11 October 2017 – Real Estate Press
Overseas real estate funds, with a major presence in the Spanish real estate market, are owners of large portfolios of land as well as of debt secured by land as collateral, and many are operating in association with Spanish property developers.
The estimates for this year indicate that 80,000 new homes will be built in total.
The funds Blackstone, Cerberus, Kennedy Wilson, TPG, Värde Partners and Apollo started to acquire servicers, created by the banks, when the real estate sector began to recover. Other funds, such as Lone Star, Centerbridge, HMC, Eurostone, Aquila, Oaktree, Castlelake, Värde and Pimco, have been backing residential development. In this way, they have become the new residential property developers that need land as their raw material.
Now, unlike in prior years, no one wants to risk buying land that still needs some kind of building permit approval to turn it into buildable land, due to the risks involved, and that is why the price of buildable land is rising.
Funds were able to acquire land in areas with high demand for housing, such as Madrid, País Vasco, Barcelona, the Costa del Sol and the Alicante coast, at low prices before residential activity started to recover. But over the last year, land prices have also been recovering in other large capital cities, such as Valencia, Zaragoza, Sevilla and Málaga.
Nevertheless, the potential that these entities see in the residential development segment has allowed them to reduce the urban planning risk in more mature markets, such as Madrid and Barcelona, until now, and start to place their focus on plots that still have not received building permit approval. Moreover, there is no shortage of people who are demanding that the administrations adopt their expansive urban planning policies once again.
Original story: Real Estate Press
Translation: Carmel Drake