1 June 2015 – Expansión
Following the arrival of the first investors, which had a more opportunistic profile, the Spanish real estate market is now starting to show the first signs of stability, with the arrival of more conservative investors. That is the case of the German institutional funds, which manage the savings of wealthy investors and insurance companies in the European country.
These German funds include Ara (Alternative and Real Assets), which is the real estate division of Deutsche Bank. “There is a clear commitment to the recovery of the Spanish real estate sector. In 2014, investment in the non-residential sector amounted to €8,000 million, but we should remember that at the peak of the boom, that volume amounted to €11,000 million. We believe that there are still a lot of good products that have not yet come onto the market”, explains Carlos Manzano, head of Real Estate España at Deutsche Asset & Wealth Management.
For this year, Ara has set a target of investing around €200 million in property in Spain. “We have the capacity to invest twice as much as we (currently) hold (in the portfolio)”, he says.
Change of course
The former Reef has focused its activity in recent years on managing its portfolio, which has included a few divestments. “Pre-2006, we made a lot of investments but then we stopped investing due to the crisis and focused on managing. Now the market has changed and we believe that there is still a lot of good property that has yet to come onto the market”, he explains.
One of their recent major transactions included the purchase of a batch of 1,350 branches from BBVA in the summer of 2009. Those properties, managed by Magic Real Estate, ended up in the hands of the Socimi Merlin Properties. “We decided to sell BBVA’s branches even though there was a business plan (for them) until 2018. But we wanted to take advantage of the opportunity in the market and in the end we obtained a better return than we initially expected. In December, we also sold an office building in Las Rozas (purchased in 2011). But we do not want to be sellers in the Spanish market, but rather buyers. We have now divested everything that we wanted to”.
Currently, Ara is on the look out for good assets. “There are lots of German funds and private clients that are expressing their interest and their preferences have not changed. They are looking for good assets in central locations. It is a product profile that is hard to find”.
Its targets include offices, commercial assets and logistics warehouses; these products are “very much in vogue”, according to the head of the German fund.
Original story: Expansión (by R. Ruiz)
Translation: Carmel Drake