5 February 2015 – Cinco Días
A study conducted by Irea validates renewed interest in the sector
More than €23,000 million was invested in the real estate sector in Spain in 2014, of which 84% was dedicated to direct investment in assets and the acquisition of real estate-backed debt portfolios. The remaining 16% related to transactions involving shares in real estate companies and servicers.
At a press conference on Wednesday, the CEO of Irea, Mikel Echavarren, explained that the increase in activity in 2014 “has helped to unclog the pipes of the financial sector and bring the sector out of its coma”. It is interesting to note that most of the investors that have shown interest in the Spanish real estate sector, are foreign: on the one hand, the main players included large funds, such as Blackstone and Lone Star, and on the other hand, listed real estate investment companies (Socimis) also played an active role, in particular Merlin Properties, which have a significant percentage of foreign capital.
In the specific case of investment in assets, Irea said that shopping centres accounted for 26% of all of the capital invested in assets in 2014 (€2,501 million), followed by offices (24%) and hotels (11%), with these last two segments in full ascent. Residential assets accounted for barely 8% of total investment, including both land and finished homes. Furthermore, 85% of those transactions related to finished assets, with land representing only 4%.
With all of this, Echavarren highlighted the “merit” of this low percentage of land sold, since it is an asset that will have to be sold at a later date. In the current context, 4% seems like an achievement, since although many developers “want to purchase land, they do not have sufficient capital to do so and it is very difficult for them to obtain financing”.
Irea’s CEO repeated that international investors accounted for 53% of all investment activity in assets, followed by Socimis, which were responsible for 24%. Developers accounted for only 3%. On the vendor side, investors sold 24% of all assets, whilst financial institutions disposed of a further 22%.
The appeal of debt portfolios
Although residential assets were not sufficiently attractive for investors in 2014, that was not the case for debt portfolios linked to residential assets. Overall, the volume of debt portfolio transactions amounted to €9,683 million, of which 48% related to the residential segment. Nevertheless, the majority of this amount related to the portfolio sold by CatalunyaCaixa to Blackstone. In this segment, international investors acquired 100% of the debt portfolios sold, and 91% were purchased by investment funds. On the opposite side, 90.6% of the vendors in this case were financial institutions and 9.3% were other entities. In addition, shares in Metrovacesa and Colonial (both listed) amounting to €820 million (22%) changed hands during 2014, whilst the remaining €2,866 million of shares in real estate companies that changed hands were not listed.
Original story: Cinco Días
Translation: Carmel Drake