22 April 2015 – Expansión
Deloitte hires nine new professionals / The consultancy firm has recruited a team from Quadratia, a company that specialises in the residential RE sector
Deloitte expects to see a boom in the sale of homes and land to overseas funds; and it wants to become a leader in that market. The consultancy firm has recently strengthened its financial-real estate team by hiring new professionals from the specialist company Quadratia. The new recruits include the Managing Partner of that consultancy firm, Gonzalo Gallego, who joins as a Real Estate partner in the Financial Advisory team.
This move comes as a result of the belief that following the purchase of real estate platforms, shopping centres, individual buildings and loan portfolios, the opportunistic funds are going to focus their attention on the residential market this year and next. “We are seeing an increasing focus by real estate investors on the residential market, where they are interested in buying land, homes and other properties on the coast”, said Enrique Gutierrez, partner in the Transaction and Restructuring Advisory team at Deloitte. Gutierrez is responsible for the department where increasing weight is being given to the real estate sector. The RE team at Deloitte is led by the partner Alberto Valls, who Gallego will report into. In total, Deloitte’s Transactions team comprises more than 300 professionals.
Valls explains that, in the same way as has happened with other types of assets, “history is repeating itself and there is a lot of conviction amongst opportunistic investors that now is the time to enter the residential sector”. These types of funds are specialists in acquiring assets that carry higher risk and therefore, represent opportunities for extracting higher returns. “In a year from now, higher returns will be obtained. Once the situation stabilises, other more conservative, institutional investors will enter (the market)”, he adds.
In this context, investors are focusing their attention on banking assets: “(Many of the banks’) balance sheets are still fully loaded with debt from property developers and other foreclosed assets, and there are 400 funds willing to invest in Spain. No other segment has as much potential as the residential market”, says Gallego.
The banks are adopting two approaches to unblock the real estate plughole: the sale of homes in their networks, which accelerated every month in 2014 thanks to the mortgage war; and the sale of portfolios to funds. Deloitte estimates that there have been 30 transactions involving the transfer of (property) developer loans over the last year and a half.
The consultancy firm explains that the banks take three parameters into account when they put these types of portfolios on the market: time, cost and price. If the result of this equation shows that it will be more expensive to foreclose assets in the future than sell them at a discount now, then they put them on the market.
Original story: Expansión (by J. Zuloaga)
Translation: Carmel Drake