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Asian Funds Alight on the Spanish Property Market

27/06/2014 – Expansion

Asian investors get off to a flying start on the Spanish real estate market this year. From having just a token presence (€50 million invested during 2013), in the first quarter of 2014 solely they spent €368 million in the country. Still many transactions are found in the due dilligence process, making experts believe the total amount invested by the businessmen from the Far East could rise to €550 million this year.

Over the past years, Asia has generally reinforced its bet on the European property market. In the years 2008-2012, they multiplied the sales volume by ten, until hitting €5 billion, according to advisor CBRE.

Sovereign Wealth Funds

The investment has been mostly boosted by sovereign wealth and pension funds, such as China Investment Corporation (CIC), Government of Singapore Investment Corporation (GIC) and National Pension Service of South Korea. These vehicles paved the way for other Johnny-come-lately funds to arrive at Europe, like institutional investors coming from Malaysia, South Korea and China.

In 2013, only one noteworthy transaction has been conducted by Asian investors: the purchase of the Hotel Valparaíso in Majorca by Chinese group GPRO that paid €50 million for the property.

However, in 2014, Far East buyers played the main role at three large operations: the sale of the Edificio España building in Madrid for €265 million to Chinese millionaire Wang Jianlin and two purchases of an India-born businessman residing in Hong Kong, Harry Mohinami: the Edificio Estel building in Barcelona (€56 million) and the Casa Palacio del Conde de Cedillo building in Madrid.

Investment Strategy Director for CBRE España, Patricio Palomar, claims the Asian funds has been always “good quality asset buyers, taking advantage of changing economic cycles and spending equity in the countries which seem interesting opportunities to them”.

Moreover, legal amendments in the Asian countries relax the requirements for investment abroad.

The investors not only explore office buildings for sale, but also hotels and construction projects.

 

Original article: Expansión (by Marisa Anglés)

Translation: AURA REE