Asian Funds Seek Local Allies to Enter Spanish Real Estate Sector

19 January 2019 – Expansión

Asian investors are joining forces with firms such as UBS, AXA and Savills IM to gain weight in the office, logistics and retail segments, where they still have a limited presence.

Spain has become a key destination for international investors interested in real estate assets, and Asian capital is no stranger to this buying fever that has boosted the sector in the country over the last five years. These investors, who are used to large volume operations, are now trying to gain a foothold in Spain through alliances with large European managers, such as UBS, Rockspring, AXA and Savills Investment Management, which will allow them to participate in smaller-sized operations and enter other sectors such as the office, logistics and retail segments.

The incorporation of new investors, capital funds and Chinese, Japanese and Korean family offices, amongst others, at the hand of the large European managers that are already present in Spain and know the local market well, offers them the possibility of arriving in the country by assuming less risk.

One of the most recent examples is that of the Korean fund manager Igis Asset Management, which, through Savills Investment Management, closed the purchase of Nestlé’s headquarters in Esplugues de Llobregat (Barcelona) last October for €87 million. That operation followed others such as the purchase of the Madrilenian Zielo Shopping Pozuelo and that of the office building located at number 2 Calle Santa Bárbara, both through funds managed by UBS, in turn, financed by Asian capital, amongst others.

Indirect investment

(…). These alliances followed the trickle of mega-operations undertaken in Spain in recent years. The most significant include the deal involving the Philippine group Emperador, which purchased the Torre Espacio building in Madrid, one of the skyscrapers that forms part of the Cuatro Torres complex, from Villar Mir, for €558 million.

Another operation that revolutionised the market involved the Chinese holding company Wanda, albeit ephemerally, as it had to abandon the project just three years later. The group purchased Edificio España (Madrid) from Banco Santander in 2014 for €265 million and sold it in the summer of 2017 to RIU, its current owner (…).

Those two Asian investors were joined by the sovereign fund of Singapore GIC, which, through the Socimi P3 Logistics Parks, acquired a foothold in the logistics market in Spain, one of the segments with the most potential.

Investors from Asia are therefore one group of overseas players who are committed to the country, but they are not the only ones. According to a report compiled by Savills Aguirre Newman, international capital was the major star in 2018, accounting for 70% of the €10.8 billion transacted, the largest percentage since the start of the market recovery five years ago (…).

By origin, investors from Europe and the USA account for almost 57% of the domestic and international investment total and 85% of the volume of operations from overseas. Asia is ranked in third place (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

US & Asians Investors Want To Construct More Homes In Spain

30 June 2015 – El Economista

There are 439,000 empty new homes in Spain. However, that figure is not deterring international investors, who are coming here to construct more homes. According to Roger Cooke, Senior Advisor in the Real Estate Transactions team at EY: “US and Asian investors are very interested in buying land in Spain for the development of homes”.

This is a significant development in the market. “In the 20 years that I have been working in the Spanish real estate sector, this is the first time that international investors have been interested in Spanish land for residential development”, explains Cooke, who remembers that before the crisis, foreign investors channelled funds into property development, but only in non-residential segments, whereas most of the investors in the residential sector were domestic.

Nowadays, many overseas investors are looking to build partnerships and work together with Spanish developers – under these arrangements, the investors inject the majority of the capital and the developers provide the local knowledge.

In fact, some of the large funds have already managed to reach such agreements in Spain, for example, the case of Lone Star, which will invest €1,000 million this year buying land through Neinor Homes. Together, they hope to launch ten developments and sell more than 2,000 homes.

Space in the market for everyone

With figures of this magnitude, it is easy to think that the country must be heading towards another real estate bubble. However, Cooke considers that there is sufficient demand for new housing developments in Spain. (…).  He says that there are currently two types of buyer, which reflect the two types of development: those where construction has not yet started; and those properties that were built before the crisis.

Moreover, on the one hand, there are buyers who look for the best price. They want to acquire properties constructed before the crisis, in peripheral and/or sparsely populated areas. On the other hand, there are more sophisticated, primarily international investors, which are more focused on new developments on the coast. These types of clients are willing to pay more money, but for homes that are built to their liking and have high standards of quality. (…).

For now, the residential market is recovering in cities such as Madrid and Barcelona, but Cooke warns that “we must look towards the coast, because that is where we see demand for holiday homes”.

In this segment, European buyers are the most active, although potential buyers from outside Europe are also arriving on the scene.

Asian investors have also seen the opportunity in this market and are starting to buy land to develop certain projects.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake