The end of the State of Emergency and the easing of the lockdown measures allowed real estate activity to resume in July. However, on the last day of the month, the GDP results for the Spanish economy in the second quarter were released and the news was not good: the country has been hit hard by coronavirus and is now officially in recession after two quarters of GDP decreases. Spain has seen the largest economic decrease in the eurozone; over the last year, its economy has contracted by 22.1%; whilst activity in Germany decreased by 10.1% in the first quarter, in the USA by 9.5% and in France by13.8%.
July is the month in which companies traditionally report their half-year results, and this year, those announcements have, of course, been overshadowed by the fallout from coronavirus. Metrovacesa, Aedas Homes, Colonial, Merlin Properties, Realia and Lar have all reflected the impact of the pandemic in their accounts along with the efforts that they are making to redefine their strategies.
Even so, there has been time for the signing of several mega-operations. Banco Santander has launched a takeover bid for 153 million euros to buy Uro Properties, a Socimi that owns 680 branches worth 1,850 million euros; this deal would allow the bank to reduce the rent penalty in its capital. Meanwhile, NatWest, one of the main creditors of the property developer Nozar, which filed for bankruptcy more than a decade ago, has put a plot of land up for sale in Madrid Nuevo Norte.
The President of El Corte Inglés also announced the launch of a new business unit dedicated to organising and generating value from the group’s properties and developing logistics projects, an old ambition of the textile and retail giant, which is gaining strength again. And Nuveen bought a commercial premise in Canalejas (Madrid) for 30 million euros which will house a Santander branch.
In the residential market, the current climate is characterised by the build to rent business. It represents an outlet for property developers with residential stock for sale (build to sell), allowing them to convert such units into real estate assets for rent and to sell portfolios of the properties to specialist investment funds.
The publication of a rental price index by the Government has further mobilised interest from investors, who are seeing that rental yields and prices have more potential than sales. In this vein, 1810 Capital Investments closed a pre-sale contract with Neinor for 72 homes for 20 million euros. The property developer will manage the rental properties for them. Sareb also continues to grant flats for this purpose.
And in parallel, and despite their results, several companies are pushing ahead with projects that are being approved by the administrations. Majadahonda City Council has granted the licence for Residencial Qian, the largest development that Aedas Homes currently has underway, after three years of paperwork. Metrovacesa has received the green light from Madrid City Council for its project on the site of the Clesa factory; that firm is also advancing urban planning procedures for other developments in La Seda (Barcelona) and Tarifa.
Logistics remains the outlet for many investment operations and is one of the clear favourites in terms of returns. In this way, during July, Dia signed the largest logistics operation of the year by renting 68,000 m2 of space in Toledo. The developer of that space will be Aquila Capital, which owns AQ Acentor and Green Logistics, which are also working on two logistics complexes in Sevilla and Málaga spanning 160,000 m2, and on the purchase of residential land in Cataluña.
During the first six months of the year, the occupancy rate of Spanish hotels stood at 33%, down by 54.8% compared to the same period in 2019. The destinations with the highest occupancy rates were Málaga and the Canary Islands, with 47% and 44.5% of their beds filled, respectively. At the opposite end of the spectrum were the Balearic Islands (21.2%) and Barcelona (32.5%). In Madrid, the occupancy rate was 41.2%, above the Spanish average (33%).
In July, the Spanish manager Azora managed to raise one of the largest capital funds to invest in hotels in Europe. It will have the capacity to invest 1.5 billion euros in total, including debt.
In terms of transactions, the Socimi Millenium reached an agreement to acquire two palaces in Córdoba (Andalucía) and San Sebastián (País Vasco) for 40 million euros, which it will transform into five-star hotels. In addition, Landon, a company owned by the Gallardo family (Almirall) acquired 100% of the Sercotel chain after buying the 53% stake that it did not control; as such it now owns 149 hotels in 104 different destinations.
Between January and June, investment in office assets in Spain amounted to 1 billion euros, and, according to Savills Aguirre Newman, that figure will reach between 2,500 and 3,000 million euros by the end of the year.
In the same segment, operations such as the one involving the Socimi Árima Real Estate stand out. In July, it closed the purchase of the last available plot of land in the Manoteras area, to the northeast of Madrid. Árima disbursed 40 million euros for the site, where it will build a turnkey property spanning 12,000 square metres.
Nuveen Real Estate has purchased one of the commercial premises in the Canalejas Complex, located in the central plaza of the same name in Madrid, for 30 million euros. This space will be occupied by a new branch of Banco Santander.
NPLs & REOs
The revival of the debt portfolio business continued in July. Sabadell selected the finalists for the sale of its SME secured loan portfolio worth 300 million euros, while the activity of initiatives aimed at small- and medium-sized investors also grew.
Top 10 most read news – July 2020
- Rental Prices Fell by 10% in Madrid and Barcelona During the State of Emergency
- A Dozen Property Developers Lead the Construction of Luxury New Homes on the Costa del Sol
- The Most Expensive Home in Spain Goes Up For Sale in La Zagaleta on the Costa del Sol for €32 Million
- Capriles Conducts an €11 Million Capital Increase for his Coworking Subsidiary
- Barcelona Reactivates the 22@ District After Doubling the Number of Planned Social Housing Units
- Covid Triggers a Decrease in Mortgage Defaults for the First Time in 6 Years
- Alcampo Negotiates the Purchase of 42 Supersol Supermarkets
- The Bank of Spain Asks for the Method for Valuing Homes to be Changed during the Pandemic
- What Impact has Coronavirus had on the Real Estate Market in China?
- How Many Square Metres are Spaniards Spending the Lockdown in?