Savills: Logistics Investment in Spain to Grow by 40% in 2018

20 November 2018 – Expansión

Real estate investment in the logistics market is on the verge of breaking a new record. According to data from the consultancy firm Savills Aguirre Newman, investment in the segment is going to exceed €1.2 billion in 2018, which will represent growth of 40% compared to the €854 million registered last year.

During the first nine months of this year alone, investment exceeded €875 million, without taking into account any corporate operations, which represents a 3% increase with respect to the total volume recorded during the whole of 2017.

“The intense level of activity at the national level in the market for land, by both funds and by end users, is going to continue until the end of the year”, explained sources at Savills Aguirre Newman.

In this sense, although the most sought-after product in the investment market is still the highest-quality and best-positioned warehouses, investors are also analysing spaces with the potential to be transformed and the capacity to offer higher returns.

Product shortage

Sources at the consultancy firm explain that, in light of the shortage of products in Madrid and Barcelona, the secondary markets have become a focus of attention for investors. Similarly, the scarcity in terms of finished products has reactivated interest in the market for land.

In terms of the volume of space leased, 1,127,000 m2 was snapped up in the markets in Madrid and Barcelona to September, which represents an increase of 22% with respect to the same period in 2017.

Original story: Expansión (by R.A.)

Translation: Carmel Drake

Ministry of Development: Spain Signed 60,000 New Home Permits in 2017

5 June 2018 – Eje Prime

Spain is still a long way from the dizzy heights of 2006, but its stock of housing is gradually recovering the colour it lost during the decade when the sun shone very little over the new build sector. Last year, 60,888 municipal licences were signed for the construction of new homes, which represents almost twice as many as the 31,213 permits that were granted five years ago, according to data from the Ministry of Development.

Moreover, in YoY terms, the increase in the number of licences for the construction of residential buildings was 6.5%, with even greater rises in certain autonomous regions, such as Cataluña, where the increase to November exceeded 50%.

Nevertheless, the region where most new homes are being built, Madrid, recorded a slight decline in 2017. Following a significant increase in the number of licences during the beginning of the new economic cycle, last year, that market for the construction of new homes lost speed with a decrease of 4.4%.

In total, in the Spanish capital and its surrounding area, 14,018 licences were signed last year for residential construction, a figure that doubles the number recorded in 2016, but which represents a decrease of more than 650 homes at a time when there is great demand from Spanish and international investors.

The recovery of the Madrilenian residential market is clearly understood in the increase in the number of licences for the construction of new homes experienced first between 2013 and 2015, and, more importantly, during 2016. Five years ago, 6,134 permits were signed in the central region, in an annus horribilis that followed a 2012 in which Madrid approved 17,000 licences. After that, 24 months of stabilisation in the segment with the registration of between 7,000 and 8,000 licences (in total) for new homes, proceeded a 2016 that doubled the figures with 7,500 administrative signings of contracts for residential development.

The shortage of land and the obstacles imposed by Town Halls such as Madrid’s (…) have led to a fall that is heating up the market and generating problems for the whole sector. Other autonomous regions, such as  Navarra, Aragón, Asturias and Murcia also recorded decreases in 2017, going against the tide (…) and once again showing signs that Spain is moving at two speeds in the residential sector.

Significant increases on the Mediterranean Coast 

The Mediterranean coast is proving to be the engine for new housing in Spain. Regions such as Cataluña, the Community of Valencia, the Balearic Islands and the Málagan section of the Costa del Sol are registering significant growth figures in terms of the number of licences granted for the construction of housing.

Cataluña is on a roll with the construction of homes, with an increase of 50% during the first ten months of last year. To November, 9,815 licences were signed and sources in the sector have said to Eje Prime that the forecast for the end of the year was 12,100 permits, up by 35% compared to 2016 (…).

Heading south, the Community of Valencia has developed in a similar way to the Catalan market over the last five years. It doubled its annual figures between 2013 and 2017, from 3,142 permits to 6,588, but the greatest increase came in 2016. In just twelve months, the Mediterranean region increased the number of licences from 4,712 to 6,540, up by 39%.

The markets in the Balearic Islands and Andalucía, where the Costa del Sol plays a prominent role, have also shown clear signs of improvement in recent years. On the islands, permits for new build almost tripled between 2015 and 2017 from 826 to 2,391 (…).

Meanwhile, in Andalucía, although the growth percentage was similar, the increase was calculated on a larger volume of homes. As one of the areas with the highest demand for new home permits, the region (…) closed 2017 with 12,363 licences. Just five years earlier, that figure barely exceeded 5,000 (…).

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

Twin Peaks Buys Plot of Prime Residential Land in Pozuelo (Madrid)

4 June 2018 – Eje Prime

Pozuelo de Alarcón has land for sale and nobody wants to miss out on the chance to acquire a slice of it. The Madrilenian town, the richest in Spain in terms of income per capita, has had a large portfolio of land up for sale for a few months now, and the family office Twin Peaks has opened the bidding in the flurry of purchases that are expected to be signed soon. The family office has acquired a plot of buildable land owned until now by Banco Santander.

The plot in question is included in the Arpo Partial Plan, the name given to the whole portfolio. Definitive approval is expected to be given for the reparcelling and urbanisation of the plots soon, which will allow investors to start building the first homes on the site. As such, the operation by Twin Peaks comes as it tries to position itself ahead of the great appetite from international funds, which are already working on buying plots on this site, according to El Confidencial.

In fact, Oaktree is already very close to sealing two operations with Iberdrola for the acquisition of plots located on the perimeter of Arpo. For Twin Peaks, the land attached to its real estate portfolio will allow it to continue growing in the luxury market in Madrid. In Barcelona, the other major Spanish city in which the firm has a presence, it acquired an asset on the central Paseo de Gracia last November for €25 million.

Pozuelo is a prime and very attractive market for property developers and funds in the residential boom that the Spanish capital is experiencing. Its high rents and ability to generate high yields are a showcase for luxury in the sector, which has seen how in just two and a half years, land prices in this municipality have risen by 20%, boosted by demand and, above all, by the shortage of buildable land available for development in Madrid.

Property developers such as Metrovacesa, which owns land spanning 46,000 m2 in Pozuelo alone worth €25 million, Vía Célere and iKasa already have important projects in place in this prime area of the Spanish residential market.

Original story: Eje Prime

Translation: Carmel Drake

BNP Paribas Real Estate: 85,500 m2 of Office Space was Leased in Barcelona in Q1 2018

24 May 2018 – Eje Prime

During the first quarter of 2018, 85,500 m2 of office space was leased in Barcelona and its area of influence, which represents 33% more than the quarterly average for the last 10 years (64,445 m2) and 5% more than the quarterly average for the last three years, according to research compiled by BNP Paribas Real Estate.

“The strong performance in terms of demand between January and March 2018 reflects the fact that the occupational market remains dynamic”, states the report.

During the first three months of the year, 84 new contracts were signed in total, below the quarterly average for the number of operations signed in the last three years (93), however, these contracts involved larger surface areas, thanks to expansions and the creation of new companies.

The three largest operations closed during the quarter were located in the decentralised and peripheral areas, specifically in the BCN Fira District multi-functional complex (6,467 m2), El Prat de Llobregat (5,000 m2) and Cornellá (4,863 m2).

The 22@ district retained its appeal, in fact, the fourth most significant operation, the rental of 3,500 m2 by the Town Hall of Barcelona, was signed in that district. In total, 28% of the surface area leased during the first quarter was located in 22@ and the district is expected to attract more demand, as new office spaces come onto the market. The availability rate of the market in Barcelona amounts to 10%.

The average rental price in the Barcelona market also continued its upward trend. Prime rents, which closed 2017 at €23.5/m2/month, had risen to €24/m2/month by March 2018. Behind that behaviour is the shortage of surface area available in the CBD as well as the scarcity of high-quality buildings.

Original story: Eje Prime 

Translation: Carmel Drake

CBRE: Valencia Is Running Out of Urban Land

28 February 2018 – El Confidencial

Valencia is running out of urban land that’s ready to develop. The municipal area is running out of batches of “finalist” land after several years of paralysis in the development of new urban planning spaces. The recovery in demand and the credit granted to the sector over the last year have attracted investors and property developers interested in positioning themselves in an urban market. And that of the third capital city of Spain is proving appealing, since prices there are still well below the saturation point that they are experiencing in Barcelona and, above all, in Madrid. Many of the local real estate businessmen from the boom era have filed for liquidation, and so now it is listed property companies, managers backed by large international and domestic funds and new industrial firms with surplus cash, that have taken over the batten to launch new residential projects.

In total, the city has 60 new build projects in process and being marketed, and the forecast is for another 15-20 developments to come onto the market during the course of the year, according to a sector report compiled by the consultancy firm CBRE, which was presented by the Director of the office in Valencia, José Ángel Sospedra, and the Director of New Build properties in Spain, Carlos de Almeida. Interest from property developers has been concentrated in the few neighbourhoods in which there is “finalist” land to be completed: Patraix, Nou Campanar, Malilla Norte and Quatre Carreres. They are areas that were processed during the real estate boom whose development was cut short by the economic crisis and whose plots ended up in the hands of the banks, for the most part, which, in turn, have been placing them with third parties and which have now ended up in the hands of companies such as Neinor, Aedas, Aelca and Q21.

Almost all of the plots are being processed, which is why CBRE expects that within three to five years, the buildable plots for new build properties will have run out. “Due to the current scarcity of available urban land in the city of Valencia, house prices are expected to increase in the medium term. During 2018, demand will focus on developments located inside the city where land is still available, such as Benicalap, Patraix and Moreres. And for the first time since 2008, we will see interest return to the city’s natural areas of expansion and its metropolitan areas, given that the stock of urban land in the city of Valencia will run out within the next 3 or 4 years”, said the bulletin.

Last year alone, the number of transactions increased by 26%, with more than 8,000 homes sold. That figure will grow over the next two years because that is when the new build flats and houses that property developers started to market and promote last year are going to be notarised (…).

The consequence of this phenomenon, in addition to greater interest in areas that are further away from the old town, in settlements in the metropolitan area, is that property developers are starting to become interested in non-finalist areas pending development, such as the PAI del Grao (…) and the undeveloped plots of Fuente de San Luis, close to the new Hospital La Fe (…).

Original story: El Confidencial (by Víctor Romero)

Translation: Carmel Drake

ACR: Residential Construction Costs Rose by 12.1% YoY in 2017

25 January 2018 – Cinco Días

The rate of inflation in the house building sector is causing concern. That has been reflected in recent months not only by the trade association but also by companies in the sector and other entities such as Sociedad de Tasación. On Thursday, some of the first data evidencing this phenomenon was published. Over the last year, to December 2017, the cost of residential construction rose by 12.1%. That is reflected in the recently created Index of Direct Construction Costs, prepared by the Navarran construction group ACR.

The index also shows that the increase has amounted to 17.5% over the last two years. The figure indicates that in 2017, these costs grew dramatically and that they accelerated. “Costs mainly grow for two reasons, a shortage of labour and a lack of manufacturing capacity in trades such as structures and façades”, said Michel Elizalde, CEO of the ACR Group.

The company has obtained this data from its construction sites in Madrid and is convinced that the inflationary figures can be extrapolated to other companies in the sector and to other regions such as Barcelona, Málaga, País Vasco and Zaragoza, where the housing market has reactivated.

Nevertheless, at the level of the general Spanish market, that rise is not being reflected in the most active areas. The statistics from the Ministry of Development indicate that in October 2017 (latest available figures), the cost of residential constructions had risen by 5.5 points since 2010. Sources at ACR report that the minimums were recorded in 2012 and 2013 after prices had been contained and have only been starting to rise since 2016.

“There is more tension when it comes to labour costs”, acknowledged Elizalde, basically due to the lack of qualified professionals in certain trades such as framers and rebar workers, according to ACR, as well as those involved with bricklaying, experts in partition walls, façades, flooring, tiling and carpenters. That causes teams and subcontractors to change construction site in the middle of house building projects if another company offers to pay them more.

“Contractors are suffering from this situation,” said the Head of ACR, given that property developers are contracting turnkey projects with fixed costs and the construction companies are, in turn, those who are suffering from a lack of professionals.

“There is a shortage of trained professionals because many of those who left during the crisis are not coming back or have now retired”, said the director.

In YoY terms, prices have increased by the most in glass making (25.2%), façades (15.4%), earth moving (15.6%) and structures (13.4%).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Savills Aguirre Newman: Logistics Demand Soars in Andalucía

26 January 2018 – Eje Prime

The logistics sector is growing throughout Spain. Demand for high-quality logistics products with a surface area of more than 5,000 m2 is increasing significantly in Málaga and the Costa del Sol, as a result of the growth in consumption in this region of Andalucía, according to a report from the international consultancy firm Savills Aguirre Newman.

The company says that interest is continuing to grow from logistics operators looking to either position themselves in the region or improve their existing facilities, whilst the supply of high-quality logistics spaces spanning more than 5,000 m2 “is very limited”. The firm indicates that the most sought-after types of facilities are those measuring between 5,000 m2 and 15,000 m2, provided they are accompanied by land that allows logical operations with loading bays and sufficient room for vehicle manoeuvring.

Nevertheless, “this product is scarce, and that shortage is limiting the arrival of companies in the province, where there is an extensive supply of warehouses and mini-warehouses very focused on local operators, but a distinct lack of supply of large warehouses”, explains Vicente Bernabé, Head of Industrial and Logistics Markets for Andalucía at Savills Aguirre Newman.

With forecast demand of around 50,000 m2 for spaces measuring more than 5,000 m2 in Málaga and the Costa del Sol in 2018 and a limited current supply of just one asset exceeding that threshold, Bernabé indicates that 2018 will be “a key year for the sector in the region”.

Original story: Eje Prime

Translation: Carmel Drake

Segro Acquires 2 Logistics Plots in Madrid & Barcelona

16 January 2018 – Press release

Segro, the British investment fund specialising in the logistics sector, is increasing its presence in Spain with two new acquisitions in Getafe (Madrid) and Sant Esteve de Sesrovires (Barcelona). Both assets were acquired in December 2017.

On the one hand, Segro has announced the acquisition of a plot of land measuring 8 hectares in Getafe for the construction of a logistics warehouse measuring 46,000m2. That land is strategically located in the Puerta Mayor-Los Gavilanes Business and Logistics Park, a relatively new location 14km to the south of Madrid, alongside the A4 Madrid-Andalucía highway and with direct access to the M-50.

That logistically strategic area is home to several large multinational companies, such as Decathlon, CostCo and Amazon, but suffers from a relative shortage of buildings measuring more than 40,000 m2 in the market in Madrid, despite the high demand for large units this year. Work to build the logistics warehouse will begin during the first half of the year in response to this market need.

On the other hand, Segro has acquired a new asset in Sant Esteve Sesrovires. That plot comprises 8 hectares and is located 35km away from Barcelona’s city centre. Sant Esteve Sesrovires is located between the A2 and A7 highways, which run from Barcelona to Madrid and represents a strategic communication hub. Barcelona is an area with a shortage of modern, high-quality warehouses, and for this reason, Segro will proceed to construct a 51,000 m2 property (…).

Whilst the construction and financing of the project will be completed over 2 phases during 2018/2019, work on the first phase spanning 29,000 m2 will start at the beginning of Q1 2018. This project coincides with the construction of a 20,000 m2 warehouse that the firm is working on in Martorelles, which will be completed in the summer and available for rent thereafter (…).

With these two new acquisitions, Segro, in its commitment to expand its presence in Spain, is positioning itself as one of the important investors in the Spanish logistics market with a portfolio spanning 255,000 m2. Segro is continuing to focus on high-quality buildings and prioritise strategic locations to create a privileged portfolio of warehouses for distribution and urban logistics, creating high added-value spaces for large companies and SMEs alike.

About Segro

Segro is a British Listed Real Estate Investment Company (Socimi) and European market leader in the management, promotion and construction of logistics and industrial assets. Segro owns and manages a portfolio of properties spanning 6.3 million m2, with a market value of GBP 8 billion, providing services to various clients in the logistics and industrial sector. Its parks are located in the main distribution and transport hubs of the countries in which it has a presence. It owns some of the best logistics parks and transport centres in Europe.

Segro enjoyed a record year in 2016 and according to its provisional results for 2017, the company recorded a 3.9% increase in its net rental income. Moreover, it signed rental contracts worth GBP 27.5 million (around €30.8 million), up by 28% compared to the same period in 2016 (…).

Original story: Press release

Translation: Carmel Drake

Juan Velayos: Spain’s New Property Developers Will Regulate Land Prices

10 April 2017 – El Economista

Neinor Homes is advancing with the purchase of land to fulfil its plans, which include reaching a cruising speed of completing the construction of between 3,500 and 4,000 homes per year.

In the first quarter alone, the firm, which just a week ago was the first property developer to debut on the stock market in Spain since the crisis, spent €51.5 million buying up buildable land, amounting to almost 90,000 m2 and with capacity for the construction of 700 homes.

“We are continuing to see that now is a good time in the market to buy land”, said Juan Velayos, CEO at Neinor. In this sense, the director stated that the company that he manages is going to continue being very rigorous in these operations to achieve the property developer margin of 18% that it has set itself.

With respect to the rises in market prices that are being seen in some areas, Velayos considers that the new players in the property development market “will act as a natural regulator of the market”.

“I do not think that land prices are going to continue to rise by as much, provided buyers are disciplined. This is a business that is now working with its own funds and buyers with this profile are much stricter with their purchases”. “Unlike what I hear on the grapevine, I do not think that we are going to see a repeat of what has happened in previous periods and that we will only see price rises that make sense”.

The director said that the difference is marked by equity. “When the banks were putting up the cash, they (property developers) were more aggressive. Nevertheless, when you are spending money from your own pocket, you are more inclined to be disciplined. That phenomenon is going to regulate the market”.

On the other hand, Velayos considers that the availability of land is very important. “I think that Spain is going to have a lot of land for several years”. “It is true that there is a problem with buildable land, which we are all aware of. It is also true that the time needed to make land “buildable” is eternal, but there is no shortage of land”.

The director considers that “the solution is none other than to try to ensure that those time frames don’t last forever like they currently do, but there is no problem in Spain in terms of land classified as residential. Simply, the urban planning procedures need to adopt coherent deadlines, and that will gradually happen”.

“I believe that Spain is entering a new phase in which the sector is basically being institutionalised. I am sure that this cannot only remain in the private part of the value chain”. In this way, he is optimistic and hopes that the public sector will start to understand that “the property development market generates a lot of employment, wealth and contributes to GDP”, and that in the end “those harmed by the lack of land are none other than property buyers”.

The property developer will complete and hand over 300 homes this year, however, it will not be until 2018 when the homes of the new stage will start to be completed. Currently, Neinor Homes has more than 4,000 homes in progress and more than 2,000 homes in an advanced phase.

Original story: El Economista

Translation: Carmel Drake

Foro Consultores: Land Prices Soar In Certain Pockets Of Madrid

13 February 2017 – El Confidencial

Land prices are soaring, house prices are rising, the buying frenzy is gaining momentum in some areas and in certain developments…Is history repeating itself? Are we witnessing the gestation of a new real estate bubble, albeit not on a national scale, but nevertheless in certain areas of the country. That is what seems to be happening in some neighbourhoods of Madrid. But, the answer, for the time being at least, seems unanimous: not yet.

Buildable land, in other words, land that is ready to be built upon, is running out and, across Spain, there is barely enough land left upon which to construct the 1.5 million homes estimated to be required to supply the market for the next 8.6 years. In Madrid, the land will run out in just over 6 years, according to the latest report from the appraisal company Tinsa. It identifies a worrying shortage of this type of land in areas of expansion to the north of Madrid, as well as in certain specific points of the metropolitan area, such as Pozuelo, Villanueva de la Cañada, Coslada and Rivas. In some of these areas, according to warnings from Tinsa, there will be no buildable land left within 12-24 months. This situation has, unsurprisingly, led to sharp increases in land prices in certain areas. And these rises are concerning the sector. Where are these first warning signs starting to sound?

Valdebebas

The large real estate development in the north of Madrid, which was launched at the height of the crisis and which has fallen victim to numerous legal setbacks, has become, in the eyes of the residential sector, a clear example of the extent to which land can become a very sought-after, as well as a very dangerous, asset.

“Without doubt, it is one of the areas where land prices have grown significantly. In 2014, they ranged between €750/m2 and €900/m2, whereas nowadays operations are being closed for more than €1,200/m2 and €1,300/m2, and the perception in the market is that land can no longer be sold for less than €1,400/m2”, explained Vicente Quintanilla, Director of the department for Investment and Land at Foro Consultores. According to this expert, “this trend generates significant tension in terms of the prices of new builds, which are being sold for €3,000/m2 in certain developments”. (…).

Pozuelo, Aravaca…

Another market where prices have also risen significantly is the municipality of Pozuelo de Alarcón, where Sareb sold land for around €1,000/m2. (…).

Indeed, the supply of land in Pozuelo has completely run out and families in need of homes are heading to other markets, such as in Boadilla del Monte, a cheaper alternative. According to data from Foro Consultores, the gap in prices is very significant. “To give you an idea, a family home or chalet in Boadilla costs around €450,000 on average, compared with between €700,000 and €1 million in Pozuelo.

Scarce and sought-after plots of land have also seen sharp price increases in recent years. “In El Camino de Barrial, in Aravaca, land prices have risen from €1,200/m2 in 2014 to around €2,000/m2 now. (….).

Boadilla del Monte, at boiling point

Boadilla del Monte is another one of the markets that has experienced a huge boom over the last two years. And there, it has not been due to the scarcity of land, but rather because of the strong demand from families who, as described above, cannot find homes in Pozuelo de Alarcón.

“For family home plots, land prices have increased from €400-500/m2 in 2014 to €800-900/m2 in2016, say Foro Consultores. (…).

Euphoria in Méndez Álvaro and rises in El Cañaveral

In the heart of the capital, where land is noteworthy due to its absence, land prices have increased considerably. In 2014, buyers paid €1,000/m2 and in a recent operation, whereby Adif and Renfe sold a plot to Vía Célere, the price paid amounted to around €1,900/m2. (…).

This increase in land prices is not exclusive to the area to the north of Madrid (…). The price of more affordable land and cheaper homes has also risen significantly in recent months.

Such is the case of El Cañaveral, in the east of Madrid, where “last summer, land prices amounted to around €360-370/m2 and now plots are going for €450-500/m2” (…).

Finally, all of the experts lament the fact that during the crisis, no agreement was reached to manage land, which has resulted in this significant shortage and in the inevitable increase in prices. They advocate greater agility in terms of urban planning, especially where the shortage is leading to a bottleneck in the market.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake