Real Estate Finance

Master of Science in Finance

Department of Economics, Finance and Accounting
Prof. Toni Candini
2
Real Estate– Welcome Message 3

WELCOME TO
REAL ESTATE FINANCE
Real Estate - Introduction 4

What to
Expect Objectives
▪ Get you ready to consider Real Estate as a Career Path.
▪ In-deep knowledge of the Real Estate sector:
▪ Business Language
▪ Asset Classes
▪ Main Players
▪ Current & Future Trends
▪ Valuation tools
▪ Corporate Finance in Real Estate
▪ ESG
▪ Financing
▪ Career Paths
▪ Skill set. Being a Pro. Ready for interviews.
▪ Real-life case studies by guest speakers.
Real Estate– Initial Questions 5

KAHOOT
Real Estate - Intro 6

Who am I
Toni Candini
▪ Investment Director Living, Conren Tramway
▪ Previously:
▪ Country Manager for CODIC Spain, part of CODIC International
▪ Director of Business Development @Arum Group
▪ Portfolio Manager @ Impulse Asset BCN
▪ Asset Manager @Solvia

▪ ESADE 2004-2009, including McCombs Business School (University of Texas) in 2009.

▪ Attending Professor of the Department of Economics, Finance and Accounting. Tutor of

Final Degree Projects and Master Thesis in Real Estate. Teaching Real Estate Market Trends
(BBA) and Real Estate Finance (MsC in Finance).
Real Estate - Introduction 7

What to
Expect Rules
▪ Show up on time.
▪ Assessment Criteria:
▪ 30% Group Project and Presentation
▪ 30% Exam
▪ 10% Peer Evaluation
▪ 30% Participation, attendance and assignments
▪ Always show your name
▪ Keep me informed when you are getting bored
▪ Be professional & participative
▪ Interact with your classmates & Guest Speakers
▪ Give Feedback
▪ Only positive comments about FC Barcelona
Real Estate - Introduction 8

Let’s test the rules

Show your name and surname

Volunteers raise your hands:

▪ Interest in the Course or something relevant worth telling
your classmates about Real Estate
Real Estate Finance – Table of contents 9

April 22 & 28 April 29 and May 6 May 12

08:00 – 11:00 / 11:30 – 14:30 08:00 – 11:15 11:30 – 14:30

Introduction to Real Valuations Living

Estate

Toni Candini & Marta Carrió Arturo Marín

Toni Candini

May 13 May 20 May 27

08:00 – 11:00 08:00 – 11:00 08:00 – 11:00

Offices Financing RE as a Career

Business Case

Hipólito Sánchez TBC Toni Candini & Clara Serra

Real Estate – Introduction to Real Estate 10

Session 1
Introduction to Real Estate
Trends Real Estate Market – BBA - Department of Economics, Finance and Accounting
Prof. Toni Candini
Real Estate - Introduction 11

Menu for Today

1. Introduction to Real Estate
2. Real Estate 101
3. Business case
Real Estate – Introduction to Real Estate 12

02
Introduction to Real
Estate
Trends Real Estate Market – BBA - Department of Economics, Finance and Accounting
Prof. Toni Candini
Real Estate – Introduction to Real Estate

Real Estate definition:

Real Estate – Introduction to Real Estate

Real Estate definition:

Real estate is the land along with any permanent improvements
attached to the land, whether natural or man-made—including
water, trees, minerals, buildings, homes, fences, and bridges.
Real estate is a form of real property. It differs from personal
property, which are things not permanently attached to the land,
such as vehicles, boats, jewelry, furniture, and farm equipment.
Real Estate – Introduction to Real Estate 15

People often use the terms land, real estate, and real
property interchangeably, but there are some subtle
distinctions.

▪ Land refers to the earth's surface down to the

center of the earth and upward to the airspace
above, including the trees, minerals, and water.

▪ Real estate is the land, plus any permanent man-

made additions, such as houses and other buildings.

▪ Real property - one of the two main classifications

of property - is the interests, benefits and rights
inherent in the ownership of real estate.
Real Estate – Introduction to Real Estate

Real Estate definition:

Real Estate – Introduction to Real Estate 17

Physical Characteristics of
Real Estate
Land has three physical characteristics that
differentiate it from other assets in the economy:

1. Immobility. While some parts of land are

removable and the topography can be altered, the
geographic location of any parcel of land can never
be changed.
2. Indestructibility. Land is durable and indestructible
(permanent).
3. Uniqueness. No two parcels of land can be exactly
the same. Even though they may share similarities,
every parcel differs geographically.
Real Estate – Introduction to Real Estate 18

Real Estate Characteristics

Diversity Complexity

▪ Asset Classes
▪ Demographics & Culture
▪ Geography
▪ Economics & Finance
▪ Investment Approach
Real Estate – Introduction to Real Estate 19

Real Estate Characteristics

Diversity Complexity

▪ Asset Classes
▪ Demographics & Culture
▪ Geography
▪ Economics & Finance
▪ Investment Approach
Real Estate – Introduction to Real Estate 20

Asset Classes

Residential Offices Logistics/Industrial Retail Shopping Malls

Hospitality Leisure Sports Institutional Others

Real Estate – Introduction to Real Estate 21

Investment Volume by Asset Class

Spain Investment Volume
Real Estate – Introduction to Real Estate 22

Real Estate Characteristics

Diversity Complexity

▪ Asset Classes
▪ Demographics & Culture
▪ Geography
▪ Economics & Finance
▪ Investment Approach
Real Estate – Introduction to Real Estate 23

Location
Location is one of the most important factors that can affect the value of a property. A property's
location can impact its value in a number of ways, including:

• Proximity to amenities: schools, parks, public transportation, and other amenities are often more
desirable and, therefore, can command a higher price.

• Quality of the neighborhood: The overall safety, stability, and desirability of a neighborhood can also
impact the value of a property.

• Local market conditions: The real estate market can vary significantly from one location to another.

• Future development: A property's location can also be affected by future development plans in the
area.
Real Estate – Introduction to Real Estate 24

Location
“Location, Location and Location”, but…

▪ Timing, meaning when to buy, sell or develop, may be as important.

▪ Importance of location depends on impact on bottom line.

▪ QUESTION:
▪ When income is more sensible than costs, the best choice will be to buy an asset in a HIGH- or
LOW-density area?
▪ Name an example of a real estate asset sensible to income and another one sensible to costs.
Real Estate – Introduction to Real Estate 25

Location
▪ QUESTION:
▪ Where would you open a Retail Store?

A
D B
C
Real Estate – Introduction to Real Estate 26

Real Estate Characteristics

Diversity Complexity

▪ Asset Classes
▪ Demographics & Culture
▪ Geography
▪ Economics & Finance
▪ Investment Approach
Real Estate – Introduction to Real Estate 27

Investment Approach
INDIRECT INVESTMENT: Through financial instruments. Stocks as main source.

DIRECT INVESTMENT: Direct investments in property.

Income properties Development

▪ Buy to lease/rent
▪ Buy land to build and sell
▪ Long-term horizon
▪ Shorter horizon
▪ Stable Income
▪ Uncertainty
▪ Lower returns
▪ Risk
▪ RE Funds, Pension Funds,
▪ Higher Returns
Insurance, Family Offices, …
▪ Developers

Income and development have different risk-return characteristics.

Real Estate – Introduction to Real Estate 28

Real Estate Characteristics

Diversity Complexity

▪ Asset Classes
▪ Demographics & Culture
▪ Geography
▪ Economics & Finance
▪ Investment Approach
Real Estate – Introduction to Real Estate 29

Demographics and Culture

Demographics Culture

Define long-term demand. ▪ RE is tangible

Main factors are: ▪ RE is a safe investment
▪ Population age brackets ▪ To rent is to throw money away
▪ Immigration ▪ Mortgage as partial lease
▪ Composition and geographical ▪ Difference is maintenance
distribution expenses and price risk
▪ Home size ▪ To own the roof
▪ Number of children, single ▪ Discipline to save money
parents, divorce rate…
Real Estate – Introduction to Real Estate 30

Real Estate Characteristics

Diversity Complexity

▪ Asset Classes
▪ Demographics & Culture
▪ Geography
▪ Economics & Finance
▪ Investment Approach
Real Estate – Introduction to Real Estate 31

Economics and Finance

Cronology

March 2023
November 2022 January 2023
- ECB raises rates by 50 and
places the depo at 3.00% and
- The Fed raises interest rates - Croatia enters the eurozone the refi, at 3.50%.
by 75 and the Schengen area. - Russia and Ukraine extend
- World population reaches - China reopens its borders to the agreement that allows the
8,000 million people. foreign travelers after three export of cereals and fertilizers
years. through the Black Sea.
- Fed raises rates in 25, up to
the interval 4.75% - 5.00%.

October 2022
February 2023
- OPEC agrees to cut crude oil December 2022
production in 2 million barrels - Fed raises rates by 25, up to
per day from levels of August the interval 4.50% - 4.75%.
- Fed raises interest rates by
2022. - ECB raises rates by 50 and
50 basic points.
- Xi Jinping receives a third places the interest rates at
- The ECB raises official
term as secretary General of 2.50% - 3.00%.
interest rates by 50 points.
the Communist Party of China. - A 7.8 magnitude earthquake
- The ECB raises official shakes Turkey and Syria.
interest rates by 75 basic p.

Source: CaixaBank
Real Estate – Introduction to Real Estate 32

Economics and Finance

Cronology
May 2023
July 2023 October 2023
- The Fed raises rates by 25 p.
b., up to the interval 5.00%-
- Fed raises rates by 25 basic - Israel and Hamas
5.25%.
points (5,25-5,50)
- The ECB raises rates by 25 p.
b. and places the depo at 3.25%
- The ECB raises rates by 25 p. - Greece recovers investment
and the refi at 3.75%.
b. and places the depo at 3.75% grade after S&P increases
- The WHO declares the end of
and the refi at 4.25%. rating to BBB
the global health emergency
due to COVID-19.

April 2023

- OPEC announces an June 2023 September 2023

additional production cut of
1.15 million barrels per day
(mbd), until a total reduction of - The People's Bank of China
- The ECB raises rates by 25
3.66. lowers rates by 10 p. b.
basic points and places the
- Kazuo Ueda becomes the - The ECB raises rates by 25 p.
depo at 4,00% and the refi at
new governor of the Bank of b. and places the depo at 3.50%
4.50%.
Japan. and the refi at 4.00%.
- The UN estimates that in 2023
India will surpass China and
become the country with the
highest world population. Source: CaixaBank
Real Estate – Introduction to Real Estate 33

Economics and Finance

Cronology

December 2023 April 2024

February 2024
- COP28 (United Nations The EU Copernicus programme
conference on climate change) The US returns to the Moon after reports that March
ends with the commitment to more than 50 years with the 2024 is the tenth consecutive
transit to leave fossil fuels behind. landing of Odysseus, the first month to mark a temperature
- The European Council approves commercial module to touch the record for the month since
the reform of the rules EU tax lunar surface. historical data has been available
authorities. (1850).

November 2023
January 2024
The EU Copernicus program March 2024 May 2024
reports that the year - NASA confirms that 2023 was
2023 has recorded the most the warmest year since
January-October period The Bank of Japan raises its Standard & Poor’s agency
temperatures are recorded
hot worldwide, with 1.43 ºC above reference rate from -0.1% downgrades France’s credit rating
(1880).
the to 0.1%. from AA to AA–.
- Japan becomes the fifth country
average of 1850-1900 and to land in the Moon.
records in the months of
June, July, August, September
and October.
Source: CaixaBank
Real Estate – Introduction to Real Estate 34

Economics and Finance

Cronology
September 2024
July 2024
The ECB cut interest rates by 25
basis points, setting the deposit November 2024
The Olympic Games start in rate at 3.50% and the refinancing
Paris. rate at 3.65%.
The Fed cut interest rates by 25
The Bank of Japan unexpectedly basis points to the range of
The Fed cut interest rates by 50
raised its benchmark interest rate 4.50%-4.75%.
basis points to the range of
to 0.25% (up from the previous 4.75%-5.00%, after having raised
range of 0.0%–0.1%), the highest them by 500 basis points since
level since late 2008 March 2022.

August 2024
June 2024
Strong turbulence in financial
OPEC agrees to extend its crude markets, due to the Bank of Japan's
oil production cuts (3.66 million decision and worse-than-expected October 2024
bpd until December 2025 and 2.2 July employment data in the U.S.
million bpd until September 2024, The ECB cut interest rates by 25
OPEC slightly revises down the
but with a gradual withdrawal until global oil demand forecast for 2024 basis points and lowered the deposit
September 2025). and 2025, mainly due to the rate to 3.25%
The ECB lowers rates by 25 slowdown in consumption in China.
bps and sets the depo at 3.75%
and the refi at 4.25%. The Fed will begin to cut interest
rates in September, according to
Powell's remarks at Jackson Hole. Source: CaixaBank
Real Estate – Introduction to Real Estate 35

Open Questions
Debate:

1. How do fluctuations on interest rates impact the real estate market,

and what are the implications for homebuyers and investors?
2. Should the government intervene in controlling interest rates to
stabilize the real estate market, or should it be left to market forces?
3. How does inflation influence real estate investments, and is real
estate a good hedge against inflation?
4. How do global economic trends, such as trade tensions or
geopolitical events, impact real estate investments on a local and
international scale?
Real Estate – Introduction to Real Estate 36

Economics and Finance

• The Spanish economy is YoY Real GDP Growth
5,8%
6%
expected to outperform the Top 5 5%
European economies, with 4%
3,1%
greater growth prospects in the 3% 2,5% 2,3%
coming years as inflation is 1,8%
2%
reined in 1%
0%
• The International Monetary Fund -1%
ranked Spain as the country with 2022 2023 2024 2025 2026
Spain France Germany Italy United Kingdom
the highest GDP growth among
major European economies in
2023 and 2024 YoY Inflation Central Bank Interest Rates
10% 6%
• After an inflationary period in 8,3% 5%
2021 and 2022, the ECB 8%
4% 3,8%
tightened its monetary policy, in
order to control inflation. Since 6% 3% 2,5%
the stabilization of inflation, the 2%
4% 3,4%
ECB has begun its interest rate 2,8%
2,0% 1%
cut policy, setting the bar at 1,9%
2%
2,75%. 0%

feb.-19

jun.-22
nov.-22

feb.-24
jul.-19

may.-20

abr.-23

jul.-24

may.-25
dic.-19

oct.-20
mar.-21

sep.-23

dic.-24

oct.-25
ago.-21
ene.-22
0%
• Central Banks anticipate an 2022 2023 2024 2025 2026
additional rate cut for the second
Spain France Germany Italy UK ECB FED BOE
half of 2025
Real Estate – Introduction to Real Estate 37

Economics and Finance

• Unemployment rate in Spain
hitting its lowest level since the
Great Financial Crisis. Spanish Labor Market
economy mainly fueled by job 25 30%
25,7%
creation and private consumption 21,2
25%
20
• Unemployment is expected to 16,4 20%
16,1%

Millions
remain stable despite global 15 10,6% 15%
instability (-7.7% CAGR 2013- 10%
2024) 10
5%
5 0%
• The number of mercantile 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
companies in Spain has
Number of employed social security affiliates Unemployment rate
increased compared to pre-
pandemic levels, with 15% more
companies created in 2023 than Company Creation YoY Variation in Private Consumption (%)
118
120
in 2019 7,1%
101 99 6,1%
100 93 94 2,1%
2,6% 1,8%
• After hitting a low in 2020, private 1,7% 1,7% 1,6%
80
Thousands

consumption in Spain is
expected to grow at an annual 60
rate of 2.6% in the short term 40
-7,0%
• The robust economic 20
performance will continue to -12,3%
0
support job creation and wage 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
growth. Consequently, Spain Europe
households will be able to regain
their purchasing power
Real Estate – Introduction to Real Estate 38

Economics and Finance

• The Spanish population Spanish Population
remained relatively stable 52
between 2010 and 2020. Post- 50,8
50,4
COVID, population started 49,9
50 49,4
increasing significantly 48,4

Millions
48
• Population forecast predicts a 46,6
47,1
continued upward trend,
46
expected to reach 50.8 million by
2029
44
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025*2026*2027*2028*2029*
• In periods of economic growth,
Spain continues to attract a
steady flow of immigrants that
support economic activity
Spanish Population 2023 Spanish Population 2050
• Employment data remains very >65: 21%
90-94 90-94
positive with unemployment
75-79 75-79
close to 10% historical structural
60-64 60-64
rate
45-49 45-49
30-34 30-34
• Biggest challenge the country will
15-19 15-19
face is an ageing population, with
0-4 0-4
over >65 years old going from
10 % 5% 0% 5% 10 % 10 % 5% 0% 5% 10 %
21% to 37% as baby boomers
Male Female
reach their retirement age
Real Estate – Introduction to Real Estate 39

Economics and Finance

Spanish Government Gross Debt Spain 10 yr. Bond vs. Eurozone
1,8 6%
120% 5% 4,1%
• Sustained public deficits have 1,5
100% 4%
driven government debt to 1,2 3,9% 3,0%

Trillion (€)
80% 3%
c.120% of GDP in 2023 0,9 2,8%
60% 2%
0,6 40% 1%
• The private sector has made a
0,3 20% 0%
significant effort to reduce debt -1%
0 0%
since the Global Financial Crisis, 2008 2010 2012 2014 2016 2018 2020 2022 2024
2008 2011 2014 2017 2020 2023 2026 2029
while the public sector has Spain 10 Yr Bond Eurozone 10 Yr Bond
Absolute Value As % of GDP
sustained deficits driven by lower
tax receipts and growing
subsidies and spending during
the aftermath of the GFC
Corporate, Household & Public Debt Public Deficit
150% 0%
• While public debt has surged, 127%
private sector debt (companies 120% 108% -2% -2,6% -3,0%

90% 83%
% of GDP

and households) has decreased, 80% -4% -4,6%

As % of GDP
positioning it well to endure the
60% 53% 46% -6%
high-interest rate cycle,
indicating a conservative risk- 30% -8%
taking stance among investor 0% -10%
2009 2011 2013 2015 2017 2019 2021 2023 -10,1%
-12%
Companies Households Public Debt 2008 2010 2012 2014 2016 2018 2020 2022 2024
Real Estate – Introduction to Real Estate 40

Economics and Finance

% of Mortgages at Fixed / Variable Rate Mortgage Payment (€/month) & Effort Rate
100% 6%
60%
80% 5%
• Significant increase in fixed rate 800
50%
4%
mortgages as interest rates 60% 600 40%
bottomed in 2017-2021 3%
40% 30%
400
2%
20%
• From record-high by the end of 20% 1% 200
10%
the 1980s-decade, mortgage 0% 0% 0 0%
rates steeply declined reaching 2008 2010 2012 2014 2016 2018 2020 2022 2008 2010 2012 2014 2016 2018 2020 2022
minimum level since 2020 and Fixed Variable Average Interest Rate Mortgage Payment Effort rate
are now around 3.50%

• YoY average salary increase Spain avg. Salary Evolution

(14% between 2010 and 2022) 28 27,3
most years being below inflation 27
Thousands (€)

increase 26
25,0
25
23,8
24
22,4 22,7 22,7
23 22,1
22
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Real Estate – Introduction to Real Estate 41

Economics and Finance

Tourism Contribution to GDP Country of Origin of Tourists (2024)
14%
12,3% 18,4
12% 11%
10% 40

8% 13
• Tourism followed steady growth
6% 5,4%
from 2010 to 2019, COVID-19
4% 11,9
dropped visitor numbers 5,1 5,4
significantly, and the recovery of 2%
United Kingdom France
tourist influx is still underway 0%
Germany Italy
2015 2016 2017 2018 2019 2020 2021 2022 2023
• With a contribution around 12%
of GDP 70M tourists visited
Spain in 2022. The UK, Germany Impact of Tourism Tourist Expenditure
and Italy being the main visitor 100 200 15% 11,7%
countries 80 10%
Millions (tourists)

150 5,8%

Billions (€)
60 5% 2%
100
40 0%

50 -5%
20
-10% -7,7%
0 0

2010

2017
2009

2011
2012
2013
2014
2015
2016

2018
2019
2020
2021
2022
2023
2024
2018
2000
2002
2004
2006
2008
2010
2012
2014
2016

2020
2022
2024
Number of Tourists Income from Tourism CPI Change in Average Tourist Expenditure
Real Estate – Introduction to Real Estate 42

Economics and Finance

• The year 2022 set records for
real estate investment, largely Investment Volume by Sector in Spain
due to high-volume transactions. 16,4
15,2
Although 2023 experienced a
12,6 12,5 4,2
decline in investment levels due 11,8 12,4 12,4
10,8 11,1 10,9
to elevated interest rates, the 3,2 3,8
8,6 8,7
level still was above the average. 7,7 3,8
2,4
Total figures of 2024 surpassed 4,6
those of 2023, and those of 2025 3,7 3,2 3,3
2,1
are also expected to exceed the
previous year
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
• With the normalization of interest Offices Retail Logistics Hospitality Living & Alternatives
rates, investment levels
recovered in 2024, showing a Listed Real Estate Companies (Value vs. Jan.-2019, %)
growth of c.13% compared to
4,00
2023 0,4 3,50
3,00
0,2
• The Spanish real estate sector 2,50
found itself at a turning point in 0,0 2,00
1,50
2023, facing significant -0,2 1,00
challenges due to the ECB’s 0,50
-0,4
interest rates policies. 0,00
Notwithstanding, as rates have -0,6 -0,50
been eased down, the stock
market value has risen up again
IRS EU 10y Realia Colonial Lar Metrovacesa Neinor AEDAS Arima
Real Estate – Intro to Real Estate 43

Economics and Finance

Real Estate Market

Enhanced
economic outlook
Spain leading EU GDP Growth – Driven by robust private consumption, strong tourism
for 2025 and (12.8% of GDP), and low interest rates
beyond

Potential Expected long-term growth, both in terms of population (top 1 among top 5 largest EU
demographic
growth
economies) and number of households

Resilience of the
The decline in interest rates, job creation, significant migration flows, and the strength of
real estate market foreign demand will continue to push prices up
Real Estate – Real Estate 101 44

03
Real Estate 101
Trends Real Estate Market – BBA - Department of Economics, Finance and Accounting
Prof. Toni Candini
Real Estate – Real Estate 101 45

Real Estate 101

1. Product Transformation
2. Asset Classes
3. Real Estate Development
4. Real Estate Investments and Valuations
 Real Estate – Product Transformation 46

1. Product Transformation
• Product Transformation
•(From land to product + ESG)
(From a piece of land to Real Estate)

• 014610 – BBA Bilingual Plan – Department of Economics, Finance and Accounting

• Prof. Toni Candini
Real Estate – Product Transformation

Land Use and Zoning

Land use is a process of organizing the use of land to meet
occupant’s needs while respecting the capabilities of the land.
Land use planning balances private property rights with the
desired community character.

Zoning defines the rules and laws governing what and where
people and institutions can and cannot build in our cities,
suburbs and towns. Zoning is actually a planning control tool and
the way governments regulate the physical development of land
based on its usage, purpose, geology, etc.
Real Estate – Product Transformation 48
Real Estate – Product Transformation

Zoning and Land Use

The zoning regulation is usually developed in the form of a zoning
ordinance, which is the text specifying land use of specific blocks
and even each individual lot within a block, set of blocks or
specific area.
- Use
- Lot size
- Density or bulk
- Height
- Building setbacks
- Floor area ratio (FAR)
Real Estate – Product Transformation 50
Real Estate – Product Transformation 51
Real Estate – Product Transformation 52
Real Estate – Product Transformation 53
Real Estate – Product Transformation 54

Example
Bonmont Resort
Masterplan
Real Estate – Product transformation 55

Product Transformation: From Land to RE

Real Estate 56

15 MINUTE BREAK
 Real Estate – Real Estate Asset Classes 57

2. Asset Classes
• Product Transformation
•(From land to product + ESG)
(specific information)

• 014610 – BBA Bilingual Plan – Department of Economics, Finance and Accounting

• Prof. Toni Candini
Real Estate - Glossary 58

Must Know

€/sqm:
€ (or any other currency) and Square meter (m²) (or any
other unit).
Divide the total amount of EUR by the total amount of sqm
(buildable, built, leasable, etc.).
Real Estate – Glossary 59

Areas
Gross Surface Area Gross Leasable Area (GLA) Efficiency Ratio

Refers to the total area of a Refers to the total surface area of a

property, including all interior and commercial property that is
exterior spaces, regardless of their available for lease to tenants.
Measures the ratio of net lettable
functionality or accessibility. area to gross surface area and
• Rentable area refers to the space
within a property that can be indicates how efficiently space
• Example: Consider a commercial within a property is utilized for
rented to tenants and includes
building with multiple floors, generating rental income.
both the net lettable area and a
including corridors, stairwells, and
portion of common areas
common areas. The gross surface
allocated to each tenant based on • Example: If a commercial building has
area would encompass the entire
their occupancy. a net lettable area of 50,000 square
building footprint, including these
meters and a gross surface area of
shared spaces.
• Net lettable area represents the 75,000 square meters, the efficiency
• Net Surface Area: This refers to
leasable space within a property ratio would be 50,000 / 75,000 = 0.67,
the usable surface area of a
available for generating rental or 67%.
property, which excludes areas
income. It excludes areas such as
such as walls and other structural
common areas, corridors, and
elements.
utility spaces.
Real Estate – Glossary 60

Areas
Floor Area Ratio (FAR) Sellable Area:

Is a zoning regulation that Refers to the total area of a

determines the maximum allowable property that is available for sale to
building floor area relative to the prospective buyers, typically used in
size of the lot on which the building the context of residential
is located. It indicates the density or developments.
intensity of development permitted
on a property. • In a condominium project, the
saleable area would include
• Example: If a property has a floor area individual units, balconies, and
ratio of 2:1, it means that the total any exclusive use areas, but would
floor area of the building(s) on the lot exclude common areas like
cannot exceed twice the area of the hallways and recreational
lot itself. facilities.
Real Estate – Real Estate Asset Classes 61

Classification of Real Estate Uses

Residential Non - Residential

▪ Office
▪ Retail
▪ Single family ▪ Hotel/motel
▪ Multifamily ▪ Industrial/Warehouse
▪ Recreational
▪ Institutional (special purpose)

Combinations of the above uses

Mixed Use Developments

Real Estate – Real Estate Asset Classes 62

Investment Volume by Asset Class

Source: CBRE_Figures Investment Spain 4Q 2023

Real Estate– Initial Questions 63

KAHOOT
Real Estate – Real Estate Asset Classes 64

Asset Classes
▪ Asset Types
▪ Demand factors
Residential ▪ Market
▪ Main Players

Commercial Real Estate

Hospitality

Others
Real Estate – Real Estate Asset Classes 65

Residential Real Estate

Residential real estate refers to a kind of property that is used for the purpose of
housing individuals or families.

This can include single-family homes, multi-family homes (such as apartments or condos), and
other types of dwellings. Residential real estate is typically classified according to the number of
units or dwellings that are contained on the property. For example, a single-family home is a
residential property with one dwelling unit, while an apartment building is a residential property
with multiple dwelling units.

In general, residential real estate is a type of personal property, as it is used for personal, rather
than commercial, purposes. As such, it is typically subject to different regulations and laws than
commercial real estate.
Real Estate – Real Estate Asset Classes 66

Residential Real Estate

Real Estate – Real Estate Asset Classes 67

Residential
Single Family Multi Family Vacation Homes
Designed as a dwelling for one Multi-family properties, are Also known as second homes, a
family, this type of property buildings with multiple housing vacation home is a residence that
doesn’t share walls with units. Multifamily structures can typically is used as a seasonal
neighboring residences or be anything from apartments to accommodation (beach house or
common areas. However, the townhouses. From a residential ski cabin).
property might be a part of a perspective, multi-family These residences can be a single-
homeowners association (HOA) properties, although typically family home, condo, or
more expensive, are often more townhouse, and can be rented out
that provides access to
attractive to both investors and when not in use by the owner.
community amenities such as a
banks as they are viewed as less It’s worth noting that financing is
pool, tennis courts or clubhouse. risky since the income generated usually more expensive than a
isn’t coming from a single tenant. primary single or multi family
residence.
Real Estate – Real Estate Asset Classes 68

Residential
Built to Rent (BTR) Built to Sell (BTS)

A Real Estate Developer builds a Traditional Real Estate business

multifamily residential project with where a developer purchases a piece
the aim of leasing out all units, of land, develops a residential asset
instead of selling them one by one. with one or multiple units and sells
Income generating properties. them one by one.
Real Estate – Real Estate Asset Classes 69

Residential
Social Affordable Free
Housing with price or rent caps, aimed at Fully unregulated housing built, sold, and rented
Publicly supported housing for vulnerable
Definition households that earn above social thresholds but at market prices without public intervention or
households, with heavily regulated prices
cannot afford market prices restrictions
Targets middle-income households who do not
Low-income households who meet specific
Target qualify for social housing but are still priced out of No income eligibility criteria
eligibility criteria
the free market
Public-Private Partnerships where land or
Either public authorities or public-private
Developer financing incentives are offered in exchange for Private entities
partnerships
capped rents or prices
Maximum rental or sale prices dictated by Developers can determine unit size, pricing,
Subject to control to guarantee effort rate balance,
Price regional governments, typically well below tenure, and typology based solely on market
but higher than social housing
market value demand and feasibility
Usually reserved for residents who meet
Typically require income verification, but criteria
strict income, residency, and registration
are more flexible than for social housing. May No formal requirements. Accessible to any buyer
Requirements requirements, including long-term
include local residency or local employment or renter based on market conditions
registration in the municipality (see next
criteria
slide)
No protection period, subject to market conditions
Protection Period Long-term or indefinite protection Often time-limited (e.g., 10-25 years)
and ownership changes
There are no standardized size limits across Spain; No legal restrictions on size; properties range from
Typically, VPOs have a maximum usable
Size Specifications specifications depend on regional policies and small studios to large family homes, depending on
area of 90 sqm
specific development agreements market demand and developer offerings
Real Estate – Introduction to Real Estate 70

Residential
• Urbanization is triggering socio-
Estimate of Housing Shortfalls as a Percentage of Current Housing Stock
economic tensions in the most
attractive cities

Surplus/(Shortfall): Number of Housing Units (thousands)

France
• The recent appearance in the 2.000
Spanish market of professional
BTR investors and new flex and Italy
1.000
co-living models are insufficient
Canada
to mitigate the housing crisis Denmark
Netherlands
because they lack scale 0

Hong KongSweden Australia

• Highest GDP growth in the EU Japan
(3.1% 2024, 2.3% 2025) (11) -1.000 Germany
Spain South Korea
• Lowest unemployment (11%)
since 2008 (12) United Kingdom
-2.000
• A strong economy and a robust
labor market support BTS
investment because of its well- -3.000
balanced risk – return profile
United States Developed Europe
• Healthy banking system,
availability of financing for -4.000
-10% -8% -6% -4% -2% 0% 2% 4% 6%
developers and buyers
• Spanish population increased its
Over/(Under) Supplied: As a Percentage of Current Housing Stock
savings rate post COVID and still
prefer ownership vs rental
(currently at 24.7% vs. 30.8% in
the EU) (13)
Real Estate – Introduction to Real Estate 71

Residential
• Spain is the European country
where households are growing Household Size Evolution
Population Growth (Index: Base 1= 2020)
the most, due to both population
growth and the reduction in the 1,15 2,9 2,8
2,8
number of members of each 1,11

Pax. per household

1,1 2,7
household 2,6 2,5 2,5
1,06 2,5
1,05 1,04 2,4 2,3
• Population growth forecast 2,3
2,3
1 2,2
expects a 5.4 million increase by 0,99 2,2
2050 (vs. 2020), reaching 52.8 0,96 2,1
0,95
2
million inhabitants
0,9
2020 2030 2040 2050
• Household size is expected to Spain France Germany Italy UK EU-27 Spain France Italy United Kingdom
continue a decreasing trend,
converging towards European
standards. 2.36 persons per
household are expected in 2037, Household Creation
+3.4m +5.4m +2.5m
vs. 2.48 today +18% +17% +17% +0.7m +0.6m
+14% +13% +2.8m
• Spain’s household growth from +11%
2006 to 2022 resulting in the +2.5m
+6%
formation of 3.4 million
households and an 18% overall
increase, positions the country
Spain France Poland Belgium Portugal Italy Germany Greece
as a standout performer among
2006 - 2023
European countries, reflecting -0.3m
sustained demographic -7%
expansion
Real Estate – Introduction to Real Estate 72

Residential
• Supply has not matched Household Creation vs. Completed Homes
350 330
household creation since the
300 281 273
Global Financial Crisis Deficit:

Housing units, (k)

250 Avg. 80k units per year
• Deficit of 944k homes (2013- Acc. 2013-2024 944k total units 2.7m new
200
homes needed
2024) and 2.7M (2025-2039); 151
150
mostly in Madrid and Barcelona 110 111 116
84 87 97
100 76 72 78 84 80
metro areas and Mediterranean 63 62 59
50
43 35 42 50 38 49
coast
• Deficit is most acute in middle- 0
class and affordable segments 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025-2039
Household creation Completed housing
• 2024 housing price +8.1%, rental
+12%
Housing Transactions New-build Housing Price Evolution
955 5.000 4.846
• Supply has been ramping up 4.462
recently, however it is far from 718 4.500
43% 694
meeting current demand and the 564 570 4.000 3.728
Transactions, (k)

€/bsqm
491 487 3.524
cumulative residential deficit 458 3.500
59% 41% 364 366
32% 91% 91% 3.000
• Housing stock is old and most 57%
90%
90%
89%
does not meet modern 41% 59% 68% 85% 2.500
sustainability requirements 2.000
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
New-built Secondhand Barcelona Madrid
Real Estate - Real Estate Asset Classes 73

Residential
Supply – New Homes Built
1.000.000

900.000
865.561

800.000

729.652
700.000
687.051
651.427
636.332
600.000

535.668 524.181
500.000
502.571

400.000

300.000
264.795

200.000

106.266 108.318 108.923

100.000 110.849 78.286 64.038
91.662 34.288 34.873 100.733 107.934,0
80.786 85.535
49.695
44.162
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Source: Observatorio de la Construcción

Real Estate – Real Estate Asset Classes 74

Residential
Stock: Age and Energy Efficiency

Source: Idealista Annual Residential Market Report

Real Estate – Real Estate Asset Classes 75

Residential
Demand

The demand pressure on the supply in Spain in 2023 continued to grow, reaching levels higher than those of the previous four years. In
December 2023, it stood at 2.42 compared to 1.91 in the same month of the previous year.
Madrid is the province and provincial capital with the highest demand pressure for homes for sale.

Source: Idealista Annual Residential Market Report

Real Estate – Real Estate Asset Classes 76

Residential
Demand for sale

Foreign demand in the purchase and sale market reached 14.44% of the total in December, compared to 13% from the same period of the
previous year. During November, maximums were reached since January 2019. Germany is the country that demanded the most housing for
sale, 13% of the total foreign demand.

Source: Idealista Annual Residential Market Report

Real Estate – Real Estate Asset Classes 77

Residential
Demand for rent

The rental demand in Spain continued to grow strongly, reaching 24.64 leads per listing in December, although it represents a slight
decrease from the peak reached in October. Despite this decline, the demand is 7.4 points higher than the same period last year. The
number of contacts received by rental properties on the platform is consistently increasing.

Source: Idealista Annual Residential Market Report

Real Estate – Real Estate Asset Classes 78

Residential
Residential Prices

• Spain’s real estate market

slowed in 2023, more gently than
anticipated. Despite the sharp
rise in interest rates, several
factors have supported the
sector, including a resilient
labour market, significant
immigration flows, the imbalance
between the short supply of new
housing and the high demand,
and the improvement in
household finances

Source: Caixabank
Real Estate – Real Estate Asset Classes 79

Residential
Macrotrends affecting Living Real Estate
Real Estate – Real Estate Asset Classes 80

Main Players in Spain

RESIDENTIAL

Vía Célere is a real Neinor Homes, is the AEDAS Homes is a real Metrovacesa is a Construcciones
estate company one of the leading estate developer that contemporary real Amenabar, S.A. is a
specialized in the residential developers offers new construction estate developer. They construction company
development, in Spain, both for rent properties with build innovative and specialized in building,
investment and or for sale. environmentally sustainable homes. civil works and housing
management of new friendly features. development.
residential assets.
Real Estate – Real Estate Asset Classes 81

Asset Classes
Residential
▪ Asset Types
Commercial Real Estate ▪ Asset Classification
▪ Market
▪ Main Players
Hospitality

Others
Real Estate – Real Estate Asset Classes 82

Commercial Real Estate

Commercial real estate (CRE) is a property that is used
exclusively for business-related purposes or to provide a
workspace rather than as a living space. Most often,
commercial real estate is leased to tenants to conduct
income-generating activities.

Unlike residential real estate, which is used for personal

purposes, commercial real estate is considered to be a
type of investment property, as it is used to generate
income through the leasing of space to businesses. As
such, commercial real estate is typically subject to
different regulations and laws than residential real estate.
Real Estate – Real Estate Asset Classes 83

Commercial Real Estate

Office buildings Industrial Logistics Shopping Mall Retail Store

Real Estate – Glossary 84

Commercial RE lease types

There are four primary types of commercial property leases, each requiring different levels of responsibility from
the landlord and the tenant.

COMMERCIAL PROPERTY
LEASES

Double-net (NN) Triple-net (NNN)

Single-net lease Gross lease
lease lease

Makes the tenant Makes the tenant Makes the tenant The tenant pays only
responsible for responsible for responsible for rent, and the
paying property paying property paying property landlord pays for the
taxes. taxes and taxes, insurance, building's property
insurance. and maintenance. taxes, insurance, and
maintenance.
Real Estate – Glossary 85

Commercial RE rental types

There are four primary types of commercial property rents, each requiring different levels of responsibility from the
landlord and the tenant.

COMMERCIAL
PROPERTY RENTS

Rents adjusted based

Flat rents Step-up rents Indexed rents on revenue/sales
performance

Rents may remain the Some leases include step-up Rents are adjusted using a In some retail leases, rents
same. This is commonly the clauses. These provide that specified index, such as also may be fully or partially
case for apartment leases. rent will increase at the end consumer price index (CPI). determined by an indicator
of specified time intervals This approach may be used of retail sales performance.
and in specific amounts in lieu of, or combined with,
during the term of the step-up provisions.
lease.
Real Estate – Real Estate Asset Classes 86

Commercial Real Estate

Office buildings Industrial Logistics Shopping Mall Retail Store

Real Estate – Real Estate Asset Classes 87

Offices: What is an office building?

Office buildings are typically multi-story structures that contain a large number of individual
offices or workspaces, as well as common areas such as conference rooms, lobbies, and
restrooms.

They may also have amenities such as on-site parking, elevators, and food service facilities.
Office buildings are typically used by businesses to house their employees and to conduct
business activities, such as meetings and paperwork.

They may be owned by a single entity or by a group of investors, and the offices within
them may be leased to individual tenants or used by the owner.

a building containing the offices of one or more companies

Real Estate – Real Estate Asset Classes 88

Offices: What is an office building?

Real Estate – Real Estate Asset Classes 89

Offices: Class

Class A Class B Class C

A buildings have a prime central location with Compete for a wide range of users with rents in Usually sold as fixer-uppers for investors who
exceptional accessibility and are usually of the average range for the market. Fully- want to move them up to Class B status, but
significant size. Prime Rents and super low functional buildings but don’t typically boast the they’re also for tenants on a budget who need
vacancies. same high-end fixtures, architecture, and striking functional space at rents below the average for
lobbies as Class A buildings the area
Real Estate – Real Estate Asset Classes 90

Offices: Tenant

Single Tenant Multitenant Flexible Virtual

These are buildings that are These are buildings that are These are office buildings or These are office buildings or
occupied by a single tenant or occupied by multiple tenants or spaces that offer short-term, spaces that offer services such as
business. businesses. flexible leasing arrangements for mail and phone handling, but do
businesses that need space on a not provide physical workspace for
more temporary basis. employees.
Real Estate – Real Estate Asset Classes 91

Office: Use

Traditional Creative Co-working Executive Suites

Employees usually work in a Open floorplans, no cubicles nor Co-working offers rentable The more traditional version of
cubicle and executives in built- minimal private offices. Open office space or desks and adds Co-working. Often leased by
out offices. Common areas: ceilings and exposed ductwork. common areas. It is more small law firms and other
Reception, Private offices, open Collaborative spaces and affordable for individuals and professional service firms.
area for cubicles, conference conference rooms. Kitchen, small companies, flexible and Receptionist, conference rooms,
rooms, printer room. game rooms, lounge areas. limited in time. Co-working mailing address, printers and
costs are all inclusive , meaning private offices.
utilities, common areas
maintenance, etc.
Real Estate – Real Estate Asset Classes 92

Office: Certifications

Leadership in Energy and Building Research Well Building Standard WirescoredWELL

Environmental Design Establishment WELL focuses on the health and well- Whether it's an occupied building,
being of building occupants. under development or part of a
LEED is one of the most widely Environmental It covers aspects such as air, water, neighborhood, a WiredScore
recognized green building
certification programs globally. Assessment Method nourishment, light, fitness, and certification for offices empowers
BREEAM is a widely used certification comfort. landlords and developers of
It evaluates buildings based on commercial real estate to improve
criteria such as energy efficiency, system, particularly in Europe. WELL certification is designed to
create a healthy and productive and promote their building's digital
water conservation, indoor air quality, It assesses various aspects of building infrastructure.
and sustainable materials. performance, including energy environment for occupants.
Different levels of certification are efficiency, water usage, materials, and
awarded, including Certified, Silver, ecology.
Gold, and Platinum. Buildings are rated on a scale from
Pass to Outstanding.
Real Estate – Real Estate Asset Classes 93

Office: Layout (example)

Real Estate – Real Estate Asset Classes 94

Office: Layout (example)

Real Estate – Real Estate Asset Classes 98

Build Specification Levels

Low
Utilizes existing landlord builds for fittings like ceiling arrangements,
couple with basic furnishings. Ideal for clients with lower CAPEX or
those looking for a simple refresh.

Medium
Offers a budget-conscious upgrade, incorporating bespoke design
elements while retaining much of the existing layout. Suitable for
standard office spaces.

High
Features the highest quality in furnishings and bespoke design details.
This level is particularly suited for HQs or client-facing offices, where
impression and functionality are paramount.
Key Data – Barcelona Office Market

CBD (Central Business District)

Prime office locations. Avinguda Diagonal, from Gran Via de Carlos III to
Plaza Francesc Macià, and Passeig de Gràcia.

RBD (Rest of Business District)

Central locations close to prime. Plaça de Sants, Trav. De Gràcia, Via
Augusta, Rambla Catalunya and Gran Via de Carlos III / General Mitre.

RC (Rest of City)
Central locations in average rents. Upper and lower Diagonal and
Eixample.

NBA (New Business Areas)

New development áreas in the city. Villa Olímpica, World Trade Center,
Glòries, Plaça Europa, Plaça Cerdà, Zona Franca.

22@
Old industrial área reconverted into an office hub. Three main áreas:
Glòries, 22@ North and 22@ South.

Main connecting roads

Avinguda Diagonal, Avinguda Roma, Avigunda Paral·lel, Gran Via, Ronda
Litorial, Ronda del Poblenou.

22@ Office Market 99

 Key Data – 2024 Bcn Office Market

BCN CBD CITY CENTER DESCENTRAL 22@ PERIPHERY TOTAL

Stock (sqm) 917.587 2.491.314 539.294 1.363.596 1.093.901 6.405.692

Vacancy (sqm) 27.514 100.328 75.827 393.963 244.321 841.953

Vacancy Rate (%) 3,0% 4,03% 14,06% 28,89% 22,33% 13,14%

Take-Up Q1 2025 4.207 22.134 3.405 22.617 1.561 53.924

Max Rent Q1 2025 28,00 27,6 21,0 25,5 12

Avg. Rent Q1 2025 24,15 21,53 15,61 20,43 11,47

Source: BNP

22@ Office Market 100

Real Estate – Introduction to Real Estate 10
1

Offices
• Office take-up in Madrid and
Barcelona has recovered to pre- Office Stock1 (M sqm) Stock Pipeline (2024)
16
pandemic levels (graph 4) MAD BCN MAD BCN
14
12
• Strong rental increases in both 10 Not Certified 69% 73% 33% 32%
markets driven by the following: 8
6
• Madrid: 4 BREEAM 14% 10% 9% 7%
2
• Rents are rising due to office
- LEED 17% 17% 58% 61%
conversions in the CBD, pushing 2017 2018 2019 2020 2021 2022 2023 2024
Grade A rents to ~€45/m² (graph 1) Madrid Barcelona
• Lack of grade A space in the CBD is
driving corporates to the periphery
Prime Yields (%) vs. Spanish Bond (%) Investment and Transaction Volume (M€)
• Barcelona: 4.500
7,0%
• Barcelona’s growth is driven by IT, 6,0%
4.000
tech, and media sectors 3.500
5,0%
3.000
• Lack of grade A space in the CBD 4,0%
2.500
(graph 3) 3,0% 2.000
• International firms choose 2,0% 1.500
Barcelona for lower costs and global 1,0% 1.000
0,0%
talent access 500

2017
2008
2009
2010
2011
2012
2013
2014
2015
2016

2018
2019
2020
2021
2022
2023
2024
-

• Highest vacancy rates in the past 8 Madrid Barcelona

years due to “zombie” buildings 5Yr Spanish Bond 10Yr Spanish Bond Madrid Barcelona
(graph 2)
Real Estate – Introduction to Real Estate 10
2

Offices
• Office take-up in Madrid and Madrid Rent (€/sqm/mth) Vacancy Rates (%)
Barcelona has recovered to pre- 50 18
40 16
pandemic levels (graph 4) 14
30 12
20 10
• Strong rental increases in both 8
10
markets driven by the following: 6
0 4

2021
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

2022
2023
2024
2
• Madrid: 0
• Rents are rising due to office

2020
2013

2014

1015

2016

2017

2018

2019

2021

2022

2023

2024
conversions in the CBD, pushing
Grade A rents to ~€45/m² (graph 1) CBD Decentralised City Center Out of Town Madrid Barcelona
• Lack of grade A space in the CBD is
driving corporates to the periphery
Barcelona Rent (€/sqm/mth) Take-up (k sqm)
35 700
• Barcelona:
600
• Barcelona’s growth is driven by IT, 30
500
tech, and media sectors 25
400
• Lack of grade A space in the CBD 20
300
(graph 3) 15 200
• International firms choose 10 100
Barcelona for lower costs and global 0
5
talent access

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
• Highest vacancy rates in the past 8
Barcelona Madrid
years due to “zombie” buildings CBD Decentralised City Center Out of Town
(graph 2)
Real Estate – Real Estate Asset Classes 103

Offices
Macrotrends affecting Offices Real Estate
Real Estate – Real Estate Valuations 104

Quick Activity
STANDOUT: Download the brochure from Moodle
Competitors - Delivered 2022 with space available
# Building Sqm Avail. Rent
1 Tanger 34 4.400 4.400 24

2 Pallars 190 23.300 5.096 23

3 Link 7.250 6.686 22

4 Diagrame 14.942 14.942 23

5 Midtown 5.038 4.756 20

6 Entegra 4.042 4.042 25

7 Badajoz 97 13.890 13.890 23

8 Pallars 180 9.700 2.425 23,50

9 ALT 35.400 15.930 N/A

10 One Parc 22.039 17.631 N/A

Carrer Pamplona 140.001 89.798

22@ Office Market 105

Competitors: Delivered in 2024

# Building Sqm Avail. Rent

1 Binar 4.500 0 22

2 Alava 111 17.500 14.000 24

3 Badavila 8.143 8.143 -

4 Zamora 70 7.500 7.500 -

5 Zamora 73 7.071 7.071 -

6 Interface 6.522 3.190 -

7 Mile Badajoz 8.026 8.026 -

Carrer Pamplona 59.262 51.487

22@ Office Market 106

Competitors: Supply 2024+
# Building Sqm Delivery Type
1 Avila 60 4.047 3Q 2024 Refurbishment

2 Llacuna 26 4.823 4Q 2024 New Development

3 Sancho Avila 110 17.860 4Q 2024 Refurbishment

4 Pamplona 64 10.664 4Q 2024 New Development

5 Joan Austria 39 7.594 1Q 2024 Refurbishment

6 Roc Boronat 40 9.950 2025 Pending Permit

7 Pere IV 62 4.090 4Q 2023 New Development

8 Pujades 105 5.441 1Q 2024 New Development

9 Pamplona 108 1.500 2025 Pending Permit

10 STANDOUT 5.560 2025 Pending Permit

Carrer Pamplona 65.969

22@ Office Market 107

Real Estate – Real Estate Valuations 108

Quick Activity
Download the Brochure from Moodle

Gather in groups of 4 people and discuss what would be your strategic

recommendation to the board regarding this development:

• Launch
• Hold
• Sell
Real Estate – Real Estate Asset Classes 109

Commercial Real Estate

Office buildings Industrial Logistics Shopping Mall Retail Store

Real Estate – Real Estate Asset Classes 110

Logistics: What is a warehouse?

A logistics warehouse is a type of commercial real estate property that is used for storage
and distribution of goods.
Logistics warehouses are typically large, industrial buildings with a high ceiling and a
large, open floor plan. They are designed to store and organize large quantities of goods
and products and may have loading docks and other facilities for loading and unloading
vehicles.
Logistics warehouses are often used by businesses as a central location for receiving,
storing, and distributing goods.

A BOX IN A PLOT OF LAND

Real Estate – Real Estate Asset Classes 111

Logistics: Must have

Free Interior Height Loading Docks Yard Depth

Real Estate – Real Estate Asset Classes 112

Logistics: Asset types

Public Warehouses Refrigerated Automated Cross-Dock Bonded

These are warehouses that Specifically designed to These are warehouses that Designed for the efficient These are warehouses that
are open to the public and store and distribute use automated systems, transfer of goods from one are approved by customs
available for rent to perishable goods that such as conveyor belts and mode of transportation to authorities for the storage
anyone who needs storage need to be kept at a robots, to move and store another, such as from a of goods that are being
space. specific temperature. goods. truck to a train or from a imported or exported.
ship to a truck.
Real Estate – Real Estate Asset Classes 113

Logistics/Industrial: Layout (example)

Real Estate – Real Estate Asset Classes 114

Logistics Outlook: Central Area

Source: CBRE
Real Estate – Real Estate Asset Classes 115

Logistics Outlook: Catalonia

Source: CBRE
Real Estate – Real Estate Asset Classes 116

Logistics Outlook: Investment

Source: CBRE
Real Estate – Real Estate Asset Classes 117

Commercial Real Estate

Office buildings Industrial Logistics Shopping Mall Retail Store

Real Estate – Real Estate Asset Classes 118

Retail
Retail real estate assets are commercial properties that are leased to retailers or
other businesses that sell goods or services directly to consumers.
These properties can include standalone retail stores, shopping centers, and
malls. Retail real estate assets can be owned by individuals, companies, or
organizations, and they generate income through the leasing of space to tenants.
The value of a retail real estate asset is often determined by factors such as its
location, the quality of the property, and the strength of the local economy.

Places to buy goods or services

Real Estate – Real Estate Asset Classes 119

Retail
Real Estate – Real Estate Asset Classes 120

Retail Outlook: High Street

Source: CBRE
Real Estate – Real Estate Asset Classes 121

Retail Outlook: Investment

Real Estate – Real Estate Asset Classes 122

Main Players in Spain

COMMERCIAL REAL ESTATE
Real Estate – Real Estate Asset Classes 123

Asset Classes
Residential

Commercial Real Estate

▪ Asset Types
▪ Branded Residences
Hospitality ▪ Market
▪ Main Players

Others
Real Estate – Real Estate Asset Classes 124

Hospitality
Properties that are used for the accommodation of travelers
and tourists, such as hotels, resorts, and bed and breakfast
establishments.
They generate income through the rental of rooms and other
amenities to guests.
Hospitality real estate assets can also include restaurants, bars,
and other food and beverage outlets that serve travelers and
tourists.

Places to stay when travelling

Real Estate – Real Estate Asset Classes 125

Hospitality

Hotel Motel Resorts Camping F&B Branded

Residences
Real Estate – Real Estate Asset Classes 126

Hotels

establishments that provides lodging and sometimes meals, entertainment

and various personal services

an establishment whose primary business is to provide lodging facilities to a genuine traveler along with food, beverage, and
sometimes recreational facilities too on the chargeable basis. Generally, for a short term rentals.
Real Estate – Real Estate Asset Classes 127

Hotels
Hotel Category

Star Rating

Heritage

Size

Location
Type of Clientele

Duration of Stay

Level of Services

Ownership
Real Estate – Real Estate Asset Classes 128

Main Brands
HILTON INTERCONTINENTAL MARRIOTT HYATT

ACCOR MELIÁ OTHER

LUXURY INDEPENDENT GROUPS SHANGRI-LA ROSEWOOD BARCELÓ HOTEL GROUP

Real Estate – Real Estate Asset Classes 129

Branded Residences 101: An Investment Opportunity

Hotel Brands grant a license to developers to market residences under their brand ensuring quality, services and specifications

What are Branded Residences? Typical Range of Services

▪ Branded residences are a residential development product available for Base Services
purchase and rent that is affiliated, usually by design and servicing, to a ▪ 24/7 security ▪ Travel
well-known hotel brand. ▪ Parking experiences
▪ The asset class includes upscale and luxury residential properties ▪ Wake-up calls ▪ Diverse
that give the possibility for a premium price. ▪ Spa, entertainment
▪ The sector dominates the U.S. and Asian markets and is beginning to restaurants reservations
gain ground in cities such as Dubai and London, where demand for this
type of luxury housing is growing.
▪ Branded residences are typically the result of a partnership between
developers and hoteliers (or lifestyle brands). On demand Services

▪ Pet services ▪ Housekeeping

Listed below a selection of hotel-brands who are key market players: ▪ Personal ▪ Laundry and
trainer dining services
▪ In-home spa ▪ Visitor suite
▪ Childcare
Real Estate – Real Estate Asset Classes 130

Main Players
DEVELOPERS / OWNERS
Real Estate – Real Estate Asset Classes 133

Asset Classes
Residential

Commercial Real Estate

Hospitality

Others
Real Estate – Real Estate Asset Classes 134

Other
▪ Recreational are very specialized uses, usually
associated with retail space that complements the
recreational activity (e.g., golf shops, stadiums, etc.).

▪ Institutional is a general category for property that

is used by a special institution such as a government
agency, a hospital, or a university.
Real Estate– Initial Questions 135

KAHOOT
 Real Estate – Real Estate Development 136

3. Real Estate Development

• Product Transformation
•(From land to product + ESG)
(From an opportunity to a business)

• 014610 – BBA Bilingual Plan – Department of Economics, Finance and Accounting

• Prof. Toni Candini
Real Estate – Real Estate Development 137

Real Estate Development 101

Town Planning / Development
Pre-Purchase Negotiation and Purchase
Approval

▪ Appoint Team for DD ▪ Select Technical Team

▪ Reception of Teaser ▪ Legal
▪ Masterplanning
▪ NDA signature ▪ Architecture
▪ Tax
▪ Interior Design
▪ Initial Analysis ▪ Finance
▪ Landscaping
▪ Market Study ▪ Technical
▪ Benchmark ▪ Carry Out DD ▪ Project Program
▪ Initial Business Model ▪ Binding Offer ▪ Develop the project
▪ Pre-Legal review ▪ Blueprint – 3 months
▪ Draft Initial SPA
▪ Site Visit ▪ Basic Project – 6 months
▪ Mark-UP SPA ▪ Executive Project – 6 months
▪ NBO or LOI
▪ Purchase Asset ▪ Obtain Planning Permits - ???

15 - 30 days 2 – 4 months 12 – 18 months

Real Estate – Real Estate Development 138

Real Estate Development 101

Pre-Construction Construction Sales & Marketing

▪ Identify the target market

▪ Closure of the public space area
▪ Budget for marketing expenses
▪ Land and foundation
▪ Enlist a Project Manager ▪ Create a website and social media
▪ Construction structure
▪ Research & Compare builders ▪ Develop digital marketing strategy
▪ Construction facilities and
▪ Choose your builder ▪ Select sales team
installations
▪ Agree on a contract ▪ Develop broker’s network
▪ Insulation and waterproofing
▪ Etc
▪ Finishings and closures

3 - 4 months 6 – 48 months* 3 – 12 months

* See Slide with Construction periods by Assets

Real Estate – Real Estate Development 139

Real Estate Development 101

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18

Pre-Purchase

Negotiation and
Purchase

Town Planning &

Development

Pre-Construction

Construction

Sales & Marketing

Real Estate – Real Estate Development 140

Construction Periods
Type of property Characteristics Months (aprox)

Single family 6 - 18
Type of property Characteristics Months (aprox)
Apartments 18 – 24
Residential
Suburban one story 9 - 12+

Logistics/Industrial
Low rise 18 - 24
Medium/high rise 24 - 48
Offices
Medium/high rise hotel 24 - 48
Retail 6 - 18 Hospitality
Small shopping center 18 - 24
Shopping mall 36 - 48
Retail
 Real Estate – Real Estate Investments 141

4. Real Estate Investments

• Product Transformation
•(From land to product + ESG)
(financial approach)

• 014610 – BBA Bilingual Plan – Department of Economics, Finance and Accounting

• Prof. Toni Candini
Real Estate – Real Estate Investments 142

1
Investors

Trends Real Estate Market – BBA - Department of Economics, Finance and Accounting
Prof. Toni Candini
Real Estate – Real Estate Investments 143

1. Risk
In the property sector, those properties that are generally regarded as low risk, such as prime retail properties, present
the lowest yields. Over time, perceptions of risk may change and so, the pattern of yields.
Real Estate – Real Estate Investments 144

3. Investor Profiles

RETURN/ YIELD
Which type of investor is OPPORTUNISTIC
most likely to
pay a higher price for an asset?
VALUE ADDED

CORE PLUS

CORE
RISK
Real Estate – Real Estate Investments 145

3. Investor Profiles

RETURN/ YIELD
OPPORTUNISTIC

VALUE ADDED

CORE PLUS

CORE
RISK
Real Estate – Real Estate Investments 146

3. Investor Profiles
Match the following type of offices to the different investor profiles.

OPPORTUNISTIC

Class C
VALUE ADDED
Class A Class B

CORE PLUS

CORE
Real Estate – Real Estate Investments 147

2. Investor Profiles
Risk and return profiles can vary greatly within an asset class based on geographic market, development
stage, and the structure of the project’s financing and investor payout. Asset classification:

Core Core Plus

Stabilized, 90% leased properties, located in primary 75-90% leased, primary or secondary markets, need of
markets with no need for significant upgrades. some moderate capital expenditure. With expiring
Population and average rents are expected to rise. leases and upgrades, rent can be increased
Less risk and generally yield lower investment moderately, presenting upside for investors with
returns. limited business plan risk.

Value add Opportunistic

Located in primary, secondary, or tertiary markets, Opportunistic is the riskiest of all real estate
major upgrades are needed. Much like value stocks, investment strategies. It is also synonymous with
these assets are underpriced for their potential and 'growth' in the stock market, like 'value-add,' but it is
therefore produce low initial returns but can even riskier. It also includes ground-up developments.
deliver substantial upside if upgrades are effective. As such, these project types can carry both significant
upside and downside.
Real Estate – Real Estate Investments 148

4. Investor Profiles
International Insurance REIT

1 Funds
€40M +
2 €30M +
3 €20M+

Private Equity Family Office

4 €20M+
5 €5-60M

Private Investors Public

6 €1-30M
7 Administration
Mostly sell
Real Estate – Business Cases 149

05
Business Case
Trends Real Estate Market – BBA - Department of Economics, Finance and Accounting
Prof. Toni Candini
Real Estate - Business Case 150

Business Case
Groups are already organized in the Moodle.
Deadline to deliver: one minute before last class starts
Real Estate - Glossary 151

00
Useful Resources
Trends Real Estate Market – BBA - Department of Economics, Finance and Accounting
Prof. Toni Candini
Real Estate – Useful Resources 152

Useful Resources: Press

https://www.expansion.com/ https://www.ejeprime.com/ https://brainsre.news/

Expansión is Spain's leading EjePrime is an online economic Brainsre News is a media

financial newspaper. newspaper specialized in the based on Data Journalism
Real Estate business in Spain. specialized in Real Estate.
Real Estate – Useful Resources 153

Useful Resources: Relevant Info

https://www.ine.es/ http://www.notariado.org/ https://www.idealista.com/m

aps/
Instituto Nacional de All sales are signed before a Heat maps with indicative
Estadística. Endless source of notary. This website publishes prices per regions, areas and
macro data. statistics related to real estate specific locations.
sales.
Real Estate – Useful Resources 154

Useful Resources: Residential

Real Estate – Useful Resources 155

Useful Resources: Big in Consulting

Real Estate – Useful Resources 156

Useful Resources: Big in Appraisal

Real Estate – Useful Resources 157

Useful Resources: Big in Legal