Miguel Pereda: “We learned and today there is no risk of a real estate bubble in Spain”

– The real estate development sector in Spain is strong. It is true that the numbers are far from what we experienced in 2007, but the industry is healthy. It is built, sold, financed and prices behave well. There is demand and there is no problem of excess supply.

– At the beginning of the epidemic, construction did not stop, except for certain months. It became one of the sectors least affected by the stance. Both work and sales continued. In 2020, everyone was expecting, but the visits – first telematically, then face-to-face – continued, and even the ones that were sold before the covid and even during the pandemic were delivered. Dynamics were normal and the industry is currently recording similar rates and figures to 2019.

– In general, the sector should increase the rental housing supply in private. A high supply is the best way to ensure that the industry develops, prices are controlled, and quality is guaranteed. Markets are smart and supply is the best medicine in every field.

“The industry is recording rhythms and numbers similar to 2019”

– Yes, we are experiencing a price tension caused by the increase in construction prices. There is no doubt that the greater the supply, the better the prices will be controlled and the quality will be improved, which is also important. After all, it is competition that regulates.

– We cannot transfer the cost increases in the chain to the price, because in the end, the buyer looks at how much he saves and how much mortgage he can allocate, and its flexibility is not infinite, what a deal. Of course, we are affected by the fact that the customer’s disposable income for housing decreases as the remaining components of the shopping cart become more expensive. We will see how far this recovery in inflation goes, but if wages do not rise proportionally, we will notice the loss of purchasing power of business families.

– Lack of labor in numbers and labor in quality. It is sometimes mistakenly thought that the construction industry is very uninformed, but requires a large number of specialists.

– Companies are more cautious now and so are financial institutions. Now you need financing to start a construction and you need pre-sales to get financing. In those crazy years before the 2008 crisis, perhaps the dominant grade in the industry was not caution.

“The more the supply, the better the prices are controlled and the quality is guaranteed”

– I certainly don’t think so. There is no risk of a housing bubble today. The industry is cyclical, there are good times and bad times, but when the bubble is inflated and that bubble bursts, a bubble is formed.

– Now none of the features that existed in 2008. The volatility of the industry, the leverage of the system and the rising prices were what produced that bubble that burst and we are still seeing some tails. Today we are witnessing a much healthier demand, the industry is clearly less leveraged and homes sold are for rent or for sale but not for making money. So many houses were sold and unused. It is one of the big differences.

Miguel Pereda next to a window at Grupo Lar headquarters in Madrid.
Photo: Jose Luis Roca

– We learned three important lessons: first, prices don’t go up forever; the second is that the real estate assets are used and the third is that the financing has to be repaid. The individual learned, the organizer learned, and the bank learned.

– We are dedicated only to the real estate business and we want to devote ourselves to this business only. But we diversified. Why? Because we operate in different markets (we are in Spain and five other countries); because we diversify products (housing, offices, shopping malls, logistics warehouses) and we also diversify activities: we promote, invest and manage.

– In 2021, we reached 180 million turnover with a profit of over 20 million, which makes us optimistic. The group has approximately 14,000 homes operating in the different markets we are in. Grupo Lar delivered more than a thousand homes in 2022 this year and manages a portfolio of approximately 3,500 million third-party assets.

– Housing market, very good. We perceive that there is a transition from residential for sale to rental housing in the Spanish market. Spaniards have always been the market for housing for sale, and this is slowly changing.

– Yes, it is a growing market that we are betting on. This area was born with the aim of developing and managing 5,000 residences in the main cities of Spain with an initial investment of around 1,000 million Euros. The sector responds to an obvious and long-term need that Spain has. The housing problem in this country is not solved only by selling houses. It is also important to provide rental housing at the required price and quality to the market. It is an issue that the industry neglects and now reacts to.

– There are several factors. The first of these is cultural. We Spaniards are more educated to buy than to hire. The second concerns the low mobility that has always existed in Spain. People often study, work and live in the same city for their entire lives, and moving house is also very expensive as taxes are high. The third factor is that our country suffers from a lack of quality supply in the rental market. This scenario is slowly changing. Young people today have a different mindset and we must also take into account that you must have saved 25% or 30% of the price of the house to buy it.

“The real estate sector is healthy. It is built, sold, financed and prices are doing well”

– Through Lar España, we manage more than half a million square meters of shopping malls that have passed and successfully passed an enormous stress test during the pandemic. Today they are stable and at pre-covid occupancy and selling levels with a very low default range.

– In these three years, the logistics market has experienced a huge capital flow and we have moved from a promotional capital to a more corporate capital with a pan-European vision. we joint venture We work with Centerbridge, but also with other investors to help them grow their platform.

– Apart from Spain, we are in Poland, Mexico, Peru, Brazil and Colombia.

– We started our international activity in 2003 in Mexico, the country where we invested the most. Then came Brazil, and then Peru, a country with very good dynamics. These are the countries where we can operate in very big cities and where the middle-income group grows. In most of these countries, the expensive market and the very cheap market were served, but the middle sector was not. We are now seeing this segment grow as financing opportunities are perfected.

– We have been to other countries as well. But now we focused on Poland, where we found some features that are attractive to us. A country of similar size to Spain, Warsaw is a big enough city, the demand for housing there is sustainable, and it’s one of the European markets, where demand and prices are more stable even during the crisis in Europe. 2008.

– The most relevant today are what we have with Primonial for the rental housing market and Centerbridge for the logistics warehouse market. Lar España is, in fact, a great alliance with the investment market as a whole.

– In the short run it helped expansion and served to boost investment, but the 2007 crisis came and we had to go back to the barracks to protect ourselves. What came was very difficult, and the plan failed to meet all the goals it was born with.

– Grupo Lar is exposed to listed markets for the first time. The experience was interesting and enriching. It is a market governed by different rules, which leads us to interact with investors of different qualities. We seized the opportunity. There were investors who wanted to capitalize on our years of recovery and had no other way of approaching the Spanish market. Socimis have been the tools that have made it possible to seize this opportunity.

– Action is so punished that it can only heal. The pandemic has brought punishment that tends to be corrected. The fact that the pandemic has passed the stress test should show the market the resilience of assets. We are optimistic.


wanderlust in nature

Miguel Pereda is a friendly guy. The friend of the smile is hospitable and sociable. “I love being with people, sharing ideas,” she says. This is probably why he loves the lessons he teaches students at the Instituto de Empresa. He is aware that communication with students enriches him and directs him to constantly update the information. “You learn all the time by talking to young people,” he admits.

In his spare time, his biggest passion is traveling to open-air destinations, often exotic, which allows him to come into close contact with nature. He traveled extensively to the magnificent corners of Africa, South America and Canada.

Her eyes sparkle when she says she has climbed Mount Kenya or Kilimanjaro in Tanzania. He loves mountains. In addition to the attraction that meeting people from other cultures represents for him, there is a personal challenge for him and a connection with another nature.

“I like skiing, I like fishing… I like everything outside!” he finishes.

In numbers:
  • 180 million BILLING
  • 3,435 million IN PORTFOLIO
  • +250 EMPLOYEES

Data: 2021

Source: Informacion


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