Blackstone Rules Out Property Bubble From Mass Influx Of Funds

11 March 2015 – El Economista

Claudio Boada, senior advisor to the fund Blackstone, has said that a property bubble does not exist in Spain today. But he warned that “we must be careful” in the market and “not confuse apples with oranges”.

In a discussion held during one of the “Money in 2033” conferences, organised by PwC, Boada said that he is not concerned that the mass influx of American and Asian funds into Spain will generate a bubble, but he recommended that the market be cautious in this respect. Moreover, he indicated that the returns on these funds will be “lower” in the future than they are currently.

Boada recalled that in recent months Blackstone has closed a transaction with Sareb, whereby it acquired a portfolio of 39 ‘non-performing’ loans with a nominal value of €237 million. In addition, at the end of this month, it is hoping to close the purchase of a portfolio from Catalunya Caixa, an entity that is now owned by BBVA.

During the discussion, the Chairman of the Centre for Economic and Policy Research, Guillermo de la Dehesa, noted that in Spain, 70% of financing comes from banks and the remaining 30% comes from the market; the opposite occurs in the United States.

De la Dehesa recalled that with interest rates close to zero, funds have to look for returns for their stakeholders and said that, for the moment, they are specialising in buying ‘real estate’ and damaged assets, through which the stakeholders will make money in the end.

Finally, he said that in the United States, there is a large concentration of funds, which have accounted for 27% of the new loans offered; this, he says is something that concerns the cental banks.

Original story: El Economista

Translation: Carmel Drake