26/11/2014 – Expansion
Among the 236 real estate deals sealed in Spain during the first nine months of the ongoing year, noteworthy are the purchase of the Edificio España building by China’s richest man Wang Jialin who paid €265 million for it, and the €2 billion amount invested year-to-date by local REITs (known as Socimis).
‘By buyer’s profile, the U.S. funds acquired most property in the country. They had a more opportunistic approach and now they will hardly buy anything. Apart from these purchasers, one cannot forget the big-name international investors like Soros, Buffet and Paulson, who also have shares in investment vehicles, the Socimis’, explains CBRE’s Office Advisory and Alternative Investment director Patricio Palomar.
From January to September, a €6.57 million amount was spent on Spanish non-residential assets (i.e. offices, shops, shopping malls, hotels and industrial warehouses). CBRE forecasts the figure will have reached €9 billion by the end of the year.
‘We estimate the 2014 closing will see the real estate boom levels. However, to achieve that, many more transactions should be sealed as prices plummeted‘, Mr. Palomar points out. Of the amount, around €3.2 billion will be spent on shops and shopping centers, €2.5 billion on offices and about €350 million on logistics assets. ‘From 2013, investment in the logistics market multiplied by four’, CBRE claims.
Year-to-date, there have been 236 deals sealed on non-residential properties. To compare, in 2013 there were 172 operations, and in 2012 only 63. Total investment in tertiary assets amounted to €6.57 billion, €4.93 billion a year earlier and €2.2 billion in 2012.
The volume was fed mostly by portfolio sales, like the four-office building package bought by Blackstone from CBRE Global Investors. ‘In 2014, many large project sales have taken place, for instance the tenders of Oncisa, IDL or the properties sold by Catalan authority Generalitat. We don’t think that 2015 will see so many asset portfolios up for sale, debt will be more common’.
The expert assures that because these portfolios were bought in the five-year lowest point of the real estate cycle, they will bring huge returns to the buyers, as ‘a property purchased now will be gaining in value by 10% annually, posting 50% more in five years’, Patricio Palomar states.
Original article: Expansión (by Rocío Ruiz)
Translation: AURA REE