17 November 2016 – Expansión
The crisis in the real estate sector not only led to the disappearance of some of the historical giants, such as Martinsa Fadesa, Reyal Urbis and Nozar, it has also resulted in a structural change in the residential landscape, with the emergence of new players, including several international investment funds, which have revived the market by injecting their capital. (…).
“Traditionally, the residential sector has been a very polarised market, with lots of local developers playing key roles. Nevertheless, the residential business model has changed following the crisis. In 2014, we began to see new players emerging in the form of partnerships between local property developers and international investment funds, with the funds providing the capital and the developers the local knowledge and ability to manage the market”, explains Ernesto Tarazona, Partner-Director of Residential and Land at Knight Frank.
Meanwhile, the National Director of Residential at CBRE, Samuel Población, explains that the partnerships created by the international funds and local developers bring together the local developers’ capacity to manage and know the local market, and the funds’ capacity to invest and provide solvency levels (…). “Grupo Lar and Pimco; Renta Corporación and Kennedy Wilson; Momentum Real Estate and HMC; Aquila Capital and Inmoglacier; Mina Inmobiliaria and Eurostone; Aelca and Värde; and Q21 Real Estate and Baupost, are just some of the partnerships that have been formed in recent months”, he says.
In this way, we are seeing “the professionalisation of the sector with institutional money that wants to enter this market”, says Borja Ortega, Director of Capital Markets at JLL. (…).
Enrique Isla, Partner at King & Wood Mallesons (KWM), explains that, in addition, some of the funds have burst into the market by purchasing real estate companies in order to access their portfolios of land as well as their management teams. “That was the case with Lone Star’s purchase from Kutxabank of its real estate subsidiary Neinor; and Värde’s acquisition of Sanjosé’s real estate subsidiary to create Dospuntos; it also explains Castlelake’s interest in Aedas, the property developer that has emerged from the ashes of Vallehermoso”, he adds.
Isla thinks that the investment funds see great potential for growth and profitability in the residential sector, given the improvement in the Spanish economy and employment, as well as the favourable financing conditions.
In this sense, Población points out that the new developments in Spain will have to respond to the depletion in the stock of new housing that we are seeing. “Given the high number of housing permits granted in 2015, we expect between 60,000 and 65,000 new homes to be ready in 2016”. (…).
In addition to the funds, Spain’s banks, through their servicers – companies created during the crisis to streamline the administration and sale of portfolios of properties and loans by financial institutions – are becoming increasingly involved in property development.
In this sense, Anida, one of the few large platforms that is still completely owned by its parent company, BBVA, has just signed an agreement with Inveravante, a holding company owned by Manuel Jove. During the first phase, the new company, in which Jove holds a 70% stake and BBVA the remaining 30% stake, will develop 850 homes in Málaga, Madrid and Las Palmas.
The experts think that other movements of this kind may well take place in the real estate market, given that many of the banks are still major land owners.
Meanwhile, Sareb is continuing to be a major player in the residential market, with its stock of almost 100,000 units as at June last year.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake