In demand home markets in Spain such as Barcelona and the Balearic Islands are seeing rents rise as the rental sector recovers well, the latest data suggests.

Overall rental asking prices increased by 8.8% on average over three months to the end of March, according to the figures from property portal Idealista, reaching €9 per square meter per month.

Rents increased the most in the Balearics with a rise of 16%, followed by Madrid up 5.1%, the Canaries up and Catalonia up 4.9%.

Rents are highest in Barcelona at €18 per square meter per month, followed by Madrid at €15 while at the other end of the scale asking rents are just €4 per square meter in cities such as Lugo, Avila and Teruel.

Meanwhile, the latest figure from Fotocasa show rents were up by 1.3% month on month in May to €8 per square meter per month and are 10.5% higher than a year ago.

According to Mark Stucklin of Spanish Property Insight more people in Spain are renting. ‘Spain still has some of the highest owner-occupier rates in Europe, partly because Spaniards have tended to see paying rent as throwing away money. But the property crash, and credit crunch that came with it, compounded by high and regressive transaction costs, have forced more Spaniards than ever into the rental market, especially the young,’ he said.

He believes that the growth in rents will attract more local and foreign investors who can’t earn a decent yield on any mainstream assets and that although rental yields are not dazzling at around 3% to 4% gross in a city like Barcelona, they are significantly better than alternatives like Government bonds, and look less risky.

‘I expect small investors to continue opting for Spanish property for the foreseeable future,’ he added.

Prices are also being affected by foreign interest as they are rising fastest in coastal areas where second homes are popular. The most up to data figures from appraisal company Tinsa shows that prices on the coast are rising fastest in Gavá, just south of Barcelona, and Mojácar in Andalusia.

The data also shows that other areas with a strong holiday home market, including the Canary Islands, Mallorca, Ibiza, the Costa Dorada, the South Costa Blanca, the West Costa del Sol and the Costa de la Luz, are seeing growth.

Confidence in the Spanish property market is rising with the research division of Spanish bank BBVA forecasting that home sales this year will be 10% higher than last year.

The bank is also predicting that sales will break through the 500,000 barrier for the first time since the downturn in the nation’s housing market prompted by the economic downturn a decade ago.

BBVA points out that they expect the market to do better than they had previously forecast because of an improving jobs market and a better outlook for the European Union as a whole.

It is also forecasting that prices will rise by 3% on average this year to €1,570 per square meter which will take values back to where they were in 2004, but there is likely to be considerable regional variation. Barcelona, for example, is seeing much higher growth than other parts of the country.

The latest figures from the land registry and Spanish notaires seem to support the view that the market is well on its way to recovery. The data for sales recorded in the Land Registry show transactions surged by 25% in May 2017 compared to the same month last year to 40,671, the first time monthly sales have broken through the 40,000 barrier since September 2008.

The sales data from notaires showed a 17.5% rise in May year on year. Home sales as reported by the Notaries’ Association have grown almost every month since the start of 2014, and May’s figures confirm that trend is still on course.

Both rises come after a dip in sales in May, and according to Mark Stucklin of Spanish Property Insight, the slight fall was probably nothing more than a seasonal pause.

The notaires also reported that the average price of homes sold in May increased 0.3% to €1,318 per square meter. But sales are still down around 40% compared to 2007 and prices down by 30%.

But Stucklin pointed out that comparing today’s market with a decade ago does not necessarily give the best picture as 2007 was the height of the property boom. ‘It is not a healthy benchmark because 2007 was the top of the real estate bubble, but it still helps to show how far the market has fallen. If and when sales get back to 20% below the 2007 peak we can talk of the market having fully recovered,’ he said.

He added that the land registry figures are based on sales recorded, not actual sales that took place in the month and as such they lag the market by about two or three months and they don’t include off plan sales which won’t be counted until the homes are built and delivered next year.

The biggest increase in sales was in and around the Costa Dorada, up 52%, while they increased by 43% in Valencia and 42% on the Costa Brava and 40% in Almeria. But sales were down by 30% in Teruel and 15% in Murcia, which is popular with British buyers.

Bodio Business Park

AXA IM – Real Assets, a global leader in real asset investments and the leading real estate portfolio and asset manager in Europe, announces that it has completed, on behalf of institutional investors, the acquisition of three prime office buildings within the Bodio Centrebusiness park in Milan, Italy, from CBRE Global Investors, acting on behalf of a separate account client, for c. €83m. This acquisition provides AXA IM – Real Assets with full ownership of the 65,000 m² office-led Bodio Centre, having acquired the remaining two office buildings and two retail assets within the business park, on behalf of clients, back in 2013.

The buildings acquired include Bodio 1, 2 and 3 office schemes, adding to AXA IM – Real Assets’ holding of Bodio 4 and 5 buildings within the same Grade A development. The three latest additions total 30,000 m² of lettable office space let to a high quality line-up of institutional tenants from a variety of industry sectors. Completed in 2005, the buildings offer modern and flexible workspace and access to a range of the park’s facilities, including a 500-space underground car park, landscaped gardens, restaurants and a fitness centre.

The Bodio Centre is located in the city of Milan’s north-west quadrant and forms part of the established Maciachini office sub-market which attracts a high concentration of leading multinational companies. The business park is well served by public transport, including buses, trams and a sub-urban railway line, while it is also easily accessible via road links.

Alessio Lucentini, Local Head of Asset Management & Transactions in Italy at AXA IM – Real Assets, commented: Having had exposure to the Bodio Centre for the past four years we are now able to extend our commitment to the scheme with confidence on the back of our own positive first-hand experience of the business park’s performance and appeal. Our earlier investment into the Bodio Centre saw AXA IM – Real Assets as one of the first movers back into Southern Europe market. Having reaped the rewards of our first-mover advantage we remain firm believers in the sustainable occupier demand of the Milan office market.”

Campo de las Naciones

UBS Asset Management‘s Real Estate & Private Markets business has completed the acquisition of a core office building at Ribera del Loira 56-58, in Campo de las Naciones business park, Madrid, Spain for €38.5m.

The core 11,549 m² multi-let office scheme comprises twin modules divided by a central atrium, and more than 300 parking spaces. The property is fully let to dental health centre Dentix and Accor Hotels on leases of varying lengths and at a low rental level, providing opportunities for growth.

The property is regarded as one of the best buildings of the Phase 2 area of Campo de las Naciones, one of the main office sub-markets in Madrid, which is home to a number of large, well known international companies including Endesa, Roche, Total, Ferrovial, Coca-Cola, Hugo Boss and Santa Lucia. The location has excellent connectivity to the public transport network as well as direct access to the nearby motorway and Madrid airport. The Madrid office market continues to be characterised by low and falling levels of supply and little new development, which, when combined with growing tenant demand, means rents are currently trending upwards.

The acquisition brings REPM’s assets under management across the Iberian peninsula to circa €772m. REPM has operated in Iberia – including Spain and Portugal – since 2003 and currently manages seven funds or separate account mandates with a portfolio of Iberian assets spanning the office (57%), logistics (6%) and retail (37%) sectors.

Jesús Silva, Head of REPM – Iberia at UBS-AM, commented: “This is a high quality office building in an excellent micro location which continues to see strong occupier demand as the Spanish economy strengthens. Furthermore, the multi-let tenant structure will provide us with a number of more near term opportunities to benefit from rental growth, improving the income profile of the asset.”

World's Most Expensive Office Markets of 2017 Revealed

Hong Kong, London, New York at Top of Global List 

According to CBRE Research’s latest annual Global Prime Office Occupancy Costs report, Hong Kong (Central) and London’s West End topped the list of prime office occupancy costs again.

Hong Kong (Central) and London’s West End remained the two most expensive office locations in the world. Hong Kong’s (Central) overall prime occupancy costs of $303 per sq. ft. per year topped the “most expensive” list, followed by London’s West End ($214 per sq. ft.), New York (Midtown) ($203 per sq. ft.), Hong Kong (West Kowloon) ($190 per sq. ft.) and Beijing (Central Business District (CBD)) ($183 per sq. ft.).

“The global top-10 list reflects the ongoing strength of global gateway cities in attracting and maintaining a successful occupier base,” said Richard Barkham, global chief economist, CBRE.

Global prime office occupancy costs–which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties–rose 1.9 percent year-over-year, with the Americas up 3.6 percent, EMEA up 0.8 percent and Asia Pacific up 1.2 percent.

Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe, along with Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands). In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong). Buenos Aires showed the biggest increase in the Americas overall, while suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S.

CBRE tracks occupancy costs for prime office space in 121 markets around the globe. Of the top 50 “most expensive” markets, 21 were in Asia Pacific, 16 were in EMEA and 13 were in the Americas.

Europe Middle East & Africa (EMEA)

In EMEA, Durban (South Africa) had the highest increase in occupancy cost overall, though Stockholm (Sweden) registered some of the fastest growth in Europe. Palma de Mallorca (Spain), Belfast (U.K.) and Amsterdam (Netherlands) also showed double-digit growth, with Lyon (France) and Berlin (Germany) not far behind.

In London’s West End, the fall in occupancy costs is largely due to a fall in rents triggered by more subdued demand, particularly amongst financial occupiers who have become less willing to pay the high rents prevailing in London’s premier market.

Occupier efforts to reduce occupancy costs due to the ongoing strength of the Swiss franc relative to the euro have resulted in falls in Swiss markets, including Geneva and Zurich.

London (City) was pushed out of the top-10 most expensive markets to 11th place, despite
prime office costs rising by 2.9%.

Asia Pacific 

In Asia Pacific, Shanghai (Puxi) in China had the highest growth in occupancy cost, followed by Guangzhou, Bangalore and Shanghai (Pudong).

In Singapore, occupancy costs continued to fall, thanks to increased supply of office stock and weak levels of inflation.

Asia Pacific was home to seven of the top 10 most expensive markets–Hong Kong (Central), Hong Kong (West Kowloon), Beijing (CBD), Beijing (Finance Street), Tokyo (Marunouchi/Otemachi), New Delhi (Connaught Place – CBD), and Shanghai (Pudong).

Hong Kong (Central) is the only market in the world with a prime occupancy cost exceeding $300 per sq. ft.

The most expensive market in the global ranking from the Pacific Region was Sydney ($97 per sq. ft.), in 19th place.

Americas

In the Americas, suburban Denver, suburban Houston and New York Midtown South saw the largest occupancy-cost increases in the U.S., but Buenos Aires showed the biggest increase in the Americas overall.

New York Midtown, number three on the global list, remained the most expensive market in the Americas, with a prime office occupancy cost of $203 per sq. ft.  New York Midtown South took the eighth spot on the list with a prime office occupancy cost of $156 per sq. ft.

Sao Paulo was the most expensive market in Latin America, posting an office occupancy cost of $69 per sq. ft. and ranking as the 35th most expensive market globally.

Making Sense of Brexit: What Happens to UK Property Markets After the Vote?

With the Brexit vote is complete, and the divorce proceedings of the UK from the European Union is now afoot, with considerable uncertainty and no real precedent, the future implications for UK’s property markets are significant.

JLL UK CEO Chris Ireland tells World Property Journal, “Even if it is effectively ‘business as usual’ for the UK in terms of trade and legislation until 2018, such a major change will inevitably create uncertainty in the economy and real estate markets.”

Ireland further commented, “In the event of a well managed exit these impacts will be largely confined to the UK. “In the short term we may see a weakening in occupier demand. The impact on rents may be limited by tight supply, but activity will be adversely hit while initial uncertainty about direction and timing continues. Investor sentiment may also remain subdued in the short to medium term. For property markets, the initial correction may be most severe but should be followed by an upturn as opportunities re-emerge in UK core markets and benefits of weak sterling are recognized. Sentiment and relative pricing will be key.”

“Much will depend on the speed of negotiation, the wider political picture and whether a clear direction of travel and timetable for an EU exit is established early on”, concluded Ireland.

The following is a summary of JLL’s view of the Brexit vote on UK commercial property markets:

  • Occupier demand will weaken in line with economic growth and declining business sentiment. The impact on rents may be limited by tight supply, but activity will be adversely hit.
  • Investor sentiment will deteriorate further subduing capital flows in the short to medium term.
  • There is likely to be a negative capital value adjustment over next 2 years (estimated at up to – 10% with yields moving around 50bp). London sectors remain most vulnerable to correction given current keen pricing and their multinational occupier base.
  • The residential market is expected to cool despite lower interest rates, but any correction will be mild, aside prime London values, which are significantly more exposed
  • For property markets, the initial correction may be most severe and followed by an upturn as opportunities re-emerge in UK core markets and benefits of weak sterling are recognized. Sentiment and relative pricing will be key.
  • Much will depend on the speed of negotiation, the wider political picture and whether a clear and favorable direction of travel is established early on.
London Office Sales Primarily Driven by Hong Kong Investors in 2017
According to international real estate consultant Knight Frank, buyers from Hong Kong have purchased £2.2 billion ($2.86b USD) of office buildings in the City of London over the first half of the year. Significantly above the £458 million ($596m USD) recorded over the same time period last year. This steep rise is somewhat unsurprising given the completion of The Leadenhall Building transaction (£1.15 billion / $1.5b USD) in Q1 2017 but still reflects a significant appetite for London real estate.

But while the Hong Kong investors grab the headlines they are certainly not alone.  The deal volumes of the first half of the year reflect a number of interesting themes:

  • The rise of the German investor.  Attracted by the returns available relative to their domestic markets and the weakness of sterling, both the open-ended and specialist funds have been active purchasers of City of London stock in Q2 including Cannon Place (£485m to Deca) and 2&3 Bankside (£310m to Deutsche AM).
  • A broad range of other global buyers chasing London real estate.  Other transactions in Q2 included HB Reavis (Slovakian) buying Elizabeth House (£250m), Ho Bee Land (Singaporean) buying 67 Lombard Street (£129m) and Utopia (Thai) buying Pinners Hall (£98m).
  • Continued activity from UK purchasers.  Workspace (UK) bought Salisbury House (£159m) and UK buyers overall accounted for a third of deals by number.
Nick Braybrook, Head of City Capital Markets at Knight Frank says, “A deep pool of buyers continue to chase City of London offices. Looking forward, we expect that Far Eastern investors, in particular Hong Kong buyers, will continue to buy strongly in the second half of 2017 and we predict that the total annual spend by Hong Kong domiciled investors will reach £4 billion – nearly four times the volumes transacted by this buyer group last year.

“Importantly, this increase in activity is being facilitated by a rise in the supply of available opportunities to purchase over the last few months.  Sellers have been attracted to the market by the continued strong demand from both domestic and overseas buyers with availability up 20 per cent in Q2 compared to last quarter and up a third on this time last year.  However, with the strong demand we expect from Hong Kong and other global and domestic investors, the supply numbers could fall rapidly over the next few months as deals are completed.  This is likely to put further downward pressure on prime yields for City of London offices; currently trading at 4.25 per cent.”

A global trend

Anthony Duggan, Head of Capital Markets Research, Knight Frank, said: “London is certainly not alone in attracting money from this part of the world with investors targeting assets in major cities across the globe. Indeed, Chinese and Hong Kong capital was responsible for 13 per cent of all global cross-border real estate investment last year, second only to the United States. As we explore in our new Active Capital report, while there is some uncertainty surrounding capital flows from China as part of on-going capital controls, we expect Chinese and Hong Kong investors to remain active.

“Despite the capital controls in place, limiting some outbound investment from China, it is clear that deals deemed appropriate i.e. in line with existing areas of business and business plans, will continue from both conglomerates, private investors and SOEs, with the recent CIC purchase of Logicor being a high profile example, and in addition many investors will continue to raise funds and invest through their overseas, e.g. Hong Kong or Singapore, entities.”

Greater-China-(China-&-HK)-purchases-in-2016.jpg

The Mercado de San Miguel has a new owner. A Dutch fund specialising in the real estate sector has just taken ownership of this historical and iconic building in Madrid. And it has done so for €70 million, a figure that, in absolute terms is not by any means one of the largest in the market, but which, nevertheless, represents the most expensive transaction per square metre that has ever been closed in the Spanish real estate market.

According to sources consulted by El Confidencial, for every one of its 1,200 m2, the buyer has paid €60,000, an amount that breaks all real estate records and which represents, for the founders and promoters of the project, several times their original investment.

The person that has led this project from the beginning is Montserrat Valle Hernández, the majority shareholder of the company that used to own the market, El Gastródomo de San Miguel. She was the architect behind the renovation of this iconic building, which last year marked its first century of life.

Sources consulted explain that prominent shareholders also included bankers such as Pedro Guerrero Guerrero (President of Bankinter), Salvador García Atance Lafuente (former President of Morgan Stanley in Spain), Paul Gomero Vaquero (Private Banking Partner at A&G), as well as the well-known journalist Guillermo Fesser and the businessmen Víctor Josue Alarcón, Pedro Gómez Blazquez and Juan Ramón Ramírez Lozano.

Aguirre Newman participated in the operation, which was signed on Thursday at a notary’s office on Calle Serrano in Madrid. Aguirre Newman led the sales process and studied the various offers that were received from domestic and overseas groups, to bring this deal to a successful conclusion. Sources at the consultancy firm declined to comment on the transaction.

A centenary building

The unique Mercado de San Miguel, located in the square of the same name, next to Plaza Mayor, was acquired more than a decade ago by a group of companies led by Monserrat Valle with the aim of restoring it and turning it into a gastronomic centre.

On 13 May 2009, it reopened its doors, restoring the splendour that it enjoyed in its heydey. The building was constructed between 1913 and 1916 and was designed by the architect Alfonso Dubé y Díez. Nowadays, it still retains its original iron structure dating back to the beginning of the 20thcentury, which stands out as one of its greatest features (…).

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18 July 2017 – Eje Prime

Baraka is setting its sights on the healthcare market. At the beginning of July, the real estate investment company completed the purchase of 600,000 m2 of land and a roof spanning 300,000 m2 for €300 million in Montcada i Reixac (Barcelona), where it will build a complex for the elderly.

The area acquired is located in Can Cabanyes, a zone that borders Barberà and Santa Perpètua de Mogoda. According to Manuel Abadía (pictured above, right), the representative in Cataluña of Trabis (the group’s construction company) (…) once the sale has been signed, work will begin to define the project in more detail.

The company does not have any experience managing these kinds of facilities, and so it will have to team up with a partner specialising in hospital care and management, according to Expansión.

“We intend to create a complex for the elderly, with villa-type homes and garden areas, which will be accompanied by personal care and also, one or two hospitals”, explained Manual Abadía. The representative for Trabis in Cataluña said that the construction phase alone will provide work for 400 people and that when the complex begins operating, “we think that it will sustain at least 200 permanent jobs”, he added. For the time being, no dates have been set for the opening of the facilities.

Baraka set up shop in Cataluña a year and a half ago with the intention of becoming a leading company in the real estate market, especially in the industrial and logistics sector. One of its most recent operations was the purchase, in June, of Edificio España from Wanda. The firm wants to grow its residential projects, amongst other initiatives.

exterior-pools

3 July 2017 – Preferente

The US fund Oaktree Capital Management is going to sell the Hotel Dolce Sitges in Barcelona. Specialising in conferences and conventions, the establishment will now be taken over by Talus Real Estate, together with the US fund Angelo Gordon.

According to Expansión, the negotiations are already well advanced and the transaction is expected to be closed this week, for just over €40 million. Oaktree has been looking to sell this hotel for a year; it acquired the property in 2015.

Operated by Wyndham, the Hotel Dolce Sitges opened its doors in October 2004. It specialises in the MICE segment (meetings, incentives, conferences and exhibitions), as well as in high-end holiday tourism.

The 5-star property has 263 rooms, a spa and fitness centre. It also has four outdoor pools and one indoor pool, as well as 2,175 m2 of space dedicated to meeting and conference rooms, spread over 38 meeting rooms and an amphitheatre.

This operation comes shortly after Iberdrola Inmobiliaria sold 55% of the Hotel Hilton Diagonal Mar in Barcelona to Axa Investment Managers Real Assets for €80 million.

The area of Barcelona where this latest hotel is situated, Sitges, has more than 5,000 hotel beds and is enjoying a boom as a tourist destination, following several recent operations, such as HI Partners’ acquisition of Hotel Terramar and Leo Messi’s recent purchase of the boutique Hotel Mim.

Original story: Preferente (by R. P.)