Deka may have found a buyer for a portion of the portfolio that it purchased from the Galician giant Inditex. The German fund manager is currently holding negotiations with the Spanish fund IBA Capital regarding the sale of most of the premises that it bought from the fashion retailer at the beginning of the year for around €100 million, according to sources close to the operation, speaking to Eje Prime.

IBA Capital, which has declined to comment, looks set to buy more than ten assets located in secondary cities, given that Deka is planning to hold onto number 16 Calle Preciados, in Madrid (2,725 m2 of retail space) and number 58 Calle Pelayo, in Barcelona (5,134 m2 of retail space), as well as the properties it acquired in Portugal.

Thus, IBA Capital would purchase assets located in secondary cities (such as those located in  Zamora, Albacete and Ciudad Real) through the fund that it has just launched onto the market specialising in the high street segment. Deka acquired the 16 assets in January for approximately €400 million, with chains from the Inditex group continuing as tenants in all of the establishments.

These two moves, the purchase and the sale, demonstrate Deka’s interest in the Spanish market. According to Eje Prime, Deka’s roadmap involves doubling the investment volume that it has in the country from €1 billion to €2 billion over the next five years.

Currently, the fund manager owns a portfolio of tertiary assets in Spain, highlights of which include the office buildings at Avenida Diagonal 640 and Sarrià Forum in Barcelona and the mixed-use (offices and retail) El Triangle building, also in the Catalan capital (…).

Firstly, some of the tenants vacated Edificio Planeta and now the property itself looks set to change hands. The iconic asset belonging to the Lara family, owner of the publishing group that gives it its name, located in the centre of Barcelona, is very close to ending up in the hands of Banco Sabadell.

The Spanish bank is finalising the purchase of the building, taking advantage of the debt restructuring process that the Hemisferio group is currently undertaking. Moreover, in this regard, Sabadell may have required the resignation of José Lara García as director, according to La Vanguardia.

Owned by Planeta since 2001, the property will lose the multinational publicity group McCann as a tenant on 31 May; that firm is moving to a newly renovated building in the most sought-after business centre of the Catalan capital, 22@, as reported by Eje Prime.

Constructed in 1979, Edificio Planeta, which cost the publishing group €100 million, is the fruit of work by the architects Tous and Fargas, who received the commission from Banco Industrial de Catalunya. Its surface area of 26,000 m2, spread over three octagonal towers, will form part of Sabadell’s portfolio. As such, the entity will acquire an asset situated very close to the towers of its competitor, La Caixa.

The real estate market in Spain is striding towards a new investment record. That is according to the partner responsible for this area at the consultancy firm PwC, Rafael Bou, speaking yesterday at the presentation of a report about trends in the real estate market in Europe – he highlighted that the best international scenario favours the arrival of new projects.

Bou affirmed that there is “widespread optimism” amongst the main players in the sector. “Even 2017, with Brexit and Trump, was a year of record investment, and so 2018 ought to be even better, given that we do not have any of that”, he said. In this sense, he also indicated that there is greater political stability in Europe following the elections in France and Germany,

Another factor that will favour the achievement of this investment record is that the European Central Bank (ECB) is going to maintain interest rates low. Bou confirmed that the uncertainty hanging over the sector is not knowing when the current expansive cycle will end; he put a date on the horizon. “Next year, the uncertainty in this regard may increase with the appointment of a new Chairman of the ECB”.

Madrid, the fifth most attractive city

PwC’s survey, compiled in collaboration with the Urban Land Institute, places Madrid as the fifth-ranked European city for conducting real estate business. If we look at the small print, the Spanish capital is ranked in sixth place in terms of the development of projects and in fifth place for the capture of investment.

The research confirms that significant growth is expected in the capital’s office rentals. “Compared to other European capitals to the north, the growth in rental prices has been restricted by the setback that the Spanish economy suffered following the global financial crisis”, he said. PwC highlights the evolution of the retail and hotel sectors, and the repositioning of offices. Madrid has risen four places in the ranking with respect to last year.

Barcelona, which has risen by five places, is now ranked in eleventh place overall. The Catalan city was ranked in thirteenth place in terms of investment and in ninth place for the development of real estate projects.

The report indicates that Barcelona is one of the cities that could most benefit as a result of Brexit, although it warns of the dangers of secessionism. The analysis highlights that the retail, office and residential sectors are currently at a critical point. So too is logistics. “Boosted by demand from e-commerce companies, investors and property developers are buying logistics warehouses and developing new spaces in Barcelona in a speculative way, for the first time since the global economic crisis”, according to the report. “Some people are now talking about a price bubble in the logistics sector in light of the boom that it is experiencing”, added Bou.

The 800 surveys that have been used to compile the study were conducted prior to 1 October 2017, and so they do not reflect the impact on the real estate sector of the political crisis resulting from the Cataluña-independence process. “Having overcome the initial shock, investment has been recovering gradually”, explained Bou. Most overseas investors have returned. “Some people have decided not to invest, but others saw an opportunity in terms of prices and competition and came back quickly”, he said.

Would Barcelona and Madrid have occupied similar positions in the ranking if the surveys had been carried out after 1-O (1 October 2017)? But highlighted that Madrid is always ranked higher than the Catalan capital because it is a larger city.

Hyatt Centric Brickell Miami, Florida. Photo credit: Hyatt Hotels Corporation

The US giant Facebook has chosen Barcelona. According to sources in the sector, the California-based company has engaged Competence Call Center, which announced its moved to Torre Glòries two weeks ago, to fight against fake content on its platform. In this space, CCC is going to employ more than 500 people who will work directly for the technology giant in the building owned by Merlin.

CCC is going to occupy 10 floors in the building located in the 22@ district. Facebook has already opened another content control centre in Europe together with CCC in Germany, a model that it is now going to replicate in Barcelona, according to Cinco Dias.

Measuring 142 m tall and with a gross leasable area of 37,614 m2, the building in Barcelona has received investment amounting to €15 million from Merlin. After the departure of the EMA, the Socimi decided to convert the property into a multi-tenant space aimed at the office sector.

The building was designed by the architects Jean Nouvel and Fermín Vázquez and inaugurated in 2005. It has 34 above ground floors and an auditorium with capacity for more than 350 people. In addition, the building has another four floors for parking with 300 spaces. In total, the property spans a surface area of 51,485 m2.

The real estate group acquired the building in January 2017 for €142 million. With this operation, the Socimi avoided the tourist moratorium imposed by the mayor of Barcelona, Ada Colau, which prevented Emin Capital from opening a luxury hotel in the famous tower.

Emin Capital reached an agreement with Agbar at the end of 2013 to acquire the building for €150 million. That commitment materialised at the beginning of 2016 when the group made its first payment of €35 million.

The 22@ district is the main area of growth in the office market in Barcelona, having consolidated its position as a magnet for international innovative companies such as Cisco, Ebay, Yahoo, Deutsche Telekom, Sage, SAP, Capgemini and Indra, amongst others.

Project of the new Bernabéu made by the architecture studio L35. 
Infiniti

Madrid expects to start work this summer and Barça, in 2019.

Real Madrid and FC Barcelona have not managed to unite their destinies to face Champions, but they have linked their paths in the remodeling of their new Coliseums. The Government Board of the City of Madrid approved yesterday morning the special plan for the remodeling of the Santiago Bernabéu stadium. And, a few hours later, the consistory of Barcelona and the club blaugrana reached a “historic agreement” to launch the macro project of remodeling of the Camp Nou and its surroundings in the neighborhood of Les Corts.

On the part of Real Madrid, the green light for the reparcelling plan for the new Bernabéu – the previous procedure for obtaining the necessary permits to carry out the remodeling – takes place almost eleven months after the project was approved by the plenary. The project includes the demolition of the two circular towers located at the ends of the west facade of the stadium. Instead, a large public square of more than 10,000 square meters will be located on the front of the Castellana, eliminating residual vials, as well as bus parking areas. As the city council highlighted yesterday, all the costs generated by this action, estimated at around 12.7 million euros, will be borne by the club chaired by Florentino Pérez,

That is only part of the bill for the new home of the white club, whose works will begin this summer and will last about two years. In 2014, Real Madrid awarded the German architecture studio GMP, the largest in the country and with extensive experience in the design and construction of stadiums, and to the Spanish L35 the reform of its stadium, with an estimated investment of more than 400 million euros. According to that plan, the project includes an asymmetric steel facade with unique technical details, such as a retractable roof that can be opened or closed in only 15 minutes. And, as for the capacity, the new stadium, which is waiting to find a sponsor for the naming rights of the field, will reduce the number of seats to 78,000 from the current 80,000.

The new blaugrana home

48 hours had not elapsed since the elimination of the quarterfinals of the FC Barcelona Champions League when the Catalan club presented its agreement with the Barcelona City Council, which will be approved at the plenary session on April 27. For this, it has been necessary to reach agreement with all the municipal groups – only the CUP has been unmarked – and to include the demands of the neighbors -scalled by previous experiences-. The works will begin in the summer of 2019.

The budget managed by the club chaired by Josep Maria Bartomeu is 639 million euros, of which, 125 million correspond to urbanization costs surrounding the future Barça coliseum. The Nou Camp will be completely renovated in several phases, and in the space now occupied by the Miniestadi there will be another Palau Blaugrana, a pavilion for sports sections and new facilities, such as an ice rink and the FBC Escola.

How will it be financed? About 200 million will be obtained with a loan, another 200 million thanks to new revenues and another 200 million, for the commercialization of the name of the field, of which Barça expects to obtain 300 million.

Barcelona City Council has managed to ensure that almost all the space that is now fenced is open to neighbors and that 23,000 square meters are green areas. An underground car park will be built and four non-sports buildings will be erected, with a roof of 28,000 square meters that will include a hotel of up to 9,500 square meters, offices, restaurants and commercial spaces.

UST Global is plugging into the new techie zone in Madrid. The technology company has leased 3,150 m2 of office space in the Avalón Business Park, a closed office complex located in the Julián Camarillo area. In its new home, the US company will share the district with other technology companies such as IBM, Atos, Tecnocom and The Cube Madrid, amongst others.

The company is going to move a team of 400 employees to Avalón, half of the company’s total workforce in Spain, who are going to be spread over three floors. The technology company’s neighbours will include Konecta and Kone, amongst other companies.

UST Global, which is headquartered in California, has a presence in 25 countries and its clients include large listed companies from the banking, insurance, retail and healthcare sectors.

During the first three months of the year, 76,000 m2 of office space was leased in Barcelona. That volume, which represents an increase of 4% with respect to previous quarters, is the highest seen in the last nine months, which means that, despite the political tensions, activity in the city’s office market is performing well. According to a report from CBRE, “companies are moving for very specific reasons and the appeal of Barcelona means that activity remains high. Currently, several large companies are evaluating new locations for their offices, which means that the forecast in the short and medium term for leasing remains good”, said Lindy Garber, Head of the Office Area at the real estate consultancy firm.

The most notable operations recorded during the first quarter include the rental of 6,500 m2 of office space by the Property Registrars in the BCN Fira District complex on Paseo de la Zona Franca; the move by the company Norwegian Air to Nike’s former offices on the Mas Blau industrial estate, where it is going to occupy 5,400 m2; as well as Pepsico Iberia’s move to its new offices spanning 4,900 m2 in the WTC Almeda Park complex. Like in most large cities, Barcelona is seeing an increase in demand from companies offering co-working space.

The volume of surface area available in the market continues to be low for another quarter. In the last year, the availability rate has decreased from 12.5% to 10.3%, and there is a shortage of large, high-quality spaces. Although several projects have been handed over in recent quarters, they have not been added to the new supply, since they were pre-leased before they even came onto the market. This practice is gaining ground due to the lack of available product in the market. On the other hand, the entry onto the market of Torre Glòries added around 27,000 m2 of available space in one of the most sought-after areas of the city, the 22@ district. Prime rents, which have risen by 35% since 2014, are continuing their upward trajectory, and now amount to €24/m2/month. Although that figure is still well below the peak of €28/m2/month reached in 2008, the rising trend is expected to continue in the medium term.

Investment market

During the first three months of the year, the office market recorded an investment volume of €121 million thanks, above all, to the purchase of Axiare by Colonial. This represents an increase with respect to the previous quarter when the investment volume amounted to €66.5 million. Nevertheless, despite the improvement in the investment figure with respect to the previous quarter thanks to the aforementioned operation, the political uncertainty is undoubtedly having an impact on the investment market.

Xavier Güell, Director of this area in Barcelona for CBRE, said that “during the last quarter of last year, investors suspended operations that they had underway because of that uncertainty; many returned to their purchase processes at the beginning of this year, but they remain cautious. Given that these processes require a certain amount of consolidation time, the operations will not be reflected in investment volumes until the second or third quarters”. Prime yields remain stable at around 4.25%.

On 26 March 2018, VBare subscribed a purchase option on a property located in Madrid, for a price of €2 million. The Company will exercise the purchase option, once the conditions agreed upon by the Grantor have been fulfilled. The purchase price of the property, upon exercise of the purchase option, will amount to between €8 million and €9 million, resulting in a total disbursement of between €10 million and €11 million for the acquisition (including the option price and the amount paid for its exercise).

The final deadline for the exercise of the purchase option is 15 December 2018 (including extensions). In the event that the maximum period for the exercise of the purchase option elapses without the agreed conditions having been met, the Company may terminate the purchase option and recover the entire amount disbursed.

There is currently a mortgage loan amounting to approximately €5 million on the property. The Company has received a binding offer from the existing mortgage bank to step into the position of borrower and the balance of the payment will be paid by cash available.

The property is located in the centre of Madrid and is mainly dedicated to residential use. The property is currently leased below market value and the Company estimates a net yield of approximately 4.00% once the reconditioning work has been undertaken and the property is fully occupied at market rents.

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