Spain RE Market Overview- October 2019

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November 21, 2019.

Overview from Aura Real Estate Experts

October was a busy month in the Spanish real estate market as major deals were seen across many sectors. Heightened activity was seen in the logistics sector, where GreenOak is finalising a deal for a €1.3-billion portfolio of assets, and in Madrid’s residential real estate market, where Merlin Properties and Ibosa both finalised major acquisitions.

At the same time, however, market growth is moderating in Spain’s principal markets, as investor activity has pushed up prices and the market begins to mature.  The country’s National Institute of Statistics released data on the sale of homes in August showing that a total of 35,371 housing sales occurred in Spain in the month, the lowest figure since August 2015. The retrenchment affected both the sales of new (-21%) and existing homes (-21.1%), the latter of which accounts for approximately eight out of every ten sales. Monthly sales took an even bigger hit, falling by 26.1% from July to August, the biggest decline for that month of the last five years. Buyers are increasingly focusing on alternative investments, such and residences for either senior citizens or students. Investments in co-working developments are also rising.

Residential

The Belgian student housing operator Xior Student Housing finalised a deal to acquire two new student residences in Barcelona ​​for a total of 41 million euros. Thus, Xior will acquire The Lofttown residence, a 78-room, 140-bed residence in Barcelona. The asset is currently operational and is located near the Paseo de Gracia, a short distance from the city’s historic centre. The firm also acquired Collblanc, another student housing development in the same city. The residence will have a minimum of 128 rooms and will also operate under The Lofttown brand. The project is currently in the licensing stage, with delivery expected in 2021.

The French firm Foncière Siscareacquired three senior citizens’ residences, two in Spain and one in Italy, for a total of40 million euros. The acquisition follows the firm’s strategy of consolidating its position in the Spanish healthcare market. Foncière Siscare acquires assets in conjunction with outside investors, concentrating on operations, while the real estate partner invests in the long-term repositioning of the asset.

Quabit finalised its acquisition of 82.9% of the share capital of Rayet Construcción, a construction company controlled by Félix Abánades, for €14.3 million. Quabit is thought to be taking control of the construction in response to tight demand and to guarantee the construction and delivery of its homes. The president of Rayet, Félix Abánades, will thereby raise his stake in Quabit from 19.1% to 20.3%, as part of the payment will be made with shares in the developer. The rest of the payment will be made in cash.

Vitruvio announced that it had acquired 35% of Fidelges S.L.for 6 million euros. The company added that it would propose a merger by absorption with the latter firm. The deal will allow Vitruvio to acquire three properties in central Madrid at an average cost per square meter of €2,700. The three properties are located in prime areas of Madrid, at Calle Duque de Rivas 4, Calle Aguirre 1 and Calle Tribulete 23. The buildings will undergo an investment of €4.5 million in upgrades and renovations to convert them into residential developments.

Hospitality

The socimi Atom Hoteles, which is controlled by Bankinter and Global Myner Advisors Capital Investment, acquired the 439-room Isla Bonita de Tenerife and the 125-room Riviera Marina de Gran Canaria hotels. The firm agreed to pay 52.6 million euros for the first hotel and 15 million euros for the second, for a total of €67.6 million. Atom Hoteles also announced that it had reached an agreement with the FTI Group’s Meeting Point Hotel Managements to operate the two 4-star units under its Labranda Hotels & Resorts brand. Either party may opt to extend the 12.5-year lease. Meeting Point will pay 6% of each unit’s revenues in rent, with a minimum guaranteed amount of just over 6% of the acquisition price.

The Millenium socimi acquired the former Asturias hotel in central Madrid from the Platinum Estates group, which is controlled by the Hong Kong-based investor Harry Mohinani, for €82 million. Millenium plans to refurbish the hotel and reopen it in 2021 in conjunction with Marriott’s W Hotels brand. The 5-star, 136-room hotel is on the central Madrid square of Canalejas.

Offices

The Canadian REIT Inovalis bought the Málaga Business Park office complex from Iberdrola, in the largest real estate operation in Málaga of the last five years. The Málaga Business Park consists of six buildings with 12,000 square meters of gross leasable area. The complex is currently 100% occupied and has nearly 300 parking spaces. Before this investment in Spain, Inovalis had focused on France and Germany, where it owns 14 office buildings in cities such as Paris, Stuttgart and Frankfurt.

The French hospitality group Boissée Finances acquired an office building on Calle Fomento in Madrid from Princeton Investments for €45 million. Boissée plans to subsequently convert the asset into a 155-room luxury hotel. The building has 10,700 square meters of surface area and is located on the Plaza de Santo Domingo and is thus quite close to the Gran Vía. The hotel will have a large rooftop pool and terrace overlooking the Royal Palace.

Retail & Shopping Centres Savills Investment Management sold The Outlet Stores shopping centre in San Vicente, Alicante, to a fund controlled by UBS for approximately 34 million euros. The Outlet Stores complex is located next to the University of Alicante. ING Real Estate Development built the centre in 2004 and subsequently sold it to Savills Investment in 2013. The firm invested in an expansion, and it currently has a gross leasable area of ​​about 35,000 meters and an occupancy rate of almost 100%. The Outlet Stores has tenants including Mango, Guess, El Corte Inglés, Nike and Puma, along with restaurants, cinemas, a gym, bowling alley and a Carrefour supermarket. The German investment fund Deka sold eleven of the stores it acquired from Inditex for a total of €105 million. The firm stated that the sale was intended to “cover expenses” since the sales price was already 5% higher than Deka had paid for the assets. Although Deka had initially intended to find a single buyer, the firm ended up selling the assets to an array of mainly local investors.  Deka sold assets located in Albacete, Palma, Sevilla, San Sebastián, Ciudad Real, Zamora, Fuengirola and Lisbon. The firm is also finalising the sale of a store in Córdoba. Land One of the biggest deals of the month saw Merlin Properties acquire a 14.46% stakein the Operation Chamartín urban development from the San Joséconstruction group for €168.89 million. The socimi has thus become the second major investor in the mega-project, through its acquisition of part of San José’s 24% stake in the development. BBVA, in turn, owns the remaining 74%. Merlin, the largest socimi in Spain, is coming into the development at a time when construction is finally set to take off, after twenty years of negotiations. The real estate cooperative Ibosa acquired the second of the three plots of land owned by Mahou by the former Vicente Calderón stadium for 70 million euros. The plot of land, called RC1, has a buildable area of 18,266 square meters for residential use, enough for 200 new homes. The asset also has 3,741-m2 of commercial land. Logistics & Industrial GreenOak announced that it was finalising a deal to sell a pan-European portfolio of logistics assets to Patrizia, the German real estate investment giant. The German group is in exclusive negotiations with the US fund to acquire the portfolio for roughly €1.3billion. The portfolio consists of 1.5 million square meters of logistics assets, which the US firm acquired over the last three years for its second pan European logistics fund. Hines, the world’s fourth-largest real estate fund by volume of assets under management, finalised its first acquisition in the logistics sector in Spain. The US fund has acquired two last-mile logistics assets in Villaverde, on the outskirts of Madrid, from Allegra for20 million euros. Allegra hired Knight Frank to lead the sale of a portfolio consisting of two warehouses in Villaverde and a plot of land in San Fernando de Henares. Both warehouses have a 10-year leasing contract with the logistics operator Ontime. The two units have a surface area of ​​9,798 and 7,676 square meters, respectively. HNA bought a logistics platform in Alovera, Guadalajara, from an undisclosed family office in Madrid for 10.5 million euros. The consultancy Knight Frank and InmoKing Real Estate advised on the deal. The acquisition of the 16,674 square-meter asset is part of HNA’s current strategy of increasing its investments in the real estate sector. Alternative Assets The Abarca Cidón family, the owner of HM Hospitales, has finalised the sale of the properties where two of its main healthcare centres, HM Sanchinarro and HM Torrelodones, are located for approximately 150 million euros to an unnamed US fund. The Abarca family sold the assets in a sale & leaseback operation whereby the family is seeking to reduce its total exposure to the property market.

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