Investors Dash For Hotels & Offices

26/06/2014 – Expansion

Step by step, the optimism returns to the property sector. “Nowadays, the circumstances are totally different from how they were two years ago when the market recovery was predicted for 2020. There is a certain movement and the foreign capital flow permits the transactions to stand on a pre-recession level”, said Jaime Cabrero, president of Coapis (Spain´s General Council of the Association of Official Colleges for Realtors) during his speech at the 9th Real Estate Asset Management Summit organized by Unidad Editorial and sponsored by CBRE.

According to the expert, the recovery will arrive to large extend thanks to “Asian and US investors”. As an example Cabrero gave the recent acquisition of the iconic Edificio España in Madrid for €265 million paid by Chinese billionaire Wang Jianlin.

“Banks started to lend again. Prices have already bottomed-out in the residential segment but still some margin remains for the tertiary property”, he stated.

The most eye-catching revival has been observed in case of hotels and shopping malls, told Miguel Oñate, director of Magic Real Estate. “In these segments investors fight for the assets and prices went up. Foreign investment plays a crucial role in the transactions as its presence increases likeliness of return of Spanish investors“.

Two recently created vehicles constituted open doors to foreign equity: Socimis and Funds for Bank Assets (FBAs). The first, Spanish REITs, attracted mostly non-resident insititutional investors and national family offices. Right now, they dispose of around €4 billion intended for investment in hotels, office buildings and shopping centers in the downtowns of Madrid and Barcelona which could provide them with a €6 billion deleveraging.

When it comes to the FBAs, they were set up by Sareb to liquidate more risky assets with view to cooperation with professional international investors, e.g. hedge funds. At the moment, there exist only 5 or 6 FBAs.

According to the participants of the summit, Spain shall do its best to create breeding ground for the future investors because once the large funds presently actively purchasing in the country, such as Blackstone, will finish their investment in Spain, they will leave.


Original article: Expansión

Translation: AURA REE