December in the Spanish Real Estate Market

The end of the tax and accounting year in the last month 2020 is seeing the last-minute buying and selling of assets and even companies in extremis. In this latest month of the pandemic, the situation has been little changed, with logistics, offices and hotels dominating the transactions in the market. And all of this has been marked by the cautious optimism of the vaccination campaign, which is beginning to take off.

December has also been the month in which most investment forecasts for the coming year, both domestic and international, have circulated publicly. There is some concern regarding next year. The most optimistic predict a rapid recovery, while others forecast a deepening of the crisis. The key for many is the rollout of the massive vaccination campaign.

Market

Market forecasts have dominated the month. Leading economists are predicting a fall in housing prices and demand in the coming year. On the upside is the continuing wave of investments in the rental and logistics sectors cresting throughout Europe. As a result, according to data from the Brains Re platform, developers have already begun to adjust the price of new housing in Barcelona, though not yet in Madrid.

The pandemic and the turbulence in capital markets led to a fall of more than 30% in investment in 2020, according to both Cushman & Wakefield and CBRE. Operations fell by a third this year, although investment is expected to increase by 18% to €9 billion in 2021.

CBRE also noted that the Spanish real estate sector remains on the path to recovery that began last April. However, the pace has slowed due to the impact of the second wave of the coronavirus pandemic.

There was important news on the legislative front. The Council of Ministers approved a measure to extend the suspension of any evictions for the duration of the State of Alert, up to the deadline of May 9. The decree extends the moratorium to all vulnerable persons and not just those made vulnerable by the Covid-19 pandemic, as had been in place until January 31. In other words, the measure increases the number of potential tenants who may benefit from the change, as their difficulties could have preceded the pandemic.

Companies

There was also news on the corporate front. The month ended with the unconfirmed announcement that Civen, a venture capital fund that owns the Tinsa appraisal company, is preparing to be sold in 2021, in an operation that could value the company at one billion euros.

Other companies have also shown some encouraging signs. Vitruvio expects to earn 7.9 million euros in 2020, 5% more than it predicted last October, due to the new vaccines’ positive impact. Aedas Homes also assured that it had already sold 98% of the homes it will deliver before the end of the year and 60% of the units it plans to deliver in the following year. At the same time, Banco Santander completed the launch of the land management company Landmarck (now Landco), which has 13,000 assets, including land for development, rural land, and land under development.

Carlos Pérez-Baz, Director of Real Estate Investments of Mutua de la Abogacía, spoke to Brainsre.news, stating that they do not rule out taking positions in Socimis or Funds specialised in development, given the scarcity of investment alternatives. The lawyers have already acquired the property located at Calle Serrano 5, which has an area of 2,560 square meters, from the German firm Deka.

According to the BME Growth, GPF Capital paid 35 million euros for a stake in a new Socimi and in Inbest IV, which owns the premises in Madrid’s Plaza de España. Pontegadea, the family office belonging to the executive Amancio Ortega, also carried out a €51.1 million capital increase for its UK subsidiary, according to the UK Commercial Register.

For its part, Gentalia has begun the inauguration of the first phase of the Bahía Real Commercial Park, developed by Citygrove. This is one of the few projects to be inaugurated this year, particularly regarding large-sized retail venues.

Logistics

The logistics market continued to be the focus of investment activity due to its perceived safe harbour status. The possible disinvestment of a €1-billion logistics portfolio, with around twenty assets and nearly 600,000 square metres that CBRE Global Investors and the Spanish company Montepino put up for sale in September is currently the primary focus of investor interest.

The interest in the operations of the insurance companies Allianz and Axa, the former property management company of Deutsche Bank (DWS), and the developers Segro, Prologis and P3 Logistic Parks, Hines, Ivanhoé Cambridge, and Invesco, as well as the giant Logicor, controlled by Blackstone and the China Investment Corporation, can provide an idea of the liquidity available and the competition to snap up these types of assets.

The North American management company Nuveen (formerly TH) acquired a more than 10,000-m2 warehouse located in the region of Corredor del Henares. According to Brainsre.news, the firm paid 14 million euros for the asset, through a sale & leaseback operation, generating an attractive yield of 4.85%.

Likewise, the Australian fund manager Arrow finalised its acquisition of a 53,816 square metre logistics warehouse in the town of Daganzo de Arriba (Madrid). The investment management firm Patrizia AG ended the year with 1.3 billion euros in assets on the Iberian Peninsula, primarily offices and warehouses.

Thor Equities has been one of the most active market players, acquiring a logistics warehouse and land for a new development in the La Postura industrial estate in Valdemoro (Madrid), days after taking over a last-mile logistics portfolio in Madrid for €39 million.

Newcomers to the Spanish market have also emphasised the logistics sector. This is the case of the Singapore-based fund manager Elite Partners Capital, which finalised the acquisition of a portfolio of six assets, including offices and logistics facilities located in Valencia’s Zone B, within the limits of the A-7 ring road.

Offices

The sector is mostly on standby as it waits to see the fallout from Covid-19 and its effects on post-pandemic business recruitment, along with the exponential increase in working from home (WFH). But opportunities continue to present themselves. The office sector is preparing to close 2020 with investments totalling nearly two billion euros, compared to four billion in 2019. However, several large deals are set to finalise in the last days and early days of 2021.

First, Arcano is negotiating the sale of the new office building in La Moraleja and retail premises in Madrid, while it is also pursuing four separate deals for its second fund, Ava II, as Arcano confirmed to Brainsre.news. The Zurich-based insurance company has sold the office building located at Calle Francisco Gervás 10 in Madrid. The property is currently occupied by the headquarters of the Family Courts of the Community of Madrid.

The investment management company Resource Capital Partners has finalised its acquisition of an office building located in Madrid’s business district of Julián Camarillo. ColTel, the Colombian subsidiary of Telefónica, has sold the Toberín building and its facilities in Bogotá for almost 17 million euros, as part of the operator’s real estate divestment plan.

In the same month, the American fund Blackstone sold the 7,324 -m2 building located at Calle Príncipe de Vergara 108 in the capital to UBS for €52 million. InmoCaixa acquired Torre Ombú in Madrid for 70 million euros from the Ribera family.

And in Barcelona, the Socimi Meridia divested three assets, located at numbers 147 and 149 on the Carretera de l’Hospitalet, in the Citypark Cornellà business complex.

Hotels

The flood of hotels assets that have hit the market because of the complete halt in tourism during the pandemic has also been a focus of attention. Total investments in the hotel sector are expected to reach approximately 800 million euros in the year; while market watchers had forecast a much higher figure, €1.7 billion back in January. In 2021, more than 100 new openings are expected, according to EY, and many operations are already underway.

Meanwhile, the investment fund Emin Capital acquired the Formentor hotel from Barceló for €165 million. The group already has the necessary permits to refurbish the property, which will become a Four Seasons hotel. Despite the crisis in the sector, the Marriott chain is opting to enlarge its portfolio in Spain with two new hotels in Seville, one in Ibiza and the other in Tenerife.

The Apple Leisure Group reached an agreement with Blantyre Capital to manage three hotels, which the British investment fund has acquired in the Canary Islands, in its first deal in Spain. The venture capital fund Navis Capital has launched its third vehicle to buy hotels in Spain in just four months given high investor demand. And Mazabi has also acquired a hotel in Malaga and is negotiating further acquisitions in Madrid, Cadiz, and the Balearic Islands.

NPL’S

The European Commission has announced that it will ‘explore the possibility’ of setting up a European network linking national asset management companies, such as the Sociedad de Activos Provenentes de la Reestructuración Bancaria (Sareb) in Spain. It is part of a plan to prevent an accumulation of bad debts, which could potentially double the existing stock in Spain to €160 billion.

Top most read news – December 2020