Thursday, October 29, 2020
Home Monthly What Happened...

What Happened in the Spanish Real Estate Sector in September 2020?

In September, the real estate news was characterised by a lot of movement and operations following the end of summer, despite traditionally being a quiet period in the sector. However, as the second wave of the coronavirus spreads throughout Spain, uncertainty is now returning to the market.

Companies

Internationally, Blackstone starred in one of the most important deals of the month. The US company closed the largest real estate debt fund in history in September. Specifically, the firm managed to raise 8,000 million dollars for Blackstone Real Estate Debt Strategies IV.

Also, a very important operation was closed during the month in the Spanish market. The Scandinavian fund EQT IX Fund signed an agreement with the funds managed by Apax Partners to buy their shares in Idealista – equivalent to 80% of the portal – for 1,321 million euros.

The listed property developer Aedas Homes became the fourth company to issue publicly guaranteed promissory notes. It managed to close the placement of 34.1 million euros over 24 months, the longest possible maturity, in the largest placement that the ICO has endorsed to date.

It has also been an intense summer for Quabit, which announced in September that it closed the first half of its financial year 2020 with losses of 50.25 million euros, compared to gains of 798,000 euros in the same period a year earlier.

In terms of the distribution of dividends, analysts expect that Colonial’s remuneration will be the only one of all companies in the sector that will remain intact. Metrovacesa has already suspended its dividend payment and other firms have not yet decided whether to pay theirs or not.

Residential

During the third quarter, there was an overall adjustment in house prices, after the lockdown in the Spring altered the dynamics of the market. During the 3 months to September, the average price of housing in Spain experienced a decrease of 1.6% to 1,361 euros per square metre, according to the appraisals of new and second-hand homes carried out by Tinsa.

Likewise, in September we learned that between April and June, 78,972 homes were purchased, down by 47.2% compared to the same period a year earlier. Meanwhile, operations carried out by foreigners dropped by 60%, according to data from the Ministry of Transport, Mobility and the Urban Agenda.

Despite the drop in prices and sales, the promotion of new build homes showed no signs of slowing down. In this way, Madrid announced that it is preparing for a significant increase in new housing developments over the coming years, specifically: 1,393 homes will be built in La Solana; 4,500 units will be constructed in the first phase of Berrocales, where plans are afoot to build more than 22,000 homes by 2034; and 10,500 homes will be built in Campamento, with a significant percentage of protected housing in all of the areas.

In the build to rent segment, the German investment fund Patrizia bought a residential project comprising more than 200 homes in the municipality of Sant Joan Despí (Barcelona) from the Spanish property developer Metropolitan House for 74 million euros. Meanwhile, the property developer Neinor Homes acquired 75% of Renta Garantizada, a
company specialising in residential rentals, which will allow it to increase its rental assets to 4,000 homes.

Hotels

Overnight hotel stays recorded six consecutive months in negative territory, after plummeting by 64.3% in August compared to the same month in 2019. This type of accommodation received 5.8 million travellers in August, who made 16.8 million overnight stays, according to figures from the National Institute of Statistics (INE).

Despite the drop in tourism due to the effects of the pandemic, operations are still being signed in the segment. For example, the tourist group Servatur acquired the Beverly Park hotel in Gran Canaria, after winning the bankruptcy auction, with a bid amounting to 56 million euros.

In addition, the NH Hoteles chain announced that it will invest 50 million euros to manage eight luxury hotels owned by the French real estate company Covivio in Europe.

Offices

The office segment has also been hit hard by the pandemic. With figures for the third quarter still provisional, investment in offices in Spain stands at around 1,500 million
euros, down by 45% compared to the same period in 2019, according to data from the consulting firm CBRE.

Despite the damage suffered by the sector, companies are continuing to invest in and develop new office projects. El Corte Inglés has announced that it is planning to build a 15,000-square-metre office building in Azca, where it owns a plot alongside its flagship Nuevos Ministerios store. Also during the month, Amundi Inmobilier closed the purchase of a 30,000 m2 office building that Therus Inbest and BNP Paribas REPD are constructing
in the Madbit area.

As for moving in the middle of a pandemic, in September, the bank ING moved into its new headquarters, located in the Campo de las Naciones area of Madrid. The entity’s new home is made up of two buildings spanning 35,000 square metres in total; for the time being, it will operate at just 20% of its capacity as a result of the pandemic.

Commercial

Shopping centre owners are facing almost one hundred claims to extend rental moratoriums. Specifically, 83 tenants, grouped together by the Platform for People Affected by Covid-19 (PAC), want to take to court the owners of retail complexes in which they have rent premises. Those affected include Merlin, Unibail, Castellana Properties, Klépierre and Carmila, amongst others.

The coronavirus crisis has hit the retail segment hard and many of the companies specialising in this type of asset have significant debt. In this way, Unibail Rodamco Westfield (URW), owner of shopping centres such as Parquesur, has announced a capital increase of 3,500 million euros to reduce its debt, along with the sale of several of its shopping centres, including those in Spain. This process is part of a wider reorganisation plan that will see the firm allocate more than 9,000 million euros to reducing its leverage.

Logistics

During the month, we learned that logistics investment in Spain during the first half of 2020 amounted to 534 million euros, and that the volume transacted until August amounted to 611 million euros, according to Savills Aguirre Newman.

In terms of operations, the deal being closed by the German fund Patrizia stands out, as it is currently finalising the sale of the new Amazon logistics centre in Alcalá de Henares, which will open its doors this autumn. The company expects to receive more than 100 million euros from this operation. In addition, Invesco purchased the Pal-M40 logistics platform from Pasaval in September.

NPLs

The European Central Bank (ECB) announced that it is working on a website, like Amazon’s, on which to put up for sale billions of euros in bank loans that have been affected by the coronavirus crisis. The project is part of the efforts by 19 countries in the
Eurozone to address a growing backlog of unpaid loans.

Top 10 most read news – September 2020

  1. Hines Reaches an Agreement with Aldi to Lease 2,000 m2 in its Macro Residential
    Project in Valdebebas
  2. CBRE hires Carolina García de la Rasilla as its Legal Counsel in Spain (in Spanish)
  3. The American Operator Costco Arrives in Paterna with an Investment of €100
    Million
  4. Madrid Sees a Boom in the Construction of New Homes in Berrocales, La Solana and
    Campamento
  5. La Solana, the New Area of Madrid that will Allow the Construction of VPO
    Homes Next to La Moraleja
  6. Enero Arquitectura to carry out the expansion of Hospital Quirónsalud Madrid in Pozuelo (in Spanish)
  7. Association of People Affected by Squatting: “We Do Not Believe the Figures Issued by
    the Administration”
  8. ACS Will Carry Out the Renovation of the ‘Torres de Colón de Mutua Madrileña’
  9. The Details of the 102 Residential Plots Being Sold by the Community of Madrid
  10. Real Estate Investment by Foreigners in China Soared in August  (in Spanish)

B-Exclusives

What Is the Nursing Home Sector Like in Spain?

In Spain, there are 363,581 beds in nursing homes, which are asymmetrically distributed across the country. The province of Barcelona has a shortage of 11,124 units; whilst Madrid needs to add another 5,220 beds to its supply.

Which is the Most Dynamic Neighbourhood in Madrid Post Covid?

Tetuán has become one of the most sought-after neighbourhoods in Madrid capital, thanks to its competitive prices and the emergence of new projects. However, coronavirus is weighing down on the market, especially when it comes to rental properties.

Property Developers Expect to Handover 20,500 New Homes Before 2021

In the three remaining months of the year, property developers expect to finish 20,551 homes in Spain, distributed across 1,061 developments, several of which will comprise hundreds of units.

The Aging Spanish Population: a Gold Mine for the Real Estate Sector

By 2050, 31.4% of the population in Spain will be aged over 64 years due to aging and a longer life expectancy. The supply of nursing homes for the elderly will need to double its capacity to keep pace.

Latest news

Mapfre Sells Five Nursing Homes to Healthcare for €50 Million

The Socimi has bought five nursing homes for the elderly comprising 800 beds and 150 day-centre places from its insurance partner.

Neinor and Oaktree Bid to Build 4,500 Homes with Barcelona City Council

The company HMB has decided that four private companies meet the solvency requirements to proceed to the second phase for selecting a private partner to build 4,500 rental homes.

Property Developers, Estate Agents and Owners Warn of the Consequences of Regulating the Rental Market

Different associations and companies in the sector say that the law to limit or lower rental prices will lead to a significant decrease in supply and investment.

What Is the Nursing Home Sector Like in Spain?

In Spain, there are 363,581 beds in nursing homes, which are asymmetrically distributed across the country. The province of Barcelona has a shortage of 11,124 units; whilst Madrid needs to add another 5,220 beds to its supply.