Juan Velayos: “Neinor will Not Buy Land in Municipalities that Oblige 30% of Developments to be used for Social Housing”

19 October 2018 – El País

Next week, the ‘Meeting Point’ real estate fair is going to be held in Barcelona and the atmosphere is palpable: property developers are angry about the obligation to allocate 30% of new developments to social housing, a measure approved recently by the Town Hall of Barcelona, which may be extended to other municipalities. In an informative breakfast on Friday, the CEO of Neinor Homes, Juan Velayos, added fuel to the fire. Velayos explained that this “manifestly illegal” measure, will generate legal uncertainty and hinder the purchase of land for construction. In the case of Neinor Homes, Velayos confirmed that his firm will not buy land in any municipalities that adopt the obligation to allocate 30% of developments to social housing.

The measure approved by the municipal government led by Ada Colau will oblige property developers to reserve 30% of all new and renovated residential developments spanning more than 600 m2 to social housing. “The need to create social housing is a reality in the city, but the measure is very unfortunate. It is great for winning votes, but not for resolving the problem of housing”, said the CEO of Neinor Homes. In his opinion, the obligation established by the Town Hall, which does not discriminate by area or reflect the specific needs of neighbourhoods, only serves to restrict the action of property developers. They will not have the same incentives to buy or build and, in his opinion, that will affect buyers, who will see prices continue to rise.

For the time being, the measure does not affect Neinor Homes, given that the real estate company only has 40 homes in the city of Barcelona. Its activity is focused on the municipalities of the metropolitan area. When asked about the possibility of those cities also adopting the measure, Velayos said that Neinor “would not buy land, or it would only buy it for a much lower price, because it would be land with a worse output”. “Municipalities that adopt this measure are going to deter investment”, he added. Velayos also criticised the ruling from the Supreme Court that establishes that it should be the banks, and not customers, who bear the cost of the Documentation Registration Tax (AJD) for mortgages. In the opinion of the CEO of Neinor, this is another measure that “will generate legal uncertainty” and it is the buyers who will have to take out more expensive mortgages.

Uncertainty due to the independence process

Despite this “legal uncertainty”, which has also been linked to the independence process in Cataluña, Velayos insisted that the region “is a very important location”. Neinor Homes has 34 developments in the autonomous community, comprising 2,700 homes in total. Of those, four developments, containing more than 200 homes, have already been sold.

In Spain, Neinor owns land for the development of 180 projects and 13,500 homes. Of those, 5,000 homes are under construction. The land owned by the property developer is worth €1.8 billion. The firm plans to hand over 1,000 homes in 2018 with more than 100 developments underway, followed by around 2,000 homes in 2019 with 120 developments underway, before reaching its “cruising speed” with the delivery of between 3,500 and 4,00 homes in 2020 and 120 developments underway.

Original story: El País (by Josep Catà)

Translation: Carmel Drake

Tinsa: House Prices Rise in Madrid & Palma by 17% & 15%, Respectively, in Q1 2018

5 April 2018 – Expansión

The boom continues with an average price rise of 3.8% during the first quarter of 2018 / Rises in large capital cities and tourist areas boost house prices in a market that is still operating at several speeds. Nevertheless, Cataluña is showing signs of a slow down.

Madrid and Palma de Mallorca led the growth in house prices during the first quarter of the year, according to data published yesterday by the appraisal company Tinsa. Specifically, the city of Madrid saw price increases of 17% with respect to the same period last year, followed by the capital of the Balearic Islands (14.7%), Barcelona (11%), Pamplona (10.4%) and Logroño (10%). All of them contributed to an average increase in house prices across the country of 3.8%.

Despite the great motor that Madrid, many tourist areas and certain non-coastal cities represent, where demographic pressure is starting to push prices up again, the positive trend of the market as a whole is being weakened by the diminishing strength of Cataluña following the independence referendum on 1 October 2017. Whilst house prices in the Cataluñan capital rose by 20.6% during the third quarter of last year, that growth had moderated to 14.8% by the end of 2017 and to 11% by the start of this year.

This weakness corresponds to lower investment activity, due in part to a slowdown in tourism, as well as uncertainty, which has caused a delay in certain purchase decisions, such as the time it takes to sell a home (…).

Moreover, it is worth noting that whilst before house prices in Cataluña as a whole rose by 12.5%, now prices in the other three capitals are stagnating or falling, and prices in the region as a whole have slowed to an increase of 7.3%.

This situation is the opposite of what is happening in the Community of Madrid, where the increase in prices in the capital is driving demand out to towns on the outskirts. In this way, prices for the region as a whole are rising with similar strength to those in the city of Madrid (…).

Heterogeneous situation

The increases in the large capitals are not isolated, given that the rises are taking place in the most touristy areas, as well as in those areas where unemployment has decreased significantly. In this way, prices are rising by between 5% and 8% in capitals along the Mediterranean (only Gerona has seen its prices decrease), as well as in Andalucía and the Canary Islands, and in several cities in the Northern third of the peninsula (such as Vitoria, San Sebastián and Burgos); in the case of Sevilla, prices rose by 8.8% in Q1.

Nevertheless, within the real estate market as a whole, there are still many provincial capitals where house prices are falling, such as the case of Ciudad Real (where prices fell by -11.9% in Q1), followed by Cáceres (-9.2%), Guadalajara (-6.3%) and Lérida (-6.2%). Several factors explain those decreases, which are concentrated in the least populated areas and, which, therefore, have little weight on the overall market. Firstly, many of those cities have high levels of unemployment and the majority are experiencing population loss, which relieves pressure on the real estate market (…).

Original story: Expansión (by Pablo Cerezal & Juanma Lamet)

Translation: Carmel Drake

Aedas Homes Acquired Developable Land in Madrid for 2,000 Homes in 2017

2 April 2018 – Inmodiario

Aedas Homes, a key player in the new cycle of the residential property development market, which made its stock market debut in October last year, exceeded its objectives in terms of the acquisition of 100% developable land in 2017. In fact, last year, the company invested €123.1 million in the purchase of land with the potential for the construction of 3,172 homes, up by 27% compared to the forecast set out in its Strategic Business Plan.

Specifically, 66% of the land acquired by the property developer in 2017 was located in the Community of Madrid, one of the areas that is seeing the highest demand for new housing, along with Cataluña. This significant stockpile of raw material has allowed the property developer to protect itself against the shortage of developable land in the Madrid region, a dearth that is causing major inflationary tensions in the market.

The plots acquired by Aedas Homes in Madrid have the potential for the construction of 2,093 homes, which, added to the land that the property developer already owned, means it now has a portfolio of land with the capacity to build 4,300 homes across the region.

Completion of the first developments

The Community of Madrid is one of the main focuses for the property developer. The firm has now sold more than 1,000 homes across Spain and is on course to achieve its objective of 1,500 operations at the national level in 2018. The high rate of transactions has been reflected in the sale of entire developments in Madrid, such as Terrazas de los Fresnos, in Boadilla del Monte, and Phase I of Escalonia, in Las Rozas –Escalonia II is now being marketed.

Raw material without any regulatory or political uncertainty

The land acquired by the property developer led by David Martínez in Madrid, along with the entirety of Aedas Homes’ land portfolio, is completely developable, which removes any kind of regulatory or political uncertainty. In other words, the property developer remains at the margin of the land transformation process (from not suitable to its conversion into “developable”), which involves some administrative activities that take a long time and which, therefore, delay the processing of urban development plans.

The company has a total land bank spanning more than 1.5 million m2 ready for development and with the capacity to house almost 13,000 homes, which represents 84% of the units that it plans to hand over between now and 2023. Many experts rate its land portfolio as the best in the market “We are committed to quality and not quantity”, say sources at Aedas Homes.

Original story: Inmodiario

Translation: Carmel Drake

JLL: Real Estate Investment Rose by 45% in 2017 to €14bn

11 January 2018 – El País

The volume of real estate investment in Spain broke records once again in 2017, closing the year at €13.989 billion, up by 45% compared to 2016, according to data from the international real estate consultancy JLL. And investors were not averse to any of the market segments, although two really stood out in 2017. On the one hand, the retail sector (stores and shopping centres), which saw investment of €3.909 billion, up by 31% compared to 2016 – that represents a historical figure thanks to the 35 operations that were closed during the year. And on the other hand, investment in hotels, which increased by 75% with respect to 2016.

Not even the political crisis in Cataluña deterred hotel investment from beating its own record by the end of 2017, with investment of €3.907 billion, representing an increase of 79% with respect to 2016 and comfortably exceeding the historical record set in 2015, when investment amounted to €2.614 billion, according to the study of this market conducted by the consultancy firm Irea. And that despite the slowdown in Cataluña, where no transactions have been closed since the referendum was held on 1 October. Nevertheless, “the impact of the uncertainty in Cataluña will make it hard for the investment data seen in 2017 to be repeated”, says Miguel Vázquez, Partner in the firm’s Hotels division.

For the time being, the incessant arrival of tourists in Spain (the country welcomed more than 82 million foreign visitors in 2017, almost 10% more than in 2016) is continuing to spark investor interest. In fact, in 2017, investment in holiday hotels comfortably exceeded financing in the urban segment (69% vs 31%), rebalancing the trend seen in 2014 and 2015.

Moreover, destinations that had remained quiet following the crisis were revived. Málaga rejoined the list of investors’ preferred destinations, accounting for 15% of total investment with 18 transactions amounting to €516 million. The Canary Islands retained its position as the favourite investment destination, accounting for €939 million of investment, representing 27% of the total volume. Madrid was the main destination for urban investment once again, with €637 million (including existing hotels and the acquisition of properties to convert them into hotels), ahead of Barcelona, which recorded €422 million.

Last year in Spain, 182 hotels were sold, containing 28,813 rooms, compared with 147 hotels and 21,646 rooms in 2016. That represented an increase not only in terms of the number of assets but also in the average price paid per room, which amounted to around €119,000, approximately 30% higher than the average price paid in 2016. In 2017, conversion projects and transactions involving land for the construction of hotels recorded a combined investment volume of €478 million, representing an increase of 139.8% compared to 2016, according to Vázquez.

Offices and residential assets

Offices were the third favourite assets for investors, accounting for investment worth €2.210 billion. Nevertheless, it was the only segment that recorded a decrease in absolute terms with respect to the prior year, with investment in this asset class falling by 20%. That reduction was driven by data in Madrid, given that investment in the Spanish capital fell by 38% with respect to the previous year – €1.374 billion – whilst in Barcelona, the investment volume amounted to €835 million, equivalent to an increase of 60%. Nevertheless, according to Borja Ortega, Director of Capital Markets at JLL, “that decrease was not due to a decline in investor interest, but rather a lack of product on the market and the fact that the previous two years saw record-breaking figures”.

Investment in land also stands out, since it amounted to a record volume of €109 million in Barcelona and €193 million in Madrid; moreover, that trend is expected to continue in 2018.

But it was investment in the residential sector – the purchase of entire buildings and land – that really soared in 2017. It amounted to €2.082 billion, which represented an increase of 160% with respect to the €802 million recorded in 2016. In Cataluña, residential investment amounted to 145% to reach €444 million.

Original story: El País (by S. L. L.)

Translation: Carmel Drake

26 Spanish Real Estate Experts Share Their Predictions for 2018

6 January 2018 – Expansión

House prices will rise by more than 5% on average this year, with increases of more than 10% in the large cities. These gains will happen in a context of great dynamism in the market, in which house sales will grow by more than 10% to exceed 550,000 transactions. Rental prices will also continue to rise.

Those are just some of the predictions made by 26 real estate experts for Expansión.

Aguirre Newman: “House prices will grow by more than 10% in Madrid and Barcelona”.

“In our opinion, house prices are going to continue to rise in 2018, reaching average growth rates of 6%-7%”, says Juan Riestra (pictured above, top row, second from left), Director of the Residential Area at Aguirre Newman. “In Madrid, Barcelona and the coastal cities, we expect to see double-digit growth, driven by the supply of new homes that the property developers have announced, which will result in an even more intense increase in prices than seen in 2017 since new build home are typically more expensive than second-hand properties”, he adds (…).

Fotocasa: “New build homes will have a higher profile in 2018”.

“New build homes will have a higher profile in 2018, as we have already seen during the last quarter of 2017. And that, combined with the return of confidence to the housing market, will continue to push prices up if the economic context is maintained and the situation in Cataluña is resolved”, says Beatriz Toribio (pictured above, bottom row, second from left), from Fotocasa, who thinks that this effect will drive up house prices by more than 5%, but not reaching double-digits (…).

Universitat Pompreu Fabra: “Everything depends on the situation in Cataluña”.

“The upward momentum in the market will be accentuated in 2018 due to the improvement in the new build market since the homes that started to be built two years ago are now being sold”, said José García Montalvo (pictured above, top row, second from right), Professor of Economics at the Universitat Pompeu Fabra. “The major change is that new homes now account for 20% of the market, whilst before they represented 60%” (…). But “everything depends on the political uncertainty in Cataluña” (…).

Arcano: “Demand for investment in housing will continue to grow”.

“There is still a very significant imbalance in terms of demand, spurred on by the ECB’s policy and labour improvement, and a supply that is still restricted by the very low level of new house starts. Moreover, demand for housing as an investment will continue to grow. In this context, prices will rise by more than 5%”, says Ignacio de la Torre, Chief Economist at Arcano (…).

Notaries’ Centre for Statistical Information: “We expect house prices to increase by more than 5%”.

“On the basis of our analysis of the available information, we expect house prices to grow by between 5% and 10% in 2018 (…). Although we expect the housing stock to increase, due to greater investment and employment in construction in recent months, which may lead to price rises being contained, we also expect an increase in demand, given the dynamism of economic activity and the behaviour observed in the labour market”, says Milagros Avedillo, at the Notaries’ Centre for Statistical Information. In her opinion, the growth in mortgage loans will be single-digit.

Asprima: “Very few new homes will be built”.

“I don’t think that the volume of transactions will increase by more than 10% and the forecast for price growth will be below 5%”, says Carolina Roca, Vice-President of Asprima. “The most important macro-factor is income”, she laments. Therefore, prices cannot rise by much, in her opinion, although they will increase in certain areas. “New builds will recover in 2018, but not by much (…)”.

Tinsa: “The reduction in the unemployment rate will boost the market”.

“The residential market will record moderate price growth in 2018 (of between 3% and 4%), similar to that seen in 2017, with different speeds, depending on the region”, says Pedro Soria (pictured above, bottom row, second from right), Commercial Director at the appraisal company Tinsa. “The recovery will expand to more areas; the large capitals will continue to be the drivers, although the rate of growth will soften”, he adds. “The reduction in the unemployment rate and continuing investor interest, due to the prolongation of the low-interest rates, will increase house sales by between 10% and 15% (…).

Sociedad de Tasación: “New house prices will rise by 5.4%”.

“Applying our predictive model to the data from the Ministry of Development, we estimate that 14.1% more house sales will be completed in 2018 than in 2017 (…)”, says Consuelo Villanueva (pictured above, top row, far left), Director of Institutions and Key Accounts at Sociedad de Tasación. “The result (…) indicates growth of 5.4% in the price of new homes under construction for the average of provincial capitals in 2018 (…)”.

Gesvalt: “Mortgage lending will rise by around 15%”.

“According to the forecasts at Gesvalt, we predict moderate growth in second-hand house prices of around 5% at the national level, although there will be notable differences between provinces”, says Sandra Daza (pictured above, bottom row, far right), Director General at Gesvalt. (…). And by how much will mortgage lending grow? “By around 15% and there will be a slight increase in the number of mortgages that exceed 80% of the total property value”.

Foundation of Real Estate Research: “The political uncertainty will weigh down on Barcelona”.

The President of the Foundation of Real Estate Research, Julio Gil, believes that house prices will rise by “between 0% and 5% in 2018. “We will move to a three-speed market”, he thinks, referring to consolidated areas, cities in recovery and provinces with a surplus supply and/or limited demand. “And I think that Barcelona will perform less well than Madrid, weighed down by the political uncertainty”, he adds (…).

Pisos.com. “Mortgage lending will rise by more than 10% for the fourth consecutive year”.

According to Ferran Font, Head of Research at Pisos.com (…) “Historically low interest rates and the decrease in unemployment mean that we expect mortgage lending to grow at double-digit rates in 2018, like it has done for the last three years”.

General Council of Real Estate Agents: “The rise in rents will lead to tension in sales prices”.

“House prices will grow by around 5% in 2018, driven more by the refuge effect of savings than by objective economic variables”, says the President of the General Council of Real Estate Agents, Diego Galiano. “Savings are not being rewards and housing is recovering a certain degree of stability and offering good prospects for investors (…)”.

TecniTasa: “Prices will grow by around 5%”.

“On average in Spain, we estimate price growth of around 5%, but we highlight that that figure represents an average of a very heterogeneous market, by area and asset class. In some regions and for certain types of high-end homes, the increase will amount to between 5% and 10%, and may even exceed 10% (for example, in the Balearic Islands). Whilst in small towns and for cheaper homes, prices are barely expected to rise at all in 2018”, says José María Basáñez, President of TecniTasa (…).

Civislend: “The mortgage war will intensify”.

“The growth that we will see in terms of mortgage lending is going to continue to reflect double-digit rates and the war in terms of granting loans by financial institutions is going to intensify”, says Manuel Gandarias, Director and Founder of the real estate crowdlending platform Civislend (…).

Acuña & Asociados: “80% of sales will be made in 400 towns”.

“Given the current situation, the expected growth in prices at the national level for 2018 will amount to around 5.5%”, forecasts Luis Rodríguez de Acuña. However, “demand for housing is not behaving in a homogenous way across the country, and transactions are only being recorded in 1,300 of Spain’s 8,125 municipalities”. In other words, in one out of every six. And 80% of transactions “are being closed in just 400 municipalities (…)”. (…).

CBRE: “The sale of new homes will continue to gain weight”.

The value of homes will increase “by around 5% YoY at the national level, with higher rises (between 7% and 10%) in certain markets such as Madrid, Valencia, Málaga and the Balearic Islands”, predicts Samuel Población (pictured above, top row, far right), National Director of Residential and Land at CBRE (…). “Sales of new build homes are going to increase their relative weight (with respect to second-hand homes) as a result of the recovery in construction output; nevertheless, the recovery will not have an immediate impact on transaction volumes given the time lag associated with new build developments”, he says.

BDO: The land market is preventing soaring construction output”.

“We are facing a very favourable macro context (GDP and employment, above all) and therefore, an upwards cycle is likely, which will have different regional rates”, explains Alberto Prieto, at BDO. (…). “The launch of new build projects by the new large players will start to be felt in 2018, and then more intensely in 2019”, he adds. “The situation in the land market makes it unfeasible for the volume of new build homes to soar for the time being”, he says.

Foro Consultores Inmobiliarios: “Fixed-rate mortgages will play an important role”.

Carlos Smerdou, CEO at Foro Consultores, believes that “new build homes will drive the market and that recent land transactions indicate that the trend in terms of prices will be upward, of between 5% and 10%” (…). In terms of fixed-rate mortgages, “they will play an important role”, despite the fact that “interest rates are forecast to remain negative”.

MAR Real Estate: “Banks are still reluctant to grant the necessary financing”.

Rosario Martín Jerónimo, representative of MAR Real Estate in Marbella, believes that house prices will grow by more than 5% in Spain this year, on average (…). Nevertheless, she does not think that sales or mortgage lending will be as high in 2018 as they were in 2017 and that the growth rates will remain below 10% in both cases. “Buyers are willing but the financial institutions are still very reluctant to grant the necessary financing”, she explains. “Many property developers are completely financing their projects using money from private investors/buyers, without any support from the bank”, she says (…).

uDA (urban Data Analytics); “Prices will rise by more than 10% in the large cities”.

“House prices will rise by around 6.9% in 2018, although the behaviour will be tremendously heterogeneous”, warns Carlos Olmos, Director of urban Data Analytics. In other words, there will be “some large cities with growth rates of more than 10% and many other capitals with small decreases” (…).

Gonzalo Bernardos, Professor of Economic: “House prices will rise by 11% and sales volumes by 23%”.

“I think that house prices will rise by 11%”, says Gonzalo Bernardos, Director of the Real Estate Masters at the Universidad de Barcelona (…). Moreover, in macroeconomic terms, it is the best scenario for the residential market: high (economic) growth (around 3%), the creation of employment, scarce new build supply (new build permits will amount to 125,000 in 2018), very low interest rates and bank willingness to grant mortgages”. “House sales will rise by around 23% and mortgage lending will increase by 17%”.

Irea: “House prices will rise by more than 7% in consolidated markets”.

Mikel Echavarren (pictured above, bottom row, far left), CEO of the real estate consultancy and advisory firm Irea, forecasts that house prices will rise by between 5% and 10% in 2018 with respect to 2017. “In consolidated markets, the increases will be closer to 7%”. (…). In the mortgage market (…), “in theory, financing conditions will continue to be very beneficial for buyers and property developers”, he adds.

College of Registrars: “Mortgage lending will grow by around 20%”.

The registrars believe that house prices will rise by less than 5%. “Taking into account our data and the slowdown that is already being seen in Cataluña, which accounts for approximately 17%-18% of the Spanish housing market (…), we think that it will be hard to exceed a growth rate of 5% in 2018”, explains Fernando Acedo Rico, Director of Institutional Relations at the College of Registrars. (…). Something similar will happen with mortgage lending, which “will continue to grow at around 20%”.

Idealista.com: “Madrid will drive the price rises”.

According to Fernando Encinar, Head of Research at the real estate portal Idealista, house prices will rise by less than 5%. (…). “There will be cities that will experience a more acute recovery, such as Málaga, Valencia, Sevilla and the islands. But I think that Madrid is going to be the real driver, with even more accelerated price growth”. Why? “The Spanish capital is gobbling up talent and investment, and demand there indicates that prices are going to continue to rise. There is minimal stock left in Madrid (…)”.

Instituto de Práctica Empresarial: “In 2018, 550,000 homes will be sold in Spain”.

According to the Director of the Real Estate Chair of the Instituto de Práctica Empresarial, house prices will rise by 6.1% in 2018 (…). In Spain, 550,374 homes will be sold, which represents 14.5% more than in 2017, despite the sluggishness that may be seen in Cataluña.

Invermax: “Tourist areas may see price rises of 10%”.

Jesús Martí, Real Estate Analyst at Invermax, thinks that “house prices will grow by another 5%, with this average varying between the large cities and the traditionally touristy coastal areas, where they may rise by 10%”. “It is still a good time to buy a home, especially for investors”, he adds (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Bain Capital Completes Purchase of Habitat for €220M

6 December 2017 – Expansión

Oaktree Capital Group and Apollo Global Management also submitted bids for the property developer.

The US private equity firm Bain Capital has completed the purchase of the Catalan property developer Habitat Inmobiliaria for €220 million, according to reports by a source close to the operation, speaking to Efe-Dow Jones.

The US investment companies Oaktree Capital Group and Apollo Group Management also submitted bids for the property developer, worth between €200 million and €250 million, according to the same source.

Created in 1953, Habitat Inmobiliaria has built more than 60,000 homes during its lifetime, according to figures published by the company itself.

Moreover, it has a portfolio of land measuring 2.5 million m2, worth €189.7 million.

The objective of the company is to hand over more than 2,000 homes between now and 2021. Its property developments are located in Madrid, Cataluña, the Canary Islands, Andalucía and the Community of Valencia.

Original story: Expansión

Translation: Carmel Drake

Operación Neo: Lone Star Negotiates Sale of Former Fecsa-Endesa HQ in Barcelona

28 November 2017 – El Confidencial

Lone Star is on the verge of closing another chapter in its history, with the sale of the last major asset that forms part of Project Octopus, a portfolio comprising more than €4,000 million in real estate loans from the bank Eurohypo in Spain and Portugal, which the US fund acquired three years ago, in conjunction with JP Morgan.

The asset in question is the former headquarters of Fecsa-Endesa in Cataluña, a building with a surface area of 35,000 m2, whose three chimneys form part of Barcelona’s skyline and regarding which, it is holding exclusive negotiations with the joint forces of the Tramway group and the German vehicle Indigo Capital.

The conversations are now in the home stretch and may even be closed this afternoon, according to sources familiar with the process, although they also indicate that a second finalist is waiting in the wings, which could take over if these negotiations do not end up proving fruitful.

This operation marks another step forward in Lone Star’s strategy to unwind its positions in the Spanish real estate market, following the sale of the rest of Project Octopus and of the property developer Neinor Homes. That company debuted on the stock market in the spring and following several share sales, the US fund now only controls a 13% stake. Moreover, it goes against the grain of the current situation in the real estate market in Cataluña, which has all but come to a standstill due to the ‘independentista’ challenge.

This property, which has been empty for five years, has both environmental and change of use problems, which have certainly conditioned its sale. Constructed on the site of an old coal generation plan at the beginning of the 20th century, the subsoil of the plot contains impurities from the former coal and gas operations, which constitute the main risk to this operation and which have convinced other interested parties to withdraw from the process.

Impact of the sovereign challenge

In addition, the property has a key 4 urban planning rating, which restricts its use to public services with a technical component. In fact, its former owner, Grupo Sanjosé, which acquired the building from Endesa in a “sale & leaseback” operation, did not manage to resolve the change of use, which allowed Lone Star to execute the debt linked to the building in 2015.

And so on and so forth, because the sovereign crisis in Cataluña was about to bring down the process, launched in September and managed by JLL, in which firms such as Meridia, Colonial, Oaktree, Tristan, GreenOak, Värde and Stoneweg expressed an interest, according to sources.

In the end, only two candidates have submitted bids, for around €20 million, and the winner will likely have to double that investment figure in order to be able to carry out all of the renovation work that this asset requires to be in a position to generate value again.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Sale of Hesperia Tower Threatened by Catalan Political Uncertainty

27 November 2017 – Eje Prime

The political situation in Cataluña is also affecting the sale of tall buildings, such as that of the NH Collection Tower in Barcelona. Known until last year as the Hesperia Tower, this five-star hotel owned by Grupo Inversor Hesperia (Gihsa) is struggling to find a new owner due to the governmental instability and, therefore, economic uncertainty that exists in the region.

Located in L’Hospitalet de Llobregat, the asset is situated next to the Fira complex in the suburban town and has been on the market since December 2010. The Hesperia Group put this hotel, along with five others, on the market, due to the debt that was weighing down the company at the time, estimated to amount to more than €600 million.

Now, the interested companies are not willing to go ahead with the purchase of the asset due to the political situation in Cataluña, amongst other factors, according to Crónica Global.

A year ago, the hotel company repositioned Hesperia Tower within a plan agreed with NH Hoteles, which took over the management of 31 assets from the entity led by José Antonio Castro after paying €31 million. Hesperia’s current portfolio contains around thirty hotels in Spain, as well as a 9% stake in the NH hotel Group.

Original story: Eje Prime

Translation: Carmel Drake

Demand for Luxury Homes Plummets in Barcelona & Soars in Madrid

23 November 2017 – Expansión

Since 1 October, demand for luxury homes has plummeted by 50% in Barcelona, with a 20% decrease in prices; meanwhile, demand has risen by 40% in the Spanish capital where prices have gone up by 10%.

Secessionism is sinking the Catalan real estate market due to the threat of uncertainty. “Demand for luxury housing has plummeted by 50% in Barcelona between 1 October and 15 November”, explains Emmanuel Virgoulay, Founding Partner at Barnes International in Spain. Whilst Barcelona falls, interest from buyers in these kinds of assets in Madrid is soaring by 40%, according to the real estate company that specialises in the premium segment.

“For every home for sale in Madrid, there are four buyers”. In Barcelona, by contrast, “the damage has already been done”, explained Virgoulay, referring to the unilateral referendum. That process has marked a before and after in the Catalan economy. The uncertainty has caused panic to spread throughout the markets, leading to the flight of more than 2,600 companies, causing the confidence of businessmen and consumers to collapse and paralysing investments. Housing, along with tourism, has been the most affected sector.

Before 1-O, Barcelona was enjoying its best moment since the crisis. The prices of high-standing properties were growing at a rate of 15%. However, since 1 October, the decrease in prices amounts to 20%. During the same month, the cost of these types of assets in Madrid has also moved by double digits, but in the opposite direction, with growth of 10%, like in the Balearic Islands. In Andalucía, the variation has been somewhat lower, between 5% and 10%, according to market sources.

In Barcelona, the rise in prices had generated a bubble. “Some owners were aligning the price of their properties with those in the most exclusive parts of other cities in Europe”, explained Virgoulay. However, investors “put the handbrake on” several months ago now. In October, there was a 50% decrease in the number of deeds signed for the sale and purchase of homes and mortgages, with buyers pulling out and preferring to lose their deposits, which can represent up to 10% of the purchase price, than going ahead with their purchases.

“Investors are going to come to Madrid because the market is safer”, explains Virgoulay. Currently, 57% of the luxury real estate acquisitions that are made in Spain take place in Madrid. The Spanish capital is the most attractive city for domestic and international investors alike. “The weight of the investor market is comparable with the market for primary residences”, he explains.

Looking ahead to year end, Virgoulay considers that, since the Government took action, with the application of Article 155, “the outlook is stable and demand has been starting to recover since 15 November”. But, 21 December is emerging as a new door to uncertainty “anything can happen once again”. Nevertheless, “Prices are going to rise, in general, but in Barcelona, it is clear that they are not going to evolve, they are going to fall”.

In Madrid, like in Barcelona, the average price of luxury housing amounts to €8,000/m2. In the Balearic Islands, where the main demand is from European buyers for second homes, the price per square metre amounts to €7,500/m2.

Barnes plans to open new offices in 2018 in locations such as the Balearic Islands and the Canary Islands. Cataluña was another one of its objectives, but, for the time being, no date has been set for that opening.

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Deutsche Bank: BBVA & Unicaja Cut Their Toxic Assets By 15% In 2017

14 November 2017 – Expansión

Deutsche Bank report / Sales to institutional investors of non-performing loans and properties allowed BBVA to reduce its stock by €4,589 million. Meanwhile, Unicaja has decreased its load by €818 million.

The clean up of the banks’ balance sheets is picking up speed thanks to the increasingly common sales of large property portfolios to specialist funds.

Between January and September, the average decrease in the stock of the large banks amounted to 6%; moreover, that figure reached 15% in the case of BBVA España. The next entity in the ranking was Unicaja, with a decrease of 14%.

During the third quarter, Santander España distorted the statistics with the sale of 51% of Popular’s toxic assets (€30,000 million) to Blackstone.

Project Jaipur

BBVA has closed several institutional sales in recent months. One of them, Project Jaipur, was sold to Cerberus, the fund with which it is now negotiating a macro-operation, which would include the sale of its real estate platform Anida. That portfolio comprises loans to property developers backed by real estate guarantees and has a gross nominal value of €600 million.

In February, BBVA sold a batch of 3,500 properties to the fund Blackstone. Another one of the representative operations of the year was the sale of 14 office buildings to Oaktree for €200 million.

Unicaja has sold several plots of land to various real estate developers in recent months. “Unlike in other quarters, during the third quarter of the year, most of the reduction in the banks’ problem assets came from the sale of foreclosed properties, despite the substantial decrease in activity in August”, says the recent report from Deutsche Bank.

Between June and September, CaixaBank was the most active entity, with sales worth €380 million.

The report cites several factors to explain the intensification of this real estate clean up. The first is the increase in the coverage ratio of these toxic assets on the banks’ balance sheets. “The volume of sales is directly linked to the coverage ratio”, it says.

The second is that many of these sales are generating capital gains. According to the data compiled by Deutsche Bank, Unicaja made €40 million in the third quarter and CaixaBank and Sabadell earned €6 million and €7 million, respectively. “These gains will allow them to accelerate future sales”, says the report.

Final quarter

The last quarter of the year tends to be the strongest for these types of operations. Sareb has put a package of doubtful loans up for sale, the vast majority of which are unsecured, for €2,600 million. “We expect to see an additional effort from the banking institutions to reduce the stock at year end. Having said that, the political uncertainty in Cataluna and the upcoming elections may affect prices and/or cause delays in institutional sales”, says Deutsche Bank, which forecasts further stock decreases of 15% in 2018 and 2019. According to its data, CaixaBank, Santander and BBVA are the banks with the highest volume of toxic assets. Since 2015, BBVA has decreased its real estate balance by 27% and Unicaja by 24%.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake