Primonial Group and Grupo Lar partner to develop BTR property in Spain
The Primonial group, a key player in property asset management in Europe with more than EUR26 billion in assets under management, has signed a long-term agreement with Grupo Lar, a major Spanish property developer operating in various international markets.
The agreement provides for the development and management called ‘Built-to-Rent’ residential assets in Spain, for an investment of EUR400 million by 2025 and an objective to increase the value of the portfolio in operation for approximately EUR1 billion.
At the end of the partnership, the joint venture aims to develop 5,000 new housing units, designed for rental purposes and located in major cities (Madrid, Barcelona, etc), "dynamic" cities (Zaragoza, Alicante, etc) or more specific markets depending on the opportunities (Pamplona, Valladolid, etc) in order to ensure good geographic diversification. An initial portfolio of 500 housing units has already been secured, with delivery planned by the end of 2020 in Madrid, Málaga and Valladolid, and 27 projects are currently being studied.
The creation of this residential platform, aimed for the Spanish middle class, meets the expectations of future occupants looking for new modern homes, efficient and sustainable buildings that are well-managed with a high level of services.
In the main Spanish cities, the real estate market shows a significant gap between supply and demand and it presents strong growth opportunities for the Primonial Group. Spain has an old rental property market, 95 per cent of which is individually owned, which will not be able to meet the increase in demand for rented homes, estimated at around 60,000 to 80,000 additional requests per year by 2024.
In response, the programme will offer quality, sustainable and energy-efficient assets. The ambition is to develop 5,000 housing units in four years, either through the eventual acquisition of projects developed by other developers (Turnkey projects), or through the development of proprietary projects (Own developments) by Grupo Lar.
"In a context marked by uncertainty, this key partnership proves the ambitions of the Primonial group and its ability to project itself into the future by actively pursuing its development strategy on a European scale. Residential real estate in Europe is one of our preferred areas of development, driven by strong rental demand and supported by favourable demographic trends, generating yield and added value over the long term," says Laurent Fléchet, Managing Director in charge of the Primonial Group's property business.
Miguel Ángel Peña, Residential General Manager Spain at GRUPO LAR, says that this strategic commitment comes in response to "a unique market opportunity to adequately and professionally serve the social demand for affordable housing for rent. The alliance of a long-term investor, with the extensive real estate knowledge of Primonial, together with the experience and ability for property development and management provided by Grupo Lar, ensures that the platform will be a national benchmark".