Fotocasa: House Prices in Ibiza Cost 38% More Now Than in 2008

25 April 2019 – El Confidencial

Together with Madrid and Barcelona, the real estate market in the Balearic Islands has led the real estate recovery in recent years. Boosted by its geographical limitations (land for the construction of new homes is finite), the boom in tourist rents and the huge push from foreign demand (foreigners account for 30% of transactions), house prices have soared over the last four years to return to the levels of the bubble, and, in some cases, even higher.

Specifically, house prices in both Ibiza and Calvià are now higher than their historical peaks at the height of the previous cycle (up by 38% and 1.6%, respectively, compared to February 2008). That is according to data published by Fotocasa relating to second-hand homes, which reveals that the number of building permits being granted in the two municipalities has also returned to pre-crisis levels.

In fact, Ibiza is one of the most expensive cities in Spain for buying a home, after San Sebastián and Sant Cugat del Vallès, according to Engel & Völkers. Much of the rise in house prices on the island is due to the strong rise in demand, especially from overseas buyers, with Germans leading the ranking by nationality.

According to the College of Registrars, the Balearic Islands is the second most active autonomous region in Spain in terms of house sales with 13.41 sales per 1,000 inhabitants, outperformed only by the Community of Valencia with 15.88 and ahead of the Community of Madrid with 11.63. Moreover, it is the eighth most active province by absolute number of transactions.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

JLL: 47 Halls of Residence for Students are Under Construction in Spain

24 April 2019 – El Confidencial

The student hall sector is on a roll. With almost fifty projects underway (47) and 17,500 new beds to be added to the existing portfolio by 2022, experts forecast total investment of €1 billion in the sector over the next 4 years.

In 2017, investment in the sector amounted to €560 million, ten times higher than the figure recorded in 2016 (€50 million). Last year, the number dropped to €141 million, but according to Nick Wride, Director of Living and Alternatives at JLL Spain, that was “due to a lack of residences in operation available for sale”. Moreover, it was still the highest figure ever recorded excluding corporate transactions – the data in 2017 was impacted by the completion of 2 large corporate deals.

Last year, 18 operations were closed involving the purchase of land or buildings for conversion. 55% of the investment was undertaken in Madrid and Barcelona, with the remaining 45% made in the main regional cities, such as Málaga, Sevilla and Granada. The operators behind the new beds under construction include Nexo, Resa, WPCarey, Invesco, CBRE GI, Axa and GSA, amongst others.

Student halls offer some of the highest yields in the sector: 5.5% in the secondary cities and 5% in Madrid and Barcelona, in line with those generated by nursing homes (5.5%) and logistics assets (5%), but well above those seen in other segments such as retail premises (3.15%), offices (3.50%), residential (3.50%) and hotels (4%).

The reason is the enormous demand that exists for these types of assets. In Spain, almost half a million students need accommodation, but there are currently just 91,000 student beds. The gap is clear, and growing, boosted by an increase in the number of domestic and international students travelling away from home to study. Those not finding student accommodation have to rent in the private market – an informal, heterogeneous, inflexible and potentially expensive option (particularly in Madrid and Barcelona where prices are soaring).

All this makes the market for student accommodation extremely attractive.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

CBRE: Hotel Investment in the Balearics Doubled in 2018 to c. €1bn

26 March 2019 – Preferente

According to data compiled by CBRE, 47 transactions were closed in the hotel market in the Balearic Islands in 2018, corresponding to a total investment volume of more than €967 million. That figure accounted for 20% of the capital invested in Spain during the year and 32 of the transactions were concentrated in Mallorca, followed by Ibiza with 11 operations and Menorca with just 4.

Most of the operations involved hotel portfolios although two individual asset sales stand out due to their high prices per room: Hospes Maricel & Spa (as part of the Hospes Portfolio) and Belmond La Residencia. Both are 5-star establishments.

Palma (de Mallorca) maintained its position as an attractive urban tourist destination, with the addition of seven new hotel establishments comprising 275 rooms during 2018 alone.

More than 10.3 million visitors travelled to the Balearic Islands during 2018, up by 2.3% YoY, breaking the record the fourth year in a row. Nevertheless, the number of overnight stays fell slightly to 59.3 million (down by 0.4% YoY). Meanwhile, the ADR of the hotels on the islands broke the €100 barrier to reach €104.10 in 2018, up by 5.5% compared to 2017. In addition, RevPAR rose by 3.5% YoY to €80.10.

Original story: Preferente (by R.P.)

Translation/Summary: Carmel Drake

Savills: Logistics Leasing in Madrid Rose by 2% in 2018 to Exceed 935,000 m2

14 January 2019 – Savills Aguirre Newman

The logistics market in Madrid has registered a new leasing record. The boost from e-commerce has been the main driver behind the absorption of 935,000 m2 of space in 2018, which represents an increase of 2% with respect to the historical record figure in 2017, according to data from Savills Aguirre Newman.

During the last quarter, 23 operations were signed involving more than 300,000 m2 of space, compared with 24 operations and 308,000 m2 of space during the same period in 2017. During the year as a whole, 77 operations were registered in 2018, compared with 70 during the previous year. It is worth highlighting the importance of the cross-docking activity during 2018, where seven operations were closed.

In terms of rental prices, the €8/m2/month peak that established the annual maximum was recorded at T4 (Airport) in Barajas. Excluding that figure, due to the uniqueness of the Barajas market, maximum rents exceeded €6/m2/month in a cross-docking operation in San Fernando de Henares. The incorporation of new high-quality projects that are adapted to the requirements and expectations of the operators have favoured an increase in prime rents to €5.5/m2/month (+7% YoY).

In terms of the size of the operations, almost 50% of the space leased during the last quarter of the year was concentrated into four operations spanning more than 30,000 m2 each, all of which were signed in the third ring.

By area, the distribution of the surface area leased between October and December was very homogeneous, with 55% and 45% registered in the Corredor del Henares and the southern area, respectively, although the Corredor del Henares continued to capture the most demand. The distribution in terms of the number of operations clearly showed the superiority of Corredor del Henares, which accounted for 70% of all activity (16 operations).

The annual analysis by area reveals a similar picture. The volume of surface area leased was very similar (>495,000 m2 in Corredor del Henares and >408,000 m2 in the southern area), but by number of operations, Corredor del Henares again accounted for the bulk of activity (48 operations versus 22 in the south).

Activity in the land market is continuing to gain weight. During 2018, 34 operations were signed in total spanning 1,800,000 m2 (+60% YoY). It is worth highlighting the three areas that accounted for almost 50% of the land surface area operations: Guadalajara (>350,000 m² in 2 operations), Illescas (>326,000 m² in 4 operations) and Torija (>279,000 m² in 4 operations).

The year closed with an availability rate of 6.9%, which represents a decrease of almost two points with respect to 2017. During 2018, more than 650,000 m2 of space was incorporated into the market, of which 67% was already committed. The future supply for 2019 will exceed 1,500,000 m2, of which 30% already have pre-rental contracts.

The dynamism in the market for users of the logistics sector during 2018 has been reflected in the investment market, with 45 operations exceeding €1.3 billion. Those figures mark new records in the historical ranking. The number of transactions involving individual assets stood out since it exceeded the figure recorded in 2017 by three times.

Original story: Savills Aguirre Newman 

Translation: Carmel Drake

Málaga: One of Spain’s Top Cities for Hotel Investment Again in 2018

11 January 2019 – La Opinión de Málaga

Málaga has consolidated its position as one of the tourist areas with the highest volume of hotel investment in recent years, even though the data for 2018 was somewhat lower than that registered in 2017, which was an “extraordinary” year, according to a report presented yesterday by the consultancy firm Colliers International Spain. In this way, Málaga recorded a total investment of €215 million in 2018, which represented 5% of the national total, estimated at €4.81 billion. The study includes investments in existing hotels (improvements and sales/purchases) as well as those dedicated to land and non-hotel properties (for their conversion to hotel use).

The consultancy firm explained that hotel investment at the national level increased by 23.1% in 2018 with respect to the previous year, to achieve a “new historical maximum”. Nevertheless, in the case of Málaga, investment decreased by 50%, motivated by the high levels reached in the area in recent times, with a “very vertical” investment, which has made investors “more cautious” following an “extraordinary” 2017 (…), according to the Partner and Director for Hotels at the consultancy, Miguel Vázquez.

In 2018, ten hotel transactions were closed in Málaga (two in the capital and eight in the rest of the province). The most important deal was the purchase of a hotel by the Greek hotel group Ikos Resorts. In the capital, the purchases corresponded to NH Málaga and Vincci Málaga – in both cases, the ownership changed hands but the hotel management remained the same.

Two buildings were also purchased for hotel use, both in the capital: the Equitativa (acquired by the Didra investor group) and another on Calle Puerta del Mar, where the chain Catalonia is going to open a hotel. On the other hand, there were two land operations, also in the capital, by Room Mate and Well&Come.

The Canary Islands was ranked ahead of Málaga as the region that accounted for the most investment in 2018 (€1.63 billion), which represented 35% of the total, followed by the Balearic Islands, with €944 million (21%). Madrid accounted for another 13% of hotel investment (€601 million) whilst Barcelona recorded €244 million (5%), very similar figures to Málaga. The Catalan capital also saw its investment volume decrease by 50% in 2018, according to data from Colliers International Spain (…).

The strength of the holiday sector

Based on the figures for 2018, Spain was ranked in second place for hotel investment in Europe, behind the United Kingdom, according to data recorded to September 2018, with a market share of 24% of the total for the region, which amounted to €21.6 billion. In total, 273 hotels were purchased, containing 36,189 rooms, 91 more than during the previous year, when 182 establishments changed hands involving 28,813 rooms (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake

CBRE: Hotel Investment Set a New Record of €4.9bn in 2018

10 January 2019 – Expansión

The hotel segment broke a new record last year thanks to two key operations: the takeover of Hispania by the US fund Blackstone and the takeover of the chain NH by the Thai firm Minor.

The hotel segment made history again in 2018 with a record investment volume of €4.9 billion, which represented an increase of 33% with respect to the previous year, boosted by the US fund Blackstone’s takeover of the Socimi Hispania and the Thai firm Minor’s takeover of the Spanish chain NH.

According to data from the consultancy CBRE, last year, 240 hotel assets were transacted in Spain spanning 36,500 rooms in total, which represents growth of 17% and 30%, respectively. In other words, more and larger-volume operations were closed in 2018 than in 2017.

The hotel market whereby completed five extraordinary years, driven by the excellent evolution of tourism. Spain is a market leader in this activity, with 81.9 million international visitors in 2017 and 81.2 million last year (…).

The most active investors in 2018 were institutional players, which accounted for 66% of operations, followed by hotel groups (21%) and private equity and family offices (13%). In the ranking of operations, the purchase of Hispania stands out, which ended up in the hands of Blackstone after the fund acquired more than 90% of that company. The US giant purchased the Hungarian-born magnate George Soros’ 16.56% stake in Hispania in April and, subsequently, launched a takeover valuing the company at €1.992 billion. After successfully completing the takeover in September, Blackstone became the largest hotel owner in Spain, with a portfolio of 46 assets and more than 13,144 rooms.

After the purchase of Hispania, came the takeover of NH by Minor. Following that operation, the Thai group became the owner of a portfolio of 350 hotels in Europe and Latin America – 30% of which are in Spain.

Other significant operations also included the entry into the market of the Chinese group Gaw Capital, which acquired 50% of the Hospes Hotel Group, worth €125 million, teaming up with Omega Capital, the family office owned by Alicia Koplowitz, owner of the other 50% of the chain.

In terms of individual assets, the purchase of the luxury Villa Magna Hotel in Madrid stands out. The Turkish group Dogus sold it to the Mexican Socimi RLH, chaired by Allen Sanginés-Krause for €210 million.

Renovation

The National Director of CBRE Hotels España, Jorge Ruiz, explained that, as well as the vertiginous sale of hotel assets, the notable investments in asset renovations stood out once again.

“The Spanish hotel stock is better equipped today to face the challenges on the horizon, such as the recovery of competing destinations, the impact of a hard Brexit and a slowdown in the Spanish economy”, he said.

Ruiz explained that, unlike during the previous upward cycle, hoteliers have opted to invest in renovating their portfolios, which will allow them to increase their prices.

In terms of the type of assets, vacation hotels accounted for 64% of investments, following the trend established in 2017, due in large part to the purchase of Hispania, whose hotels are located primarily on the Spanish islands and along the coastline. Investment in urban assets went from 40% to 36%. In 2018, the main star asset were 4-star hotels, which accounted for 64% of operations, followed by 5-star hotels, with 21%.

Star destinations

By destination, the Canary Islands accounted for 35% of investment, followed by the Balearic Islands, with 20%. The third-ranked location was Madrid, with 12%, followed by Barcelona (8%) and Málaga (5%) (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Foreign Capital Causes Investment in Madrid’s Offices to Soar

29 November 2018 – Expansión

Foreign capital is raising its game in the office market in Madrid and has caused investment during the third quarter to soar to a record level: almost €800 million. That figure, which is the largest since 2007, is explained by three mega-operations, which had a combined total of €511 million and accounted for almost 65% of the total transaction volume, according to a report compiled by the real estate consultancy Savills Aguirre Newman.

By volume, the largest transaction closed in the period was the purchase by the British firm Tristan Capital of a portfolio of offices spanning 78,000 m2 in Madrid from Colonial for around €280 million; it was followed by the purchase by the French firm Amundi Immobilier of the Pórtico building in Campo de las Naciones; and the acquisition of FCC’s headquarters in Las Tablas by Safra Sarasin.

In Spain, during the first three quarters of the year, the cumulative investment in offices amounted to €2.1 billion, which almost equals the total amount transacted in the whole of 2017. Specifically, Madrid accounted for 70% of the total invested during the first nine months of the year, with €1.4 billion worth of transactions signed.

Forecasts

In terms of forecasts, the consultancy firm has identified that almost €1 billion of operations are under negotiation and could be closed within the coming months. “The dynamism in terms of demand and the increase in products for sale in open processes could mean that the annual volume closes at 2016 levels, exceeding the figure recorded in 2017 by more than 50%.

In terms of absorption, the total volume during the third quarter increased the cumulative figure to 440,000 m2, which represents a YoY increase of 4%. “The good behaviour of the market during the third quarter allows us to forecast an annual volume of more than 600,000 m2”, explain sources at the consultancy firm.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Anticipa: House Prices in Madrid & Barcelona Return to their Peaks of the Real Estate Boom

11 November 2018 – El Confidencial

The (real estate) recovery is really heating up. House prices in Madrid are on the verge of returning to their peaks of 2007. What seemed impossible, is now becoming a reality. That is according to a report from Anticipa Real Estate, which forecasts two-digit increases in house prices in the Spanish capital this year and next. Specifically, it predicts that homes will become more expensive by 10.2% in 2018 and by 11.5% in 2019, rises that are twice as high as the percentages that experts consider to be sustainable.

House prices have already been growing at rates of 10% during the last two quarters, according to the Repeated Sales House Price Index, prepared in accordance with the Case & Shiller methodology from the United States applied to Spain, which analyses repeat sales of the same homes. In other words, they are rising at double-digit percentages reminiscent of those recorded at the height of the real estate boom a decade ago.

Despite that, both property developers and banks are insisting that the market is very different to the one seen more than ten years ago and they categorically rule out that we are facing a similar situation to then. On the one hand, access to financing remains very restricted for solvent clients, whilst the recovery in prices is very uneven across the country. Whilst in the cities (and in certain neighbourhoods), prices are skyrocketing, in others, prices are still decreasing.

Although on average, by the end of 2019, house prices in Spain will be 15% below the peaks recorded in 2007, according to the report from Anticipa Real Estate, there are some hot spot areas where those prices have already been exceeded. In Cataluña, another of the hot spots in the Spanish market, increases of around 9% are expected next year and that despite the delicate political situation in Cataluña, which has had a direct negative impact on the real estate market – in Barcelona -, which, until a year ago, was performing extremely well in terms of transactions and prices.

Madrid stands out from the rest of Spain, with an evolution in terms of residential prices that has caused the first alarm bells to start sounding. In certain neighbourhoods, such as Chamartín, Chamberí and Salamanca, second-hand homes now cost the same as they did ten or twelve years ago, whilst in others such as Arganzuela, Centro, Moncloa and Tetúan, prices are close to exceeding those levels. In others, where prices are still well below their peaks of the bubble, the market is rising at rates of 20%, rapidly reducing the gap with respect to 2008.

They are peripheral areas of the city towards which price rises are moving like an oil slick. And that is because prices, both to the purchase and rental markets in the centre of the city have reached such prohibitive levels that much of the demand is moving en masse to more affordable areas, resulting in significant upward pressure on prices.

According to the latest data from Tinsa, in Vicálvaro, Ciudad Lineal and Villaverde, house prices have risen by more than 20% in the last year, compared with rises of 8.5% in Chamartín and 13% in the district of Salamanca. Meanwhile, the municipalities of Barcelona, such as L’Hospitalet de Llobregat, Castelldefels, Esplugues de Llobregat and Sabadell, are experiencing a similar phenonemon with increases of more than 15% (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Haya Real Estate Negotiates Contracts with Sareb & BBVA Ahead of its IPO

31 July 2018 – Europa Press

Haya Real Estate, the Spanish real estate servicer owned by the US fund Cerberus, has linked its possible IPO in Spain to the “visibility” that it obtains over the negotiations that it is holding to renew its contract to manage the real estate assets of Sareb and to take over the contract of BBVA.

That is according to the firm’s Finance Director, Bárbara Zubiria, speaking during the presentation of the servicer’s half-year results.

With respect to Sareb, Haya Real Estate is currently offering the bad bank various alternatives ahead of the termination, in mid-2019, of its contract to manage some of the bad bank’s assets.

In terms of BBVA, the firm is waiting for the entity to decide whether to award it the management of the assets that it is going to transfer to a joint venture owned by the bank together with Cerberus.

For the time being, during the first half of the year, Haya Real estate saw its revenues rise by 20% to €130.2 million, boosted by an “increase” in the commissions that it charges for its activity and management.

Meanwhile, the EBITDA grew by 16% to €64.9 million, according to reports from the company.

During the first half of the year, the servicer led by Carlos Abad managed assets amounting to €38.8 billion, on which it closed transactions worth €2.4 billion, up by 58% YoY.

In financial terms, at the end of the period, the firm had corporate debt amounting to €463 million.

Spain’s first listed servicer

Haya Real Estate is continuing to weigh up the pros and cons of its leap onto the stock market even though two of the three real estate companies that had announced their debuts, Azora and Testa Residencial, postponed their own IPOs and have opted to list on the MAB instead.

In the event that it does make its stock market debut, the firm led by Abad will become the first of its kind to list on the stock market in Spain and one of the first in Europe.

The servicer of Cerberus is not a real estate company, but rather a company that manages and develops real estate assets for third parties, in this case, primarily assets that were foreclosed by the financial institutions during the crisis.

Constituted in 2013, the firm currently manages loans and real estate assets worth almost €40 billion. Some of the entities that have entrusted the firm with the management of their assets include Cajamar, Liberbank, BBVA, Sareb and Bankia, amongst others.

Original story: Europa Press

Translation: Carmel Drake

Servihabitat: Spain’s Housing Market Continues on its Positive Trajectory

24 July 2018 – Eje Prime

The housing market in Spain is going to continue with positive figures across all areas in 2018. That is according to a report from Servihabitat, which indicates that prices are going to continue to rise this year, up by 5.4%; operations are going to soar, with a leap of 24%; and new build starts are going to rise by 16.6% (all figures compared to last year).

According to the report, these increases respond to a residential market that “is progressing with clear signs of consolidation”, which is explained by factors such as an improvement in consumer confidence, the containment of unemployment and the positive evolution of companies’ turnover.

These elements “are encouraging the start of housing projects and configuring an expansive cycle”. With a special focus on the largest populations in Spain, such as Madrid, Barcelona, Málaga, Valencia and Sevilla, in the case of homes for regular use, and on regions such as Galicia, La Rioja, the Community of Valencia and the Canary Islands, the number of new home starts will rise by 16.6% this year to 93,895 units.

Meanwhile, the number of finished homes will rise by 15.5% during the course of this year, according to Servihabitat’s forecasts, with a total of 63,744 homes delivered. Despite that, the pull of demand will reduce the new build stock by 4% to 454,939 homes, with a greater reserve in the communities of Cataluña, the Community of Valencia and Andalucía (the three account for 49% of the total stock).

The second major increase will be seen in the number of transactions, in other words, the sale of homes signed at the notaries’ offices. According to the report, the year will close with a total of 669,739 transactions subscribed, up by 24.3% compared to 2017.

Macroeconomic conditions, together with opening up of the financial sector to the granting of mortgages and demand for property investment (thanks to the returns that the rental market is offering) are the three main drivers of demand, which have reduced the average sales period for a normal home to 6.6 months.

Finally, the evolution of supply and demand will lead to a rise in house prices once again this year, up by 5.4%, compared with an increase of 6.2% with respect to the previous year.

Prices are expected to grow by the most in the Community of Madrid, with a forecast increase of 11.5%; followed by Cataluña, 9.6%; the Balearic Islands, 8%; and País Vasco, with an expected increase of 5.2%. By contrast, prices are forecast to rise by less than 1% in the autonomous regions of Extremadura and Castilla-La Mancha in 2018.

The report also reflects the opinions of the real estate agents who form part of Servihabitat’s own network of branches and its collaborating agents. In particular, 64.2% of that sample believes that the price of regular homes (primary residences) will remain stable in 2018, compared with 33.2% who think that they will rise and just 2.6% who consider that prices will fall. In the case of holiday homes, the dispersion is somewhat greater: 34% forecast that prices will rise this year; 62.6% think they will remain stable and 3.4% believe that they will fall.

Original story: Eje Prime (by C. de Angelis)

Translation: Carmel Drake