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Spanish Property Market Overview – June 2016
Spain is still without a Government after the PP again failed to win a majority in the country’s second General Election in six months, which was held on 26 June 2016. Nevertheless, investors seem undeterred by the political uncertainty, instead pushing ahead with transactions, encouraged by ever strong macroeconomic indicators: GDP is forecast to rise by 2.7% in 2016 according to the IMF; unemployment continues to fall; and interest rates are at a historical low.
In June, transaction highlights in the real estate sector included: EQT’s sale of Parkia, the country’s third largest car park company, to the Australian fund First State for more than €300 million; GreenOak’s acquisition of Las Mercedes Business Park in Madrid for €140 million; ID Logistics’ purchase of the logistics firm Logiters from Corpfin Capital for €85 million; Avintia’s sale of Aelca to the US fund Värde for €50 million; Lar’s acquisition of the Vistahermosa shopping centre in Alicante for €42.5 million; and Hispania’s purchase of three hotels in Ibiza for €32 million.
In parallel, Merlin announced its plans to merge with Metrovacesa to create Spain’s largest real estate group, with total assets worth more than €10,297 million. The Socimi has managed to reach an agreement with the real estate company’s major shareholders (Santander, BBVA and Banco Popular), who will transfer around 7,500 homes to the new entity. The deal will likely be completed in September after approval has been obtained from Merlin’s shareholders.
Meanwhile, in the banking sector, Abanca sold a €1,400 million NPL portfolio to EOS Spain. Several other banks negotiated hard to close deals before the end of H1, with Bankia selling a €400 million property developer loan portfolio to Deutsche Bank and the Norwegian fund Axactor (which bought Geslico last month) acquiring a €144 million NPL portfolio from BMN. In addition, Sareb put 1,300 assets up for sale in Madrid and Barcelona.
Other major land and property owners also put some of their assets on the market during the month of June: FCC announced its plans to sell off real estate assets worth more than €300 million, including a plot of land in Tres Cantos, Madrid, which has a book value of €120 million; RTVE put 32 buildings up for sale worth €85 million; and Aena launched an ambitious plan to generate returns from its vast land holdings, in particular the plots surrounding its Madrid Barajas and Barcelona El Prat airports.
The Socimis enjoyed a bumper month in June – Hispania completed its conversion into a Socimi; three Socimis debuted on the MAB, namely Silvercode Investments, Hadley and Asturias Retail and Leisure, taking the total number of Socimis on the alternative stock market to 18; and Ilunion and Vincci Hotels created a €500 million hotel Socimi and Alquiler Seguro launched a Socimi specialising in residential rental properties. The largest 4 Socimis (Merlin, Hispania, Lar and Axiare), all of which are listed on the continuous market, have together raised €2,746 million in the last year alone, with more rounds of financing planned for the coming months. Hispania and Lar were named as the most profitable Socimis and the arrival of foreign Socimis was welcomed by all players in the sector, as yet another sign that the RE market is entering a new phase in its recovery.
In the residential sector, Servihabitat published its forecast showing that house prices will rise by 3.8% in Spain in 2016. INE reported that house prices had risen by 6.3% in Q1 2016 and Sociedad de Tasación announced that the price of new homes have increased by 4% in the last year in Madrid and Barcelona, with average new builds now costing €2,886/sqm and €3,390/sqm in those two cities, respectively.
In other news, Wanda decided to accelerate the timetable for the sale of Edificio España, requiring all binding offers to be submitted by the end of June, in an attempt to close the deal before the summer. Värde created a new property developer, Dospuntos, from the former structure of San José Desarrollo Imobiliarios, which it acquired from the San José group last year. Amancio Ortega submitted a binding offer amounting to €490 million for Torre Cepsa through his real estate investment company, Pontegadea. Finally, Amazon further enhanced its commitment to Spain by leasing one mega warehouse (measuring 42,253 sqm) in Tarragona and acquiring a 150,808 sqm plot next to El Prat airport in Barcelona, where it plans to construct a 60,000 sqm warehouse, which will open in Autumn 2017.
After the referendum on 26 June, the United Kingdom has begun the process to leave the European Union; the considerable uncertainty regarding the depreciation of the pound, modifications in terms of provision of health services and restrictions over free movement of people, will affect the Spanish residential market, as British purchasers are the most prevalent foreign buyers of homes in Spain. However, the impact will be limited to certain geographical regions, as this quantification of demand and prices decrease in municipalities, tourist regions and in the whole country.
Source: AURA REE
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