23 December 2016 – El Mundo
In order to understand the current situation in the Spanish real estate market, beyond the reactivation of the construction of homes in certain specific areas, it is worthwhile looking at the amount of debt and real estate assets, left over from the bubble, that are still sitting on the balance sheets of financial institutions and other major owners, such as investment funds.
This real estate indigestion, which led to the restructuring of the financial system, the creation of Sareb (popularly known as the bad bank) and the launch of the bank’s servicers (which are now mainly owned by funds), has drawn a new real estate reality. The involvement of these new players has changed the rules of the market. They have and will continue to play a key role.
The Asset Under Management Report, which the consultancy Axis Corporate has just prepared and presented, is an extremely useful tool for understanding this business, which is being completely redefined. Axis Corporate specialises in advising these new players in the sector.
Regarding the role of the servicers, the study explains that, once each one has established itself in the market and following the Íbero tender whereby Sareb awarded the management of its assets, they must consolidate or adapt their respective models.
In this sense, and taking into account what is happening in other countries, Luis Fernández, Managing Partner of Financial and Real Estate Services at Axis believes that “over the medium term, the number of servicers will be reduced to two or, at the most, three”. Corporate movements forecast not only the “inevitable” concentration process, but also the repurchase of these platforms by financial institutions, their sale to industrial partners and international growth.
This will happen in a context in which the major investors, which are currently their main shareholders, will have their interest diverted to other problem economies such as those of Greece, Cyprus and Italy, where financial restructuring processes, such as the one undertaken in Spain, are still pending and where they may try to replicate the asset management model as servicers.
“The funds entered this business three years ago and their perspective as investors tends to be fixed for four years, which means that we are now approaching the divestment phase”, said Fernández. In this process, sources at Axis expect that the exit of funds with a more opportunistic profile will make way for others, with a more industrial focus”, who are committed to creating value more over the long term”.
In this regard, José Masip, Partner at Axis, draws our attention to the rental market, which is going to be “highly attractive” over the next few years and he predicts that we will see a “clear commitment” from the latter type of funds to obtaining profitability, not only from the value appreciation of their assets, but also from their rental.
“Both banks and funds are going to continue removing assets from their balance sheets through Socimis or by means of other vehicles specialising in rental”, said the expert. In this context, sources at Axis estimate that “over the medium term, it will not be unusual to see companies managing volumes of up to 50,000 homes for rent”.
Original story: El Mundo (by L.M.C.)
Translation: Carmel Drake