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The State of the Spanish Real Estate Sector: August 2020

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The real estate sector in August, a month traditionally defined by reduced market activity in the industry, was subdued even further by the second wave of the coronavirus, the uncertainty of the return in September and the first signs of what the final straight of 2020 may look like, with a V-shaped recovery seen as increasingly unlikely.

Companies

The largest publicly-listed real estate companies closed out the first half of 2020 having borne the brunt of the Covid-19 pandemic. In the first half of the year, Metrovacesa, Lar España, Colonial and Aedas Homes recorded joint losses of 134.7 million euros due to the devaluation of their assets.
Additionally, insolvency proceedings moderated their fall in July to 6.5%. In total, 319 companies went into receivership last month, down by 6.5% month-on-month, a much smaller decline than the 16% seen in June or 85% in April.
Berkshire Hathaway HomeServices Larvia, the Spanish subsidiary of Warren Buffett’s real estate brokerage, chose to maintain its expansion plans in Spain despite the pandemic, one year after initiating operations in the country. The firm is aiming to become a benchmark in the luxury home brokerage market, both for Spanish and international buyers. To this end, it plans to expand its footprint on Spain’s Mediterranean coast and the Balearic and Canary Islands.
For its part, the South African fund Vukile extended a €17.5-million loan to its socimi Castellana Properties, which owns prominent shopping centres throughout Spain, to help it weather the crisis
It has also been an intense summer for Quabit, which continues to focus on balancing its accounts and recently underwent a €25-million capital increase to repay its debts to Sareb.

Residential

In August, several large residential developments in Spain reported good news regarding the progress of their plans. Such projects include the PAI in Nou Nazareth, in Alicante, which has the participation of such major companies as Aedas, Metrovacesa and Realia, as well as the Ensanche Levante in Benidorm.
This month, the National Institute of Statistics (INE) announced that the purchase and sale of homes fell by 34.3% in June, the fourth such consecutive decline. In the case of second homes, transactional activity rose by 29% in July.
Concerning housing prices, 6% of the homes on sale in Spain saw their prices reduced in July, according to a study carried out by CoHispania.

Hospitality

The fall in tourism associated with the pandemic and the subsequent lockdown failed to reduce investors’ appetite for the hotel sector. For example, the fund manager Schroders raised more than €400 million for its first pan-European hotel fund.

Offices

In the office market, Sareb decided to quit its headquarters on Paseo de la Castellana, in order to move to a property it owns on Calle Costa Brava in Madrid. The first big move of the post-lockdown era has the aim of reducing costs and increasing the attractiveness of the property to investors, as Brainsre.news exclusively announced.
Also in August, we learned that Caixabank would finance work on an office building for Cain y Freo in Barcelona’s 22@ district, which continues to dominate investor interest in the city, despite recent events.

Comercial

El Corte Inglés resumed its plans to sell more than 100 commercial and logistics properties for a total of 2 billion euros. The group further strengthened its new Real Estate unit, which will focus on selling assets and developing others for third parties, in addition to enhancing its logistics portfolio and making divestments to reduce its debt a target of €2.729 billion.

Logistics

Blackstone started the month of August out by finalising its acquisition of Gallastegui’s portfolio of logistics warehouses in Spain. The four assets it acquired from the transport company are located in Pinto (Madrid), San Vicent del Hors (Barcelona), Ribarroja (Valencia) and Elgoibar (Guipúzcoa), for which it paid approximately €10 million.
Goodman also acquired more than 100,000 square metres of land in Madrid to build a logistics complex, in an investment of €37 million.

Student Residences

The venture capital fund VStudent will build a 662-bed student residence on the grounds of the Portaceli school in Seville, making it the largest such facility in all of Andalusia.

NPL’s

In the further demonstration of the way the Covid-19 pandemic is reverberating around the real estate market, this time to Spain’s detriment, international investors such as Fortress, Bain Capital and Bayview instructed their respective teams in Southern Europe to look for opportunities in other markets in the area such as Italy and Greece. The firms also intend to leave some current operations in the Spanish market, such as the sale of NPL’s from Santander and Sabadell, on hold.

Top 7 most read news – August 2020

  1. Sareb Quits Castellana to Reduce Costs as Markets Adapt to Post-Lockdown Era
  2. Madrid Backs Luxury Housing to Curb the “Suburb Effect” of the Pandemic
  3. Blackstone Goes All Out in Spain After Investing More than €24 Billion
  4. Santander Reduces the Value of its Stake in Quasar by 40%
  5. In Which Municipalities Do Britons in Spain Choose to Live?
  6. El Corte Inglés Resumes Plan to Sell More Than 100 Properties for €2 Billion
  7. Major Investment Funds Slow Down Their Investments in Spain, Halting Ongoing Transactions

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