Tag: scarce supply

Asprima: Buildable Land is Running Out in Madrid

25 November 2017 – ABC

Land is running out and the market is becoming distorted in the Spanish capital. For two years, the price of buildable land for the construction of new homes in the Community of Madrid has been rising, especially in the centre. There is not much buildable land left and the space that is available has seen its value rise due to the increase in demand. This equation means that, unless new variables are introduced, we will end up seeing an acceleration in house prices. “Real estate activity has returned with a vengeance and new housing is needed”, according to Daniel Cuervo, the Director General of the Association of Property Developers in Madrid (Asprima) (…). By way of example, “in Valdebebas, two years ago, people were paying €800 per square metre for buildable land “and now that price is above €1,500/m2 (…)”.

He also thinks that the property developers feel very certain about the sale of their homes “and that there is competition between them”, which translates into high house prices. Certain political decisions have paralysed several developments (…).

The Councillor for the Environment and Town Planning at the Community of Madrid, Pedro Rollán, was quite explicit this week when he said that “talking about housing requires us to talk about land” (…). “Many people have been obliged to go outside of Madrid due to the (high) price of land (in the centre),” he said, at a conference organised by the Association of Housing Managers (AGV). At the same time, he called for “a policy that allows for the development of sufficient land to deal with the true demand in the city of Madrid”. Rollán made reference to the importance of the “large batch of land in the south-east of Madrid”, where “at least 50% of the homes will be subsidised properties”.

Value of land

Daniel Cuervo also said that the project underway in Los Berrocales, Los Ahijones, Los Cerros and Valdecarros (the Strategy for the Southeast, within the municipality of Madrid) will allow “the relaxation of new house prices, given that more than 100,000 homes are planned”. To this end, the Town Hall needs to “continue complying with urban planning legislation to convert plots into buildable land”.

The Director General of Asprima also (…) made reference to a study conducted by IESE, which indicates the need for 13,000 new homes per year in the municipality of Madrid “and the impossibility of achieving that”.

According to the experts, the price of land, with respect to the price of a home, should not exceed 20-25% of the total value; and the traditional unwritten rules indicate that it should represent one third. “In the neighbourhood of Salamanca, in certain cases, the price paid for land may reach 70%-75% of the final value of the home”, explains Óscar Ochoa, Director of the New Build department at the real estate firm Gilmar (…).

Areas on the rise

If we talk about other parts of Madrid, things change. In San Sebastián de los Reyes, for example, the value of land “represents around 30%-35%”. Ochoa warns that it is not only in the centre that it is impossible to find new land, the supply is also scarce along some of the main access roads. “Such is the case in Las Tablas, San Sebastián de los Reyes, Montecarmelo and Valdebebas along the A-1 and in Pozuelo and Las Rosas along the A-6”.

For Ochoa, the solution involves establishing urban development plans designed to meet the true demand for the areas (…). Ochoa acknowledges that in terms of buildable land “we are in the hands of the politicians”. That is why he asks “for the plots to be organised and for the concession and licence processes to be streamlined”.

According to the Community of Madrid, there is a need for between 15,000 and 20,000 homes per year, including the repositioning of homes for those who want to change the kind of property they live in and new homes that are built. (…).

The situation is also affecting the rental market, according to José María García Gómez, Director General of Housing and Rehabilitation for the Community of Madrid (…). “The rental market is under pressure and prices are rising there once again”.

García Gómez believes that the role of the Administration “is not to put obstacles in the way, but rather to grant licences. He believes that the new Land Act, which is being drafted, will bring stability, pointing out that of the 178 municipalities in the region, only 20 have a general housing plan in place. The conclusion is clear: much remains to be done” (…).

Original story: ABC (by Belén Rodrigo)

Translation: Carmel Drake

CBRE: Inv’t In Industrial & Logistics Assets Totals €386M In H1 2015

15 July 2015 – Misnaves.es

Investment in industrial and logistics assets in Spain amounted to €386 million during the 6 months to June 2015. This figure is considerably higher than the one recorded during the same period in 2014, when only €113 million was invested, according to data from CBRE, the leading global consultancy and real estate service company.

Several factors have contributed to this increase, including the greater ease of access to financing and the expectation that rents will rise.

International investors are continuing to see Spain as an attractive market, based on their analysis of location and type of asset. Investment funds and Socimis have been the main purchasers.

Madrid and Guadalajara accounted for the majority of the activity, although one-off transactions were also recorded in other Spanish cities. These include Merlin Properties’ purchase of Testa’s portfolio, spread across several regions, with a total surface area of 209,000 m2. They also include Rockspring’s purchase of two logistical warehouses, still under construction, in Montepino and Torrejón de Ardoz, with a surface area of 49,000 m2, which will be completed during the first quarter of 2016.

Two transactions were also recorded in Barcelona, including Baraka Global Invest’s purchase from Inbusa of Alstom’s facilities in Santa Perpetua de Mogoda, with a surface area of 370,000 m2 and a price of €60 million.

Both the increase in liquidity and purchasing activity, as well as the scarcity of supply in the market, has led to the compression of prime rental yields since 2012, to their current levels of between 6.5% and 7%.

Original story: Misnaves.es

Translation: Carmel Drake

Colonial To Construct New Office Block Next To Castellana

29 May 2015 – Expansión

The real estate company Colonial has purchased a property on Calle Estébanez Calderón in Madrid, just a stone’s throw from the Paseo de la Castellana. It will demolish the building and construct a new office block in its place. The total investment will amount to €40 million.

The future corporate tower will cover an area of 15,000 square metres above ground and will be exclusively devoted to offices that will be rented out.

Given the scarcity of prime products for sale and the significant pressure from the international market to purchase this kind of product in Madrid and Barcelona, Colonial has decided to build its own property. The company chaired by Juan José Brugera specialises in office buildings in the centres of Madrid, Barcelona and Paris and its assets amount to €6,000 million.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake