Tag: stock

C&W: 86 Office Spaces Spanning 101,000 m2 were Leased in 22@ in 2017

2 July 2018 – Mis Oficinas

According to the Marketshot report issued by the real estate consultancy Cushman & Wakefield, Barcelona’s 22@ district closed 2017 with 86 rental operations, spanning a total surface area of 101,000 m2, which represents the highest figure in the last ten years.

The 22@ district is continuing at record levels for another year. According to the Marketshot report from the real estate consultancy firm Cushman & Wakefield, the district closed 2017 with a total of 86 rental operations, spanning a surface area of 101,000 m2, which represents the highest figure in the last ten years and 34% more than in the previous two years. This leasing figure accounted for 30% of the total office space leased in Barcelona and was led by pre-lease operations, such as the case of Amazon in the Luxa Silver building (10,241 m2), Activision (King) in Ciutat de Granada 150 (8,837 m2), Hewlett-Packard in the building located on c/Tanger 62 (8,132 m2) and WeWork in the Luxa Gold building (6,572 m2).

Potential tenants in the district are mainly looking for sustainable, high-quality spaces. In this sense, 78% of the surface area leased belongs to buildings with A or B+ ratings. The district had only 60,000 m2 of space available at the end of the first quarter of 2018, which represented a 15% decrease in the available surface area in one year and an availability rate of 7%. If we take into account high-quality buildings only (those with A and B+ ratings), the percentage of available space in the 22@ district decreases to 5.7%. Leasing levels recorded at the moment and forecast for the next few months support the development of new properties.

The 22@ district currently has 129,000 m2 of space under construction, scheduled to be handed over between the second half of 2018 and 2019. The potential space for offices in the district amounts to more than 800,000 m2, of which 350,000 m2 is located on finalist land.

Investor interest in the district broke all records in 2017. In terms of investment volumes, the 22@ district received total investment of €161 million, which tripled the €51 million recorded in 2016. In square metres, the investment volume amounted to 173,000 m2, well above the figure at the end of 2016, which amounted to 33,000 m2.

New construction in the area has reactivated in recent months, due to the type of demand and, to a large extent, the growth in rents. On the basis that this trend is going to continue, there will be an impact on capital markets, where we will start seeing operations again soon.

Flexible and coworking spaces are enjoying an unprecedented boom in Barcelona at the moment. The rise in coworking spaces in the city is clear and during the first six months of 2018, 52% more space was leased in this segment than during the whole of 2017.

In Barcelona, the 22@ district is still the main hub of innovation in the city, attracting technological companies, startups and the digital eco-system. The main coworking operation this year, amounting to 4,500 m2, was completed in 22@ and these types of spaces already account for 3.5% of the constructed stock in the district (…).

Original story: Mis Oficinas 

Translation: Carmel Drake

Spain’s Banks Are Queueing Up to Finance Rental Housing

4 July 2018 – El Economista

One of the major challenges facing Spain in the residential market is the organisation of the rental home segment in light of the fragmentation that exists and the boom that is currently underway. There is currently a great deal of demand, but there is also a distinct lack of supply, and the new Housing Plan approved by the Government is not proving sufficient to incentivise the supply with the granting of aid to property developers that build rental housing. In light of this situation, we ask ourselves whether the opportunity that currently exists in Spain to organise the rental market is being taken advantage of?

“I think that the professionals and investors who have launched portfolios thanks to the creation of Socimis are taking good advantage of the opportunity, but I believe that some important players are simply not supporting the sector, such as the Public Administrations. Both nationally and locally, but above all locally, they are failing miserably and this is generating price tensions due to a lack of supply”, explains José Luis Ruiz Bartolomé, Director General of the consultancy firm Chamberí Asset Management.

Along the same lines, José María Cervera, Corporate CEO of Renta Corporación agrees and states that the public sector has been left on the sidelines. “Private capital has taken the initiative in this new segment of the market because it has seen a business opportunity and is looking for returns. And the public sector is going to have to enter, but now the arbitrage and those who are institutionalising it are in the private sector, and so they are going to place more rental properties on the market”.

For all of these reasons, during 2018, we are observing the creation of a new industry. Given that in Spain there are 18.5 million households, according to the latest figure from the Active Population Survey (EPA), and of those, 22% are rental homes, there are 4.7 million rental homes in total. Of that portfolio, only 5% are owned by institutional companies; the remaining 95% are owned by individuals.

“The Public Administration has done something important, which is to reorganise the real estate sector and separate property promotion and development activities, by creating Socimis that operate under a special framework. That has brought us closer to a situation that is more similar to those seen in other European countries. Now, we will have to see how the different players that are emerging in this market position themselves, and in two or three years, we will see the consolidation of this sector, which means that the Public Administrations will have to continue refining their regulations so that the sector can develop and be brought into line with those of other European countries”, says Nicolás Díaz-Saldaña, CEO at Témpore (Socimi of Sareb).

Nevertheless, not all of the experts in the sector concur. David Botín, Director of Real Estate Development at the ACR Group, says that this opportunity is not being leveraged. “It is possible that we are seeing the beginnings of a new rental market, but to date, just 22% of our households are renting and that supply is being provided almost exclusively by individuals. As such, it is very hard to fathom how we will reach the percentages seen in other countries such as Germany, where rental properties account for 48.3% of the market or the United Kingdom (36.6%). It is really hard to increase the stock in Spain because there are 19 million homes, and so a 1% increase means placing 190,000 more homes on the rental market, and that would take between three and four years (…). At that rate, nothing is going to happen quickly. No market works if there is no equilibrium between supply and demand. We need a large and varied supply for this market to work effectively”, he adds.

It is true that, historically, Spain has been a country of property owners, but the cultural and socio-economic changes that have been happening in recent years are drawing some new business lines, where the rental market is taking centre stage and is starting to become institutionalised. The new players in this market are: on the one hand, the Socimis, which are listed companies that serve as investment vehicles with tax benefits. The largest of them is Testa, which will debut on the stock market soon and which is owned by Santander, BBVA, Acciona and Merlin Properties. There are also others such as Azora, Vivenio (Renta Corporación), Témpore (Sareb) and Fidere, amongst the largest. Within this market, we can also include the servicers, which although they do not own properties, manage them, such as Solvia (Sabadell), Anticipa (Blackstone), Haya (Cerberus), Altamira (Apollo and Santander). And then, there are companies owned by the banks, such as Building Center (Caixabank) and other types of companies such as Alquiler Seguro, family offices, etc.

Therefore, now that the new players required to institutionalise this market are starting to be created, the next step is to develop a portfolio of assets. “We are going to need to reach agreements with property developers to build homes for rental (…), and at Sareb, we are going to use some of the land that we have for the co-development of rental homes (…)”, says Nicolás Saldaña.

That is a formula that is starting to spark interest. According to the experts, property developers have always been reluctant to enter the rental market, because they didn’t see it as their business, but in the end, the market trend has changed and whilst the sale and purchase segment will continue to exist, so too will the rental sector and property developers will have to participate (…).

The rental segment is a market that has always existed in the hands of individuals, but now, it is being professionalised, thanks to the arrival of overseas capital. “Investors have contributed many things, besides capital. They have contributed methodologies, rigour, professionalism (…). The banks were not open to this business before, they only financed promotion, but that has changed. For six months now, everyone has been wanting a piece of the pie and now there is a queue of financial institutions wanting to finance this type of business (…)”. Says José María Cervera (…).

Investing in residential properties is profitable. The gross return from investing in rental homes has increased to 7.3% from 6.3% a year ago, due to the strength of demand for rental properties, according to the real estate portfolio Idealista (…).

Original story: El Economista (by Luzmelia Torres)

Translation: Carmel Drake

CBRE: House Prices Will Rise by 6% in 2018

25 May 2018 – Expansión

Good omens for the Spanish residential market. After experiencing a serious setback five years ago, with a significant decline in demand and, as a consequence, a decrease in prices, the housing market is now well on the road to recovery, with a positive outlook for the year ahead. In this sense, for 2018, the predictions are optimistic, with an estimated increase of 6% in average house prices at the national level, according to data compiled by the real estate consultancy firm CBRE.

“We expect strong growth over the next six to twelve months, which will reach 6% compared to the current YoY rise of 5% and, then growth at a lower intensity from then on of between 3% and 5% for 2019”, says Álvaro Martín, Head of Research at CBRE.

This growth rate of 6% will be more acute in the large cities such as Madrid and Valencia, as well as in tourist towns such as Málaga and the Balearic Islands, where the YoY increases will reach up to 10%, according to the consultancy firm.

“In large cities such as Madrid and Barcelona, we have seen price tension but prices are still 50% lower than the average prices over the last ten years”, explains Samuel Población, National Director of Residential and Land at CBRE España. According to estimates from the consultancy firm, house prices in Madrid will increase by between 8% and 10% this year with respect to 2017.

Despite these price increases, the absolute values are still well below those seen during the real estate boom. In this way, although house prices have been rising at the national level since 2014, the intensity of that growth has been moderate, with YoY increases of around 5%. “In recent years, price rises of between 5% and 6% have been recorded, but during the boom, those figures reached 12%”, recalls Población.

Nevertheless, there are exceptions to that moderate rise: such as the case of towns like Madrid, Barcelona and Palma de Mallorca, where new build house prices have risen by 23%, 34% and 13%, respectively with respect to the historical minimums recorded at the beginning of 2014. Meanwhile, in the second-hand segment, the increases registered amount to 28% in Barcelona, 27% in Palma and 21% in Madrid (…).

Transactions

The price rises are being accompanied by an increase in demand, which, currently, is focused on those buyers who are looking for homes to reposition themselves or as investments.

“House sales have grown at a constant rate since 2015, but they have been very oriented towards the second-hand market, which accounted for 90% of transactions in 2017, due to the lack of supply in the new build segment and the absorption of much of the unsold stock”, says Población (…).

The consultancy firm predicts that demand for housing will continue to grow, with more than 575,000 transactions being closed in 2018, up by 8% compared to the previous year.

Of those operations, foreign buyers will retain an important role, above all, in the market for second homes. “The bulk of that demand is concentrated around five provinces, with established tourist infrastructure: Alicante, Málaga, Barcelona, the Balearic Islands and Tenerife, which accounted for more than half of the average annual volume of transactions by overseas citizens between 2006 and 2017”.

Another buyer cohort will be investors who buy properties to let them out, taking advantage of the growth in the rental market, which currently accounts for around 22.5% of the total stock of Spanish households. “The expansion of the rental market is attracting lots of investors, something that wasn’t happening ten years ago, given that they can now achieve returns of between 4% and 6% on average”, says Martín. By city, in Madrid, the average gross return amounts to 4.7% p.a., compared with 5.4% in Barcelona and 5.8% in Sevilla.

“If we also consider gains from the appreciation in property values, we see yields of up to 9% in the large cities”.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Liberbank Transfers €180M in Toxic Assets to JV with G-P-Bolt

18 May 2018 – El Economista

Liberbank has transferred real estate assets with a gross accounting debt of around €180 million to a joint venture with G-P-Bolt, in which it will hold a 20% stake, according to a statement filed by the financial institution on Friday with Spain’s National Securities and Exchange Commission (CNMV).

This joint venture, in which G-P-Bolt will hold the remaining 80% stake, has been constituted with the purpose of managing, developing and owning a portfolio of foreclosed assets from Liberbank and its group.

Liberbank has highlighted that the close of this transaction, which has a neutral effect on its income statement, forms part of the strategy to reduce its non-performing assets (the most doubtful foreclosed assets), which has resulted in a decrease of €1.82 billion between 31 March 2017 and 31 March 2018, equivalent to a 30% reduction in its stock.

Finally, Liberbank has reiterated its objectives in terms of the quality of its assets communicated to the market and expects to achieve an NPA (non-performing assets) ratio of less than 12.5% by the end of this year.

Original story: El Economista

Translation: Carmel Drake

Málaga Capital Attracts Attention from Top Real Estate Investors

10 April 2018 – Diario Sur

“We are in love with Málaga”. Just like that, without any qualms, Juan Velayos, CEO of Neinor Homes declared his love for the city. (…). Neinor is one of the large real estate giants to have emerged during this new cycle in the housing market. Fed by international investment funds, the property developer is building tens of thousands of homes all over the country. And Málaga is one of the jewels in its crown. “Our forecast sales for the province amount to €850 million”, announced Velayos today at a real estate meeting organised by the Association of Construction Companies and Property Developers (ACP) in the auditorium of the Museo Picasso.

The most striking aspect is that 40% of those forecast sales correspond to Málaga capital, where Neinor starred in a macro-operation last year when it purchased land from Unicaja, as a result of which it is going to be able to build almost 1,000 homes. Velayos highlighted the great appeal of the city for investors and property developers, in part due to the tourist boom and in part because “things are being done significantly better here than in other places” in terms of the processing of urban development plans. (…). The other experts participating in the forum were in agreement with Velayos: Málaga capital is starting to become an entity in its own right in the real estate market, whereas previously it was always in the shadow of the Costa del Sol brand.

In this way, the Regional Director of CaixaBank in Andalucía, Juan Ignacio Zafra, highlighted that the city “is enjoying a unique time”, adding that the western coast “continues and will continue to operate well” and that the eastern coast “has enormous potential capacity” still to be developed.

The Commercial Director of Tinsa, Pedro Soria, stressed that Málaga is the Mediterranean capital where homes are sold the quickest, after Barcelona. And the Director of Capital markets at Savills Aguirre Newman, Pablo Méndez, revealed that the office market in the city also has significant potential, given that Madrid and Barcelona – until now the only two cities that have operated as proper markets in the tertiary sector – are showing signs of depletion and investors are on the hunt for new opportunities. “Very few cities have an office stock of the size of Málaga: around 600,000 m2. But the stock is old, with a significant shortage of buildings that fulfil current requirements in terms of sustainability, energy efficiency and comfort”, he explained. “Monthly rents average around €12/m2, which is insufficient for investors, but we are now seeing maximum rents of €18/m2/month in the centre. When the average rent reaches €14/m2/month, we will start to see new office building projects, which is what we need”, he added, warning, as an aside, about the need to reserve tertiary land in attractive areas of the city.

The Secretary-General of the ACP, Violeta Aragón, highlighted the good times that the real estate sector is enjoying in the province, although she ruled out any risk of a bubble. (…). “The growth percentages may seem exorbitant, but the reality is that we are starting from levels well below those seen ten years ago”, she explained, providing some examples: last year 3,800 new home permits were granted, compared with 40,000 in 2008; and the average price per square metre amounted to €1,479/m2 last year, compared with the peak of €2,415/m2 in 2008.

Original story: Diario Sur (by Nuria Triguero)

Translation: Carmel Drake

C&W: 130,000m2 of Office Space Leased in Sant Cugat since 2015

15 March 2018 – Eje Prime

Sant Cugat del Vallès is growing strong in Barcelona’s slipstream. In addition to being one of the most sought-after cities in the residential market, the office sector is also strongly committed to this location, where 130,000 m2 of office space has been leased since 2015. Those figures place the city as the second location of choice for this segment in the province of Barcelona.

Currently, there are more than 3,100 companies installed in the city, with a financial district containing 49 hectares of business parks and more than 62,000 professionals working in its office buildings, according to the Marketshot report prepared by the consultancy firm Cushman&Wakefield.

According to the research, Sant Cugat del Vallès has played a fundamental role in the expansion of Barcelona’s office stock in recent years, evolving from a dormitory city into a nucleus of activity for the services sector, bringing together workers and residents alike.

Since 2015, the number of office rental operations in the city has soared. During that year, a record volume of office space was leased, with more than 75,000 m2 signed. In 2015 and the following year, 54 transactions were signed in the office market, spanning a leasable surface area of 104,000m2, which represented 27% of all the office space leased in the entire province of Barcelona.

In recent years, large operations have been carried out with the arrival of Stradivarius into an office building that spans 26,400 m2; and the leasing of offices to Echevarne, Mapfre and Natura Bissé Internacional, which contracted 12,000 m2, 10,000 m2 and 9,200 m2 of space, respectively.

In terms of the type of office being demanded, in Sant Cugat, prime products stand out. Quality A-rated offices account for 93% of the total space leased in the city, whilst properties rated Quality A/B+ represent 96% of the leasable surface area. These records have generated a significant decrease in the space available in the city.

In 2017, the shortage of available office space in Sant Cugat became clear with the leasing of just 22,000 m2 of space, a much lower figure than had been recorded in previous years. And, currently, the available surface area has been reduced to just 25,500 m2, which represents an availability rate of 4.9%, when just a few years ago, it stood at 30%.

Sant Cugat is a sought-after enclave for sectors such as pharmaceutical, R&D and technology, due to the services, communications and technical quality of the buildings, according to the report. It also highlights the location in the city of the Esadecréapolis knowledge and innovation centre as a “powerful” magnet for those types of companies to set up shop there.

1,800 m2 on average 

Since 2015, the average rental operation in Sant Cugat has amounted to around 1,800 m2, when between 2010 and 2014, the figure was less than half (750 m2).

Today, in Sant Cugat, there is more than 115,000 m2 of potential office space, of which 100,000 m2 is located on buildable land, without a construction start date. The potential for growth in the stock is significant, and if all the projects were to be completed, the office supply in the city (the capital of the office market on the outskirts of Barcelona) would increase by 22%.

Original story: Eje Prime

Translation: Carmel Drake

INE: House Sales Soared by 23% in January

15 March 2018 – Expansión

The real estate sector is aiming high in 2018 off the back of the economic recovery. Having surpassed the barrier of half a million homes sold in 2017 and whereby made a return to pre-crisis levels, in January, house sales soared by 23% YoY, to reach 47,289 units. It is the best data for a decade, since May 2008, according to the latest data published by INE. That, combined with the 4.5% recovery in prices in February, as estimated by Tinsa’s price index, indicates that the time is ripe for consolidation in the sector. “The consolidation of credit, the improvement in the economic context and the strong outlook for the sector and the economy, in general, explain this reactivation in demand for housing”, explains the Head of Research at Fotocasa, Beatriz Toribio. With respect to December, sales in January soared by 46.8%.

Forecasts for the real estate sector point to increases of 5% in terms of prices and 10% in terms of sales, in line with the forecast evolution of the Spanish economy. Even so, the number of operations recorded is still well below the more than 100,000 homes sold per month in the years prior to 2008, when the real estate bubble burst. Prices have also continued to recover, and whilst in the centre of some cities, they have now recouped their losses, there are still many areas of the country where house prices today are 65% lower than they were in 2007.

On the one hand, the large capitals and coastal areas are leading the increases in prices, boosted by interest from investors, the tourist boom and a shortage of stock and of new homes. In fact, the overheating of prices in many areas is leading to a displacement of demand towards less central areas of those cities.

In terms of sales, the 23% increase is backed by double-digit growth in 13 autonomous regions. Asturias, the Community of Valencia and Murcia lead the rises, with increases of 56%, 40% and 39%, respectively. Nevertheless, only Valencia remained in the top 3 in absolute terms. That community was, after Andalucía, the one where most house sales were recorded in January (7,409 units). Andalucía was the area where most homes were sold, 8,988 units, up by 31% compared to January 2017. The third region on the podium was Cataluña, which recorded 7,334 sales, although at a rate that was well below the average, of 8%. In this regard, Toribio said that although “the political situation may have slowed down activity in the Catalan real estate market, it has not paralysed it completely”.

Meanwhile, in Madrid, 6,526 homes were sold, up by 14%. Together with Cataluña, La Rioja, Aragón and Extremadura recorded the lowest increases in transaction numbers, up by 8%, 5% and 1%, respectively. The geographical differences expand further as you zoom out of the photo. By province, Álava grew by the most (56.5%) and several provinces saw their sales figures fall. Specifically, in Ciudad Real sales decreased by -19.4%, in Zamora by -10.3% and in Badajoz by -7.4%.

The composition of that growth was also uneven by segment, with a clear predominance in terms of second-hand housing. Of the total number of transactions, just 8,272 were new homes, compared to 42,745 second-hand properties, in other words, 17.5% of the assets sold were new and 82.5% were second-hand. Nevertheless, both segments are evolving in parallel, with growth of 23.5% for new homes and of 23% in the case of second-hand dwellings.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Israeli Fund Adar Buys 3.5% of Neinor to Increase its Stake to 15.4%

8 March 2018 – Eje Prime

Neinor Homes is continuing to attract attention from international investors. The Israeli fund Adar has purchased an additional 3.5% of the property developer’s share capital, according to a statement filed by the group with Spain’s National Securities and Exchange Commission (CNMV). In this way, the fund now controls 15.4% of the group.

The package acquired by Adar coincides with the percentage that the US fund Wellington sold a week ago. The Israeli fund has reaffirmed its commitment to the stock in the midst of an attack by bearish speculators, who have doubled their presence in Neinor to reach a record level of 4.5% of its share capital, according to Expansión.

The property developer’s roadmap until 2022 involves investing €1.5 billion in order to hand over 15,000 homes during that period. Neinor’s portfolio of homes in stock currently amounts to 12,472 compared to 9,025 last year.

Original story: Eje Prime

Translation: Carmel Drake

Socimis & Property Developers: Two Sides of the Same Coin

4 March 2018 – Expansión

Property developers and Socimis are two sides of the same coin on the stock market. The two large segments of the listed real estate sector in Spain are moving at different speeds on the stock market after the 2017 results season. Whilst the Socimis, which specialise in the rental of non-residential buildings, are maintaining their cruising speeds, the purely residential property developers are being punished by investors, especially in the case of Neinor.

The company led by Juan Velayos has recorded a share price decrease of 18% this year, reaching its lowest levels since it started trading on the stock market at the end of March last year.

The property developer has just presented its results for 2017, which reveal that it registered a loss of €4.6 million despite generating revenues of €225 million. Moreover, just €77 million of the revenue figure proceeded from the property development business, with the delivery of 313 homes, a rate that is well below the 4,000 units that the firm promises to reach within two years (2020). For 2018, its objective is to hand over 1,000 homes. Investors have penalised the announcement that the company is not going to be able to maintain the volume of house deliveries forecast in its initial roadmap either this year or next.

Punishment

The market’s reaction against Neinor has been virulent. “The time it takes to obtain licences is getting longer and the curve of expected deliveries for 2019 is being delayed until 2020”, explains Velayos, who acknowledges that “we measured poorly”. The company has revealed that it is going to change its strategy of buying only “finalist” land (plots that already have the necessary licences for development) and is going to invest €200 million buying land under management, which is more abundant in terms of supply but which will involve much longer construction times.

Like Neinor, Aedas is also trading below its debut price on the stock market. Its share price has lost just over 9% of its value so far this year and did not vary following the results. During its first year of activity, the real estate company created with land purchased by the fund Castlelake over the last few years recorded revenues of €38.6 million, with a net margin of €12.2 million and a loss of €40.1 million. The losses are due primarily to non-recurring expenses relating to the company’s stock market debut, which had a negative impact of €31.55 million, and a one-off cost of €26.1 million linked to the incentive plan for senior management (…)

Following the cumulative punishment this year, the discount on the net value of their assets amounts to around 5% in the case of Neinor and reaches the double digits in the case of Aedas. But, are they attractive prices? (…). For the time being, analysts are maintaining their ‘buy’ recommendations for the pair (…).

Moreover, the experts consider that both Neinor and Aedas have a bullish potential of around 35% from their current levels (…).

In the case of the classic real estate companies, the results have been varied. Quabit (…) saw its turnover decrease significantly, by more than 80%. The company has handed over just six homes this year, after years focusing on its financial restructuring and the sale of its stock. Now, it has launched an ambitious business plan, which will allow it to resume its property development activity and its share price is up by 6% on the stock market so far this year.

Meanwhile, the Socimis are experiencing a different reality. The four large real estate investment companies (…) debuted on the stock market in 2014 with a combined valuation of €2.6 billion and no assets on their balance sheets. Now, their combined market capitalisation stands at more than €9.3 billion and their portfolios are worth more than €18.6 billion. Including Colonial, the combined profit of these companies has grown by almost €1 billion YoY.

The valuations of the Socimis are much more adjusted. The large players have closed the first two months of the year with share price gains of between 4% and 5%, with the exception of Axiare, which has been limited by the takeover price set by Colonial (…).

Original story: Expansión (by Rocío Ruiz and Enrique Utrera)

Translation: Carmel Drake

Velayos: Neinor Plans to Deliver 15,000 Homes by 2022

23 February 2018 – Eje Prime

Despite ending last year with a loss, Neinor Homes seems to have everything under control. The property developer is now heading into a new  five-year phase during which time it expects to leave behind those losses and invest almost €1.5 billion in the purchase of new land and to deliver up to 15,000 homes, according to explanations provided by Juan Velayos (pictured above), CEO of Neinor Homes, speaking to Eje Prime in an interview.

“You always have to read the cycle and, now, is a good time for the real estate business”, explains Velayos. “We complain that there is not as much land as we would like in the market, but the reality is there is, just not in the hands of property developers”.  Over the next few years, new land will start to be released, which will satisfy the desire of companies such as Neinor Homes, and other players that operate in this sector, including Aedas Homes, Vía Célere and Metrovacesa, to continue growing.

In 2018, Neinor Homes plans to invest around €250 million in land. “At the moment, we are studying land on our radar worth around €500 million, of which €151 million is already in the negotiation phase, another €145 million is under analysis and the remaining €217 million is strategic land for Neinor Homes”, says the director.

Over the next few years, Neinor Homes has set itself the challenge of investing between €300 million and €350 million in the purchase of new land until, at least, 2022. “Nevertheless, we are negotiating several purchase operations for non-buildable plots, minimising the use of own funds, whereby following the Anglo-Saxon model,” said Velayos, as one of the alternatives that he has found to continue gaining ground in the development of its business plan.

In terms of the delivery of homes, since its creation until 2017, Neinor Homes has delivered 432 homes, with a gross margin of approximately 28%. Now, the company has set itself the objective of handing over 1,000 homes in 2018, in order to reach its cruising speed over the following years and double the delivery of finished homes year after year. In this way, Neinor Homes expects to hand over 2,000 homes in 2019, 4,000 homes in 2020 and 8,000 homes between 2021 and 2022.

Currently, Neinor Homes has a portfolio of 12,472 homes in stock, including finished homes, homes under construction and homes under design, compared to 9,025 a year ago, which represents an increase of 28%. The property developer owns a portfolio of buildable land spanning 1.47 million m2, which has also grown since last year, by 29%.

In terms of Neinor Homes’ debt, according to Velayos, it is “more than under control”. The company has net debt amounting to €382 million, up by 31% compared to last year, when its credit obligations stood at €291.6 million. “It is healthy and an indicator that the business is performing well: we finance the construction phases using bank debt and the purchase of land using own funds”, says the executive. The group’s loan-to-value is 22%.

2018 – the turning point

The property developer lost €25 million in 2017, weighed down by the costs of its stock market debut, as the group reported yesterday to the National Securities and Exchange Commission (CNMV). Nevertheless, Neinor Homes still has the objective of becoming profitable in 2018. If Neinor Homes fulfils all of its objectives for the coming year, the company will sell and deliver (and receive the proceeds for) 1,000 homes, at an average price of €300,000. As such, with a return of 20%, the property developer could generate profits of €60 million.

The revenues of the company, which has been listed since March 2017 and for that reason does not compare its accounts with those of 2016, amounted to €225 million, of which €77 million proceeded from the new build property developer business and more than €114 million from the sale of “legacy“, assets proceeding from the real estate subsidiary of Kutxabank, which its former shareholder Lone Star purchased in 2015 to create it.

Following the same calculations, the turnover of the company from the handover of homes in 2018 would thus amount to €300 million, excluding any pre-sales that may be closed during the course of the year, which Neinor calculates will amount to €750 million.

Original story: Eje Prime (by Custodio Pareja)

Translation: Carmel Drake