25/07/2014 – Expansion
The real estate sector positions among the markets that have suffered the most during the recession, deepened by the property bullbe burst and tapering-out debt rates. However, over the last months we have been observing an improvement in perspectives for this segment. One of the prooves is an increased number of Socimis (REITs) that went public this year.
Experts prefer to distingiush the development and the real estate business fields. The first, encompassing both land and houses, still undergoes the adjustment process, whereas the other focuses intensively on returns from office and CRE rentals, to name few. The latter market bottomed-out and reached its turning point in 2013, so right now it heads towards a full recovery.
Aside from the Socimis, also other listed firms become more and more popular. To illustrate, Colonial appreciated by 122% this year, currently selling shares at 0.58 Euros each. Morgan Stanley specialists say that Colonial offers a high-quality scheme on the office market, owning a €1.1 billion worth of offices situated in Madrid and Barcelona”.
This real estate firm enlarged its social capital with €1.26 billion in May, allowing it to fight large part of the indebtness. Presently, the debt equals to 40% of the value of its assets which is an “acceptable” level.
What is more, some experts point out at “uncertainty” evoked due to its elevated exposition to the French market.
If it comes to Realia, the company shot up by 56% on the stock and reached the price of 1.29 Euros a share. However, just like in case of Colonial, specialists call for cautiousness as the firm still has to face debt restructuring and is pretty exposed to housing development and land deterioration.
Also, investors yet shall not snap up smaller property managers like Quabit, Urbas or Montebalito until the companies crawl out of their financial troubles. Moreover, experts remind about the record high default rate in banks.
Original article: Expansion (by C. Sekulits & D. Esperanza)
Translation: AURA REE