Martín Perea (TC Gabinete Inmobiliario) : “Build to rent is what will bring down rental prices”.

Partner of one of the few 100% Spanish real estate consulting firms, TC Gabinete Inmobiliario, Martín Perea has some of the most relevant operations in the office, residential and tertiary sectors, in a market dominated by large international consultants.

With a degree in Law, after working for the international division of Banco Atlántico as Deputy Director of the Legal Department for 8 years, Martín Perea began his professional career in the real estate sector in 1999 in the company Gabinete Inmobiliario SA, the seed of the current TC Gabinete Inmobiliario, where for 17 years he managed to position the company as one of the reference consulting firms in the office market. He has advised on transactions such as the move of PwC to the Cuatro Torres de la Castellana complex.

Now, it has just closed one of the most relevant recent operations in the the build to rent, the trendy businessto the advising AEW and Metrovacesa on the sale and purchase of 200 rental properties in Palma de Mallorca. Weeks earlier, it had advised another investor, in this case Axa IM, on the purchase of a residential portfolio from Tectum for 150 million euros.

“At TCGI, we are very proud to have brokered, between 2019 and 2020, BTR transactions worth close to €450 million. We have advised investment funds of the caliber of AEW, Axa, Aberdeen and Patrizia,” Perea explains in an interview with Brainsre.news. “We are very happy because they are very hard-working operations, with a lot of enthusiasm… They are deals where we have been very attentive to the market and where we have worked alone as advisors, which helps us to better control the entire transaction,” he adds.

TCGI’s operations reflect the boom that the build to rent business has experienced in recent years, becoming one of the preferred assets for investors. Thus, in the last fiscal year, investment in build to rent (BTR) and private rented sector (PRS) projects reached 1.65 billion euros, which represents nearly 80% of total residential investment and triples the volume of the previous year.

A growing path that even Covid has not stopped and that in the first half of 2020 alone , reaches 810 million euros, exceeding by 23% the volume of investment in the same period of 2019. “Many investors are very attracted to BTR products as they present a lower risk than others such as office, retail or logistics, especially at the current time,” explained TCGI.

“However, despite having a reduced risk-especially if the asset is purchased turnkey, Build to Rent’s product offers a profitability very interesting potential that could be located in the 3.5% to 5.5%. depending on the city and area where the asset is located,” the consulting firm adds.

Rental rates

For this reason, Perea believes that the government’s announcement to implement a rent price cap system in order to boost access to housing is a mistake. ” Build-to-rent transactions are the ones that are going to drive rental prices down. For example, what Metrovacesa has done in Mallorca: look how good it is for Palma to suddenly put 200 rental homes on the market,” the executive emphasizes.

Criticism of this regulation is not only limited to the limited impact it will have on the ultimate goal, but also on the Spanish economy. “We have to emphasize that it is a formula that is working very well among institutional investors, at a time when many real estate assets are at stake and with the economic forecasts left by Covid.”

In this sense, Perea asks for clarification of the government’s announcement as soon as possible. “If you take out a law and regulate it, then the investor can look at an operation with fixed prices and calculate his profitability, which does not have to be very high, because most of these investors are not looking to make a lot of money and get out quickly, but to have assets for 15 years. However, with the uncertainty of how the law is going to be, how the prices are going to be…well, investors do not know where they stand for the next four and five months”.

In spite of everything, he is optimistic and believes that in 2020 there will still be more investments in rental housing. “We will continue to close build to rent deals this year, because it is the only product that is very defensive.”