spain are foreigners. The main countries of origin of those owners are the United Kingdom (19%), Germany (12%), The Netherlands (4%), France (3%) and Belgium (2%). The remaining 56% of owners are Spanish.

The main areas where second homes are located in Spain include the Canary Islands (12%), the Costa del Sol (9%) and the Balearic Islands (9%).

Where are they buying homes?

People’s behaviour when it comes to acquiring a second home is different depending on where the buyers come from. The study reveals that British and Dutch owners are those who buy the most second homes outside of their own countries, nevertheless, Spaniards, Italians and Portuguese citizens tend to choose their own countries as the destination for acquiring second homes (around 95%).

Second homes: for personal use and to rent

According to the study, 28% of Spanish owners cover some of their expenses with revenues generated from the rental of their properties and 38% obtain a profit.

Summary of second homes in Spain

The average price of the second homes acquired last year by the Spanish owners surveyed amounted to €245,000, 22% lower than the average acquisition price ten years ago. Moreover, 28% of those surveyed confirmed that they personally financed the acquisition of their second home, 52% acquired it using a mortgage and 8% inherited or were gifted the property.

In the same vein, Spanish owners of second homes obtain an annual income of €12,000 (from their properties) and they rent them out for 19 weeks a year, on average. 43% of owners had the same number of reservations in recent months as they did during the same period a year ago, 41% had more reservations and 16% had fewer.

Second homes, with some specific characteristics

Two-bedroom apartments are the most popular types of second home for the Spanish owners surveyed.

Features that owners are looking for when it comes to buying a second home include: proximity to restaurants and bars (88%), a balcony or terrace (88%) and proximity to the supermarket and shops.

According to Juan Carlos Fernández, Director General for Southern Europe at HomeAway: “The fact that Spain is the most attractive destination for foreigners looking to buy a second home indicates that Spain is a robust market that is very attractive to investors and that is something that we must take care of and promote”.

Owner profile

  • Average age when they acquired the property, in 2017: 51 years old
  • Average number of weeks leased during the year: 19 weeks
  • Typical property type: 2-bedroom apartment
  • Average acquisition price in 2017: €245,000.

Original story: Finanzas.com

Translation: Carmel Drake

Savills & HomeAway: 60% of Second Homes are Bought to Let

17 September 2018 – Eje Prime

Buying a second home with the objective of putting it up for rent. Currently, that is the main reason why more than 60% of owners around the world acquire an asset of that kind, according to a study prepared by Savills and HomeAwayTM.

“In a low-interest rate environment, investors look for assets that generate income”, says Paul Tostevin, associate director at Savills and the person responsible for the report. The situation has changed in recent years, given that, for example, at the beginning of the 2000s, only 14% of second homes were purchased with the objective of letting them and not for personal use. During the credit crisis, that figure increased to 19%.

The average purchase price of a second home in the Spanish market was €245,000 in 2017. Nowadays, almost 40% of owners obtain profits from their properties and approximately 30% partially cover the expenses associated with the asset.

In terms of the location of the asset, less than 5% of the second homes owned by Spaniards are located overseas. The main regions where they do own second homes in Spain include the Canary Islands (12%), the Costa del Sol (9%) and the Balearic Islands (9%). The increase in the arrival of international tourists in recent times has caused the owners of these homes to lease them more frequently to be able to obtain income.

In terms of the rest of Europe, the study reveals that Brits purchase the most second homes outside of their own country. Only 24% of their properties are located within the United Kingdom, 19% are located in France and 16% in Spain.

Original story: Eje Prime

Translation: Carmel Drake

Allianz Invests €400M in Student Halls of Residence in UK

22 June 2018 – Eje Prime

Allianz is joining the wave of student halls of residence. Allianz Real Estate, the real estate arm of the insurance group, is preparing to invest €400 million in the sector in the United Kingdom. The company has created a joint venture with Greystar Real Estate Partners and the Public Pension Investment Board (PSP Investment) to promote Chapter, a brand of halls of residences for students in London.

Chapter is owned by Greystar, a US group specialising in this type of accommodation. Allianz has acquired a stake in Chapter’s share capital, together with PSP Investment, one of the largest pension fund managers in Canada. The insurance company is going to disburse GBP 350 million (€399 million) for the operation.

With this alliance, Chapter will double its size to 10,000 beds in five years. Greystar will continue to manage its portfolio, which currently contains 5,100 beds in ten locations in the centre of London. The next one to be added to the portfolio, in September, will be located in White City, West London.

“This joint venture with Greystar and PSP Investments demonstrates our strategic commitment to scale our global business with high-quality halls of residence for students in established markets”, explained Olivier Téran, Director of Investment at Allianz Real Estate. In the operation, which is pending approval, Allianz has been advised by Savills and Herbert Smith Freehills.

Original story: Eje Prime 

Translation: Carmel Drake

CPPIB Puts Valencia’s Largest Hall of Residence Up For Sale

25 April 2018 – El Economista

The Canadian pension fund CPPIB is going to take advantage of the investor appetite that currently exists for student halls of residence by placing the “For Sale” sign up over one of its assets in Spain. Galileo Galilei is the largest accommodation block for students in Valencia and one of the largest in the country, according to confirmation from several sources speaking to this newspaper.

With more than 500 beds, the asset will come onto the market during the course of the next month, given that its owner has entrusted the sales process to the international consultancy firm Savills, which declined to comment.

Currently, this hall of residence, which is the only one located on the campus of the Universidad Politécnica de Valencia, forms part of the Liberty Living portfolio, one of the largest managers of student halls of residence in the United Kingdom. CPPIB acquired the British group in March 2015 for GBP 1.1 billion (around €1.2 billion) and continued to grow its portfolio.

In December 2016, CPPIB closed an important operation with Blackstone, which divested a portfolio of 13 student halls, located in the United Kingdom, Germany and Spain, which included Galileo Galilei. For that package, comprising 6,484 beds, the pension fund paid around GBP 460 million (€536 million) to the US firm.

Almost a year and a half later and with the sector in Spain in full boom, CPPIB has decided to put this property on the market in an operation that, according to the experts, could amount to €32 million.

Galileo Galilei currently has 520 beds spread across individual, double and triple rooms, which range in price from €515/month to €846/month. That figure includes all consumption, restaurant services, doctors, cleaning and sports activities.

In addition, the hall of residence offers supplementary services such as laundry, sheet and towel changes, a university support academy for all subjects, IT and nutritional advice, amongst others. Moreover, on the ground floor, the property houses a shopping arcade with restaurants and cafeterias offering special prices for students and various local shops such as a beauty salon, a hairdresser, a print shop, a travel agent, a newsagent, a driving school and a language academy.

With these features and its high occupancy rate, Galileo Galilei is expected to arouse significant interest amongst investors looking to gain positions in the alternative asset market in Spain in the main university cities, such as the case of Valencia. “Since 2016, the city has appeared in the Top 100 ranking of the QS Best Student Cities, which highlights the best cities in the world for students. It is also one of the most sought-after locations by European students participating in the Erasmus program,” says Patricio Palomar, Senior Investment Consultant at Aire Partners.

In fact, the expert highlights the growth potential of the supply in this market, which in its metropolitan area “has around 165,000 students matriculated, a mobility rate of approximately 29% and just 4,123 beds in colleges and halls of residence, which results in a supply rate that falls below the Spanish average”, Moreover, Palomar points out that “the process of economic recovery currently being seen in this area is expected to lead to an increase in demand from domestic and international students alike, and this situation of imbalance may be accentuated even further”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Colliers International Acquires Spanish RE Consultancy Irea

27 February 2018 – El Confidencial

There’s a new marriage in the market for real estate consultancy firms. Colliers International Group has acquired the independent Spanish firm Irea. This move comes just a few months after Savills purchased Aguirre Newman, a firm that Colliers also expressed its interest in.

Following this integration, the new company will have a team comprising more than 100 professionals, with offices in Madrid and Barcelona, a turnover of €25 million, and will provide services in the following fields: advisory, capital markets, consulting, valuation, workplace solutions and project management. The objective of the new group is to be one of the top three firms in the sector within five years.

The operation has been structured through the purchase of the majority of Irea’s share capital by Colliers International, a listed company with a global turnover volume of €27 billion, a move that has been followed by a merger, whereby Irea has acquired the Spanish subsidiary of Colliers.

Mikel Echavarren, Founding Partner at Irea, is going to be the CEO of Colliers in Spain. Meanwhile, the rest of the management team is going to comprise: Ignacio M. Iturriaga, Joan García and Álvaro Alonso as the Heads of Corporate Finance; Neil Livingstone and Antonio Pan de Soraluce as the Heads of Capital Markets; and Miguel Vázquez and Laura Hernando, as the Heads of the specialist hotel services division.

In addition, in accordance with the model that characterises Colliers, which teams up with local partners, Echavarren, Livingstone and Pan de Soraluce will hold onto 20% of the share capital of the Spanish subsidiary.

“The Spanish real estate and hotel markets have experienced significant growth in recent years, and having the opportunity to expand our business with Irea’s excellent team of professionals is going to allow us to offer high added value services for our clients”, said Chris McLernon, CEO at Colliers International for the EMEA region.

“Our integration into Colliers represents a natural evolution for Irea, given that both companies share the same business culture and a strong commitment to excellence”, said Echavarren. “We consider that integrating ourselves into a global brand that has an unparalleled international platform is the key for strengthening our growth strategy and continuing to offer the best service possible to our clients, wherever they are in the world”, he added.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Savills & Aguirre Newman Complete Their Merger

3 January 2018 – Eje Prime

Without any fuss whatsoever, Savills and Aguirre Newman ended the year by completing their merger. On the last working day of the year, the British company announced to the London Stock Exchange that it had finally signed the agreement to buy the Spanish real estate consultancy. The company, which announced its intention to acquire the Madrid-headquartered business through the same channel on 28 July 2017, will pay €67 million by way of consideration.

According to the document that proves the purchase of Aguirre Newman, the British consultancy firm paid €42 million at the time of the signing and will pay the remaining balance in instalments of €5 million over the next five years, to reach the €25 million agreed between the two parties.

In theory, Savills had planned to complete the purchase before 30 November, however, administrative setbacks delayed the signing. Nevertheless, the company said that all of the paperwork was completed before the end of 2017 (…).

The need of both groups to sign their merger before the end of the year was also an administrative priority, given that they wanted to start the new year afresh to operate under the brand, Savills Aguirre Newman, from the beginning of 2018. Moreover, this change will result in a significant number of changes to its operations in Spain. The first will see it move to a new headquarters in the financial heart of Madrid.

The Spanish subsidiary of Savills has set the wheels in motion to move its offices to one of the capital’s main skyscrapers. After lots of negotiations, the new consultancy firm will move into the Castellana 81 building, better known as the Torre BBVA. The company will lease 8,000 m2 of space after reserving six floors in the building from the Socimi GMP, which owns the asset.

Built in 1981, Torre BBVA is one of the symbols of the Azca financial district in the Spanish capital. GMP renovated the asset after buying it and, coincidently, Aguirre Newman, along with CBRE, were appointed to look for new tenants for the building. The consultancy firm plans to move into its new offices as soon as the integration of the two companies has been formalised.

In terms of the business of the two consultancy firms in Barcelona, sources in the Catalan capital indicate that it is very likely (although not definite) that the Savills staff located in the Catalan capital will move to the offices that Aguirre Newman has on La Diagonal in Barcelona, given their location and capacity.

Another matter still up in the air is the duplication of the entire organisational structure of both companies. Savills’ intention is to maintain the entire workforce, although it is more than certain that many of the directors will leave the company voluntarily, according to sources consulted by Eje Prime.

The Presidents of Aguirre Newman, Santiago Aguirre and Stephen Newman, and the President of Savills España, Rafael Merry del Val, will be appointed to the Board of Directors of the combined company, in the following roles: Santiago Aguirre, Chairman of the Board; Stephen Newman and Rafael Merry del Val, Executive Co-Vice-presidents.

The senior management team of Aguirre Newman and Savills España will retain and include José Navarro, current CEO of Savills España; Javier Echeverría, CEO of Aguirre Newman; Jaime Pascual-Sanchiz, Executive Director General of Aguirre Newman, and Ángel Serrano, Director General of the Business at Aguirre Newman. The office in Barcelona is going to be led by Anna Gener and Arturo Díaz, as the CEO of Savills Aguirre Newman and President of the group in Barcelona, respectively. The real headache for Savills Aguirre Newman will come with the next level of management, although those roles will not be assigned for several weeks yet (…).

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake

Real IS Returns to Spain With Purchase of Terrassa Plaça

12 December 2017 – Eje Prime

Real IS is returning to Spain with the acquisition of an asset that has only just opened. The German investment fund has reached an agreement with the property developer Citygrove to purchase Terrassa Plaça, a retail complex on the outskirts of Barcelona that was opened just over a month ago. It is the first property that the German company has acquired on its return to the country, where it used to invest before the crisis. To this end, the company has recently opened an office in Madrid, with the aim of expanding its asset portfolio in the country, according to a statement issued by the company.

The operation, whose amount has not been disclosed, involves a complex with a gross leasable area (GLA) of 29,466 m2. Inside, Terrassa Plaça is home to brands such as Sprinter, Gifi, Globo and the restaurant chain La Tagliatella, amongst others.

Real IS has a presence in five European countries. For this deal, it has been advised by Savills on the real estate side and by the law firm Monereo Meyer Marinel-Lo, on the legal side.

Original story: Eje Prime 

Translation: Carmel Drake

Savills: Spain Leads RE Inv’t in Southern Europe

12 December 2017 – Expansión

Real estate investment in Spain is on the verge of setting a new record and positioning the country as the leader of the sector’s boom amongst its counterparts in Southern Europe. Specifically, investment in the tertiary market (offices, retail, hotels and logistics assets) in Spain looks set to amount to €8.9 billion in 2017, which represents an increase of 5% compared to the previous year and the highest figure in a decade, according to a report from the consultancy firm Savills.

The report reveals the strong performance detected in the retail and hotel sectors and also highlights that the growth in e-commerce in Spain is expected to result in greater demand for logistics and storage space, a segment that has lagged behind the main markets in Europe until now.

Luis Espadas, Director of Capital Markets at Savills España, also points out that, to the extent that demand in the more traditional sectors grows, so investors are starting to focus on alternative products, such as student halls and nursing homes. “That market may be small still but it has the potential to develop more attractive returns and price differentials”.

Other countries

The recovery of the sector in Spain has been followed by an upturn in other countries such as Italy, Portugal and, more recently, Greece and Cyprus. In this way, after a few years of weak investor activity, the volume of investment in Southern Europe increased by 277% in 2017, compared to the minimum of €5.2 billion recorded in 2012.

Overall, total investment volumes increased by 8% YoY. The markets in Southern Europe now account for 10% of the total investment in the European Union, compared to the 5% that they represented in 2012. “Economic growth, the decrease in unemployment rates and renewed consumer confidence are attracting investors back to Southern Europe”, says Alice Marwick from the Europe Research department at Savills.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake