REPORT
''Today, we housing developers must compete with a robust rental market and banks in a rush to sell, so we face the unprecedented challenge of getting customers excited about a different product,'' said Juan Velayos, CEO of property developer Neinor Homes, at the latest Matins ESADE talk sponsored by Bluecap in conjunction with Spanish daily La Vanguardia.
As regards the decision of the US fund Lone Star to enter Spain’s housing development sector by buying up Neinor Homes, formerly a subsidiary of Kutxabank, Velayos believes that, in the wake of the crisis, ''three successive windows of opportunity have emerged in the real estate sector: SOCIMIs, servicing companies and, more recently, housing developers.''
According to Velayos, there are four reasons for the upsurge in housing developers: ''Spain prefers home ownership; it currently has better macroeconomic conditions than its neighbouring countries; the percentage of family income needed to repay a mortgage has fallen to pre-crisis levels; and the banking sector has realised that the mortgage business depends on volume so lots of mortgages must be granted. This it why Velayos predicts that Spain will experience what happened in the UK and US in 2002 where, “property developer appraisals increased threefold.''
Neinor Homes now has 10,000 homes and €1,000 million of developed land in Madrid, Barcelona, the Basque Country, Costa del Sol and the Balearic Islands. But Velayos sees this as just the beginning. ''The real challenge is how an industrial model based on the three cornerstones of institutionalization, customer focus and the transformation of a product that has not changed for decades, can be applied to housing development'', in which respect Velayos highlighted the transformation achieved by the Neinor Lab ideas lab.
Transformation of the property sector
The CEO examined the factors underpinning the transformation of Spain’s property sector, beginning with demography. Velayos explained that despite falling birth rates in Spain, ''the upsurge in single-parent families, longer life expectancy and the international market yet to be exploited'' are all attractive opportunities.
Another natural development is the fact that promoters no longer rely solely on banks for finance and are, therefore, ''more cautious when managing capital from their own equity or institutional funds, and must act as regulators, which helps prevent more property bubbles.''
Juan Velayos predicted an increasingly concentrated sector, despite the on-going presence of local and national companies, and also a paradigm shift ''from the development of land, which in Spain has traditionally called for good contacts, to buying developed land and being very careful about the margins, costs and schedules of projects in order to safeguard returns.''
Finally, the speaker emphasised the sector’s traditional disregard for its customers, ''despite the fact that buying a home is one of the biggest decisions they will ever make'' and pointed out the importance of remedying this from a business viewpoint because against a backdrop of smaller returns, the ability to understand demand and tailor a product to suit it will make the difference between success and failure.
Programme
Juan Velayos, CEO of Neinor Homes, will feature this new session of Matins ESADE entitled ''Leadership of the property sector overhaul''.
The upturn in the economy and property sales is forcing the real estate industry, with its seriously damaged reputation, to rethink its business model. Against this backdrop, Neinor Homes has taken the lead in the shift towards a system based on sustainable, ethical and transparent criteria to avoid repeating past mistakes and regain buyers’ trust. After years in the doldrums, the upsurge in this industry will only benefit companies aware of the need for this change.
Chairs and closing:
Xavier Sanchez (Lic&MBA 97 / AMP 08), Director of ESADE Alumni
Introduction:
Jordi Fabregat (PhD 05/ CDG 91/ Lic&MBA 80), associate professor in ESADE’s Department of Financial Management and Control and Director of ESADE’s Master in Economy and Finance
Lecture:
Juan Velayos, CEO of Neinor Homes
Discussion:
Xavier Sanchez (Lic&MBA 97 / AMP 08), Director of ESADE Alumni
Juan Velayos
Juan Velayos is the CEO of Neinor Homes, a real estate company established in 2015 and figurehead of the new model of housing developments based on ethical, sustainable and transparent values. Velayos is not only the head of Neinor Homes: his concept of the real estate business makes him a central figure in the overhaul of this sector in Spain. Before Neinor Homes, Juan Velayos was a partner in charge of Real Estate Deals at PwC in Spain and around the globe. Prior to that he was the CEO of Renta Corporación and África Mixta, and also one of the youngest partners in the Uría Menéndez law firm. Velayos holds a degree in Law and an MBA from IESE. He has extensive experience in M&A operations, capital markets, entrepreneurship and the real estate sector, particularly buyouts, management and disinvestment of housing, tertiary and land operations.
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For further information:
esadealumni@esade.edu
