Tag: sector

CBRE: RE Inv’t Rose By 38% To €6,100M In H1 2017

4 July 2017 – El Confidencial

Investor appetite for the Spanish real estate sector is continuing to rise and our country is getting ready to close yet another historical year in terms of investment volumes. For the time being, the first half of the year has seen record investment figures, with an investment volume of €6,100 million during the six months to June, up by 38% compared to the same period last year, according to data from CBRE.

There are five mega-operations behind this result, which have determined the strong start to the year: the purchase of the Madrid Xanadú shopping centre by Intu Properties, which paid €530 million for the property; the acquisition of the Buffalo portfolio, worth €300 million, by Blackstone; the sale of Edificio España to Riu for €272 million; the sale by GreenOak of the Acero logistics portfolio to GIC for €243.3 million; and the purchase of the Nueva Condomina shopping centre by Klépierre for €233 million.

And all indications are that between now and Christmas, there will be another similar run of operations, an expectation that allows experts to predict that investment will exceed the €10,000 million threshold for the third year in a row.

Some of the operations called to collaborate in the record-breaking figures are on course, such as Hispania’s sale of its office portfolio, for which the Socimi has received half a dozen offers for around €500 million; the sale of Parque Corredor by Sareb; and several portfolios that the banks are bringing onto the market; whilst others are well underway, such as the purchase of nine retail parks and properties that the South African fund Vukile Property has just agreed – it will acquire a portfolio of retail properties from the joint venture between Redevco and Ares for €193 million.

More appetite, lower returns

The main driver of investment during the first half of the year was the retail segment, which accounted for one-third of total investment (€1,900 million), boosted by the recovery in consumption. The other side of the coin corresponded to the residential segment, which saw a decrease of 20% with respect to the first half of last year, whereas the hotel sector continued to benefit from the boom in tourism and accounted for 29% of the total (€1,750 million).

Nevertheless, all of this buyer appetite means that returns are now at minimum levels…and they are still falling. The logistics and hotel sectors are the only markets capable of offering attractive yields, with average returns of 5.85% and 5.75%, respectively, although those numbers fall well below the figures achieved just two years ago (7% and 8%).

Yields on shopping centres have decreased to 4.25%; office returns have fallen to 4%, whilst the profitability of high-street premises barely reaches 3.5%. Despite this narrowing, international funds, which have been backing our country for a while and other new funds, which are just arriving, have Spain at the centre of their targets and are starring in these record figures.

In this way, whilst last year, the Socimis were the undisputable investment leaders, accounting for 43% of the total, this year, they represent just 14%; meanwhile, investment funds account for 34% of the total, with the US, British and French funds leading the ranking of overseas investors.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Irea: Hotel Inv’t May Reach €2,000M This Year

20 June 2016 – Expansión

Hotel investment in Spain may reach €2,000 million this year, according to estimates made in a study compiled by the real estate consultancy Irea.

Between January and May this year, based on provisional data, investment in the purchase of hotel assets in Spain amounted to €611 million, down by 14% compared to the same period in 2015.

Nevertheless, this investment level is very significant for the real estate consultancy, in comparison with the trend seen during the first five months of the year over the last ten years.

In terms of the volume of hotel assets sold, the figure is very similar to the same period in 2015. During the five months to 31 May 2016, 39 hotels have been bought and sold (compared with 42 last year), nevertheless the number of rooms transacted has decreased by 42.2% from 8,673 to 4,993 so far in 2016.

Increase in the average price paid per room

According to Irea, this implies a considerable increase in the average price per room from €81,000 during the period from January to May 2015 to €122,000 during the same period this year.

For the consultancy firm, this increase is primarily explained by the sale of Villamagna in Madrid (in Q1 2016), at a price of €1.2 million per room, which represents the highest price ever paid per hotel room in Spain.

In addition, the study shows that no hotel portfolios have been sold so far during the five months to May, compared with four that had been sold during the same period in 2015.

It is worth noting the Socimis’ commitment to the hotel sector in the short and medium term, a formula that is currently accounting for all of the operations associated with repositioning assets and adapting them to suit the premium segment.

Experts in the hotel sector agree that the level of growth in this industry may continue in Spain if the hotel supply is renewed and updated in line with the expectations of international tourists, in addition to the investment in technology and the search for customer loyalty.

Original story: Expansión

Translation: Carmel Drake

CBRE: RE Inv’t Amounted To €2,100M In Q1 2016

4 April 2016 – Expansión

After a record year in 2015, real estate investment in Spain has recorded its second best start to the year since 2008.

Real estate investment in Spain amounted to €2,100 million during the first quarter of 2016, which represents the second best start to the year since the start of the crisis in 2008, and exceeded only by 2015, when activity was “exceptionally” high and investment volumes exceeded €3,000 million, according to conclusions from preliminary data published by CBRE.

Of the total investment, 78% came from international investors, which confirms that Spain is continuing to generate interest as a destination for overseas investors, according to sources at the consultancy firm.

By sector, retail and residential led the ranking, with total investments of €750 million and €645 million, respectively. CBRE highlights major operations such as the purchase of the Festival Park shopping centre in Mallorca for €100 million, and the acquisition of a portfolio of supermarkets by Invesco for €350 million.

And in the residential segment, the operation involving Blackstone’s purchase of a portfolio of 4,500 homes from Banco Sabadell for €450 million alone exceeded investment in this business segment in 2015. Other highlights included the acquisition of assets for conversion into homes, such as the former headquarters of the news agency Efe, on the Madrilenian street of Calle Espronceda and the building located on the corner of Gran Vía and Balmes in Barcelona.

In total, €365 million was invested in the hotel segment, with the purchase of Hotel Villa Magna in Madrid for €180 million representing the most significant transaction. The logistics segment also performed well with investment of €142 million, which represents an increase of 39%. The most significant transaction was Neinver’s purchase of a portfolio comprising 23 assets for €87 million.

By contrast, investment in offices declined by 70% during the period, to €178 million, due to the scarcity of available products in the segment.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Pimco Urges ECB To Buy Spanish Securitisation Products

14 October 2015 – Expansión

The US investment management company is proposing the creation of a new supra-national entity to acquire securitisation products.

Anniversaries are often a good time to take stock and a year has now passed since the European Central Bank (ECB) announced the launch of its plan to buy securitisation products in the market. The effective acquisitions began in November and so far amount to €13,105 million. Has the effort made by the ECB to support this program been worth it? According to Pimco, the global fixed income giant, the answer is a resounding no.

And not only because the amount acquired so far represents only a tenth of the bond purchase program to date and less than 4% of the public assets, or because the acquisitions have centred on those countries that need the least help in their securitisations markets (Central Europe). All of those factors counts towards to the overall assessment, but Pimco thinks that there is much more to it.

For starters, the US investment management company considers that it is neither the appetite of investors, nor the price that is strangling the issuance of securitisations. The banks have limited liquidity needs at the moment and they can obtain the financing they do need through other simpler instruments, such as bonds or by appealing to the ECB. It is the regulation and the impossibility of freeing up capital with the sale of securitisation products to investors that is causing this issuer drought in Europe. “The banks that need relief for capital requirements are not receiving it under the current regulatory and economic framework for securitisation products”, explains Pimco, in a report published by the company that specialises in this field.

To that it adds the design of the ECB’s plan itself. There is general criticism that the supervisor is being excessively cautious with its purchases: the slowness with which it is analysing each possible purchase and the fear it is showing when it comes to buying assets that may generate problems, have been the commonplace. And the US management company is joining the ever-growing list of critics of the program. They say that purchases are being concentrated in the wrong countries, as well as in the wrong sectors and tranches of the securitisation products, because that is not where the banks need help. Pimco believes that the ECB should focus on buying the most risky tranches of debt issues, because that would help lower prices and free up capital for the banks.

Moreover, the ECB should not only buy the tranches with the highest risk, it should also do so in those countries in which, until now, it has barely made a mark. Pimco points to the periphery of Europe, “where the prices of loans are still high and access to credit is scare”. And by way of example, it cites Spain, the rate of growth in terms of loans is low and the margins being charged on those loans are high. (…)

If power needs to be granted to the European Investment Fund to do make these purchases or a new supra-national entity needs to be created to assume the first losses from the securitisation products acquired, then Pimco insists that that is exactly the action that should be taken.

And all of this would be for the greater good. “If carried out correctly, we think that the European securitisations market could help to cure the continent’s economy, stimulating credit and access to it, especially in the peripheral regions”, concludes the investment management company.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake