Lone Star Funds, the private-equity firm founded by billionaire John Grayken (pictured above), will invest as much as €500 million this year buying land in Spain for housing developments as demand picks up.
“Despite the glut of homes in Spain, there are areas where stock is running out and we aim to fill that gap,” said Juan Velayos, CEO of Neinor Homes, the Lone Star unit seeking to become Spain’s biggest home builder. “We aim to build homes where there is solvent demand and where people can afford to and want to buy.”
Lone Star’s blueprint for Neinor signals the changing sentiment toward the nation’s residential property market, which is rebounding after a six-year slump when prices fell by as much as 40%. The company will buy land in Madrid, Barcelona, the Balearic Islands and some coastal areas where stock is being depleted, Velayos said in an interview in Madrid.
Dallas-based Lone Star bought Neinor from Spanish lender Kutxabank SA in December for €930 million. It has already signed contracts to purchase 230,000 m2 of land for €187 million to construct 2,050 homes, Velayos said. The firm will target middle class homebuyers aged 40 to 50.
House prices rose by 1.5% in the first quarter from a year earlier and there was a 9.4% surge in transactions. The Madrid region is helping to lead the revival, with sales jumping by an annual 20% in April, while the volume of transactions grew by 18% in Cataluña.