30 June 2015 – El Economista
There are 439,000 empty new homes in Spain. However, that figure is not deterring international investors, who are coming here to construct more homes. According to Roger Cooke, Senior Advisor in the Real Estate Transactions team at EY: “US and Asian investors are very interested in buying land in Spain for the development of homes”.
This is a significant development in the market. “In the 20 years that I have been working in the Spanish real estate sector, this is the first time that international investors have been interested in Spanish land for residential development”, explains Cooke, who remembers that before the crisis, foreign investors channelled funds into property development, but only in non-residential segments, whereas most of the investors in the residential sector were domestic.
Nowadays, many overseas investors are looking to build partnerships and work together with Spanish developers – under these arrangements, the investors inject the majority of the capital and the developers provide the local knowledge.
In fact, some of the large funds have already managed to reach such agreements in Spain, for example, the case of Lone Star, which will invest €1,000 million this year buying land through Neinor Homes. Together, they hope to launch ten developments and sell more than 2,000 homes.
Space in the market for everyone
With figures of this magnitude, it is easy to think that the country must be heading towards another real estate bubble. However, Cooke considers that there is sufficient demand for new housing developments in Spain. (…). He says that there are currently two types of buyer, which reflect the two types of development: those where construction has not yet started; and those properties that were built before the crisis.
Moreover, on the one hand, there are buyers who look for the best price. They want to acquire properties constructed before the crisis, in peripheral and/or sparsely populated areas. On the other hand, there are more sophisticated, primarily international investors, which are more focused on new developments on the coast. These types of clients are willing to pay more money, but for homes that are built to their liking and have high standards of quality. (…).
For now, the residential market is recovering in cities such as Madrid and Barcelona, but Cooke warns that “we must look towards the coast, because that is where we see demand for holiday homes”.
In this segment, European buyers are the most active, although potential buyers from outside Europe are also arriving on the scene.
Asian investors have also seen the opportunity in this market and are starting to buy land to develop certain projects.
Original story: El Economista (by Alba Brualla)
Translation: Carmel Drake