21/04/2014 – Expansion
Baupost, KKR and Blackstone are only a small sample of the large international investors that chose Spain as their 2014-and-on target. “Opportunistic investors, in majority coming from the United States, have focused on ailing markets of Spain and Ireland to take advantage of higher yields”, says Jonathan Hull, general director for the European Markets of consultant firm CBRE.
The tendency turned at the end of 2013 when investment volume showed €3.8 billion, figures that were seen before the recession in 2004 and 2005. The improvement served as a spur for investors not only from the Anglo-Saxon countries, but also from Asia and the Middle East.
As CBRE informs, in Q1 2014 the investment in commercial real estate (CRE) in Spain rose by 132% to €988 million in comparison with the €426 million amount spent on offices, shopping centers and logistic platforms (but not houses) registered last year.
The improvement shall be mainly assigned to the increased interest in office buildings that constituted almost a half of all the transactions (€614 million).
According to Jones Lang LaSalle, “such large fund managers as Blackstone, Cerberus or Apollo are looking for both real estate firms and direct asset sales. Madrid´s offices are in the sight of the Americans and the Britons.
Shopping centers put up for sale in companies´divestment process also contributed to the growth and the main players in that field were British Land and Vastned.
Still, several other deals found currently in the due diligence process ought to be added to the enormous transaction volume. For example, the closing purchases of the Torre España put up for sale by Santander, the Castellana 200 complex sold by lenders of Reyal Urbis, or the IBM headquarters in Madrid traded by Morgan Stanley.
The key factor due to the improvement are the historically low prices (about 40% off). “As it happens always, the first to recover is the office market that in turn pushes consumption and influences commercial asssets and logistics”, explains Patricio Palomar, Research Director of CBRE.
Other important factors that enhance the investment are the return of financing and utterly attractive yields.
Original article: Expansión (by Rocío Ruiz)
Translation: AURA REE