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29 June 2018 – Eje Prime
Spain is doing well. At least that is according to the heads of the domestic and international funds that participated in the Square forum, a business meeting that is being held at the moment in Ibiza and which has brought together the leaders of the Spanish real estate sector to discuss new concepts and disruptive models.
Under the slogan “money never stops”, Javier Faus, founder and CEO of Meridia Capital, said at Square that “money will continue to be invested in the Spanish real estate sector for at least the next ten years”.
For the Catalan businessman, real estate is “growing” and he pointed out in a debate about investments at the meeting, moderated by Stephen Newman, the CEO of Savills Aguirre Newman, that “Spain has always been unique: despite the economic crises or threat of Cataluñan independence, and now the change of Government, large funds have always come here to invest”.
Of the same opinion is Juan Pepa, another of the guests at the roundtable organised by Square. Perhaps, the main driver behind the IPO of the property developer Neinor Homes, in his capacity as the former senior director of the fund Lone Star in Spain, Pepa highlighted that “the recovery of the real estate sector has solid foundations”. “You just have to look at the way in which the banks are now lending money in the residential sector: they are being very cautious”, said the now co-Managing Partner of Stoneshield.
In this regard, Faus added that in the market where his corporation dominates the most, the office segment, “we are not going to see rents return to their 2007 levels for another five years”. Therefore, according to the director, there is still scope for growth in a sector that in Barcelona and Madrid is looking very strong, taking advantage of the pull of the economic recovery and the arrival of international companies to the country.
Logistics and alternative assets, the great desires
“Now, everyone wants to invest in logistics”. That is how one international heavyweight committed to Spain summed up the target of the funds. Evan Carruthers, Managing Director of Castlelake, recognises that for his opportunistic fund, those types of assets are not attractive, given that “there is too much money looking for logistics assets”, he said.
His investment firm, which, amongst others, controls the listed property developer Aedas Homes, remains faithful to the residential market, in contrast to the other experts around the table.
For Juan Pepa and his fund, student halls, one of the most sought-after alternative assets at the moment, are very attractive “and so too are logistics assets, but we don’t touch them because we are small”.
In the appeal of halls of residence, the Argentinian business agrees with Brookfield, “the largest real estate company in the world”, according to the Spanish leader Ismael Clemente, CEO at Merlin and one of the promoters behind Square’s debut this year. The Director of Investments in Europe at the US giant, Brad Hyler, added that the problem on the continent is political instability but he did not assess in any detail the Spanish market, where his firm does not yet have a presence.
Those who are investing a lot of capital in Spain, and it seems that they will continue on this path over the coming years, are Latin American property companies and family offices. Pepa said in his intervention that “we will see much more money from Latin Americans investing in the country”.
In his closing comments on the second of three days, Clemente wanted to point out that in a real estate world in which the fashionable term is “to create experiences”, real estate “is, without doubt, the most human productive sector: we create employment and there is a healthy atmosphere between us”.
Original story: Eje Prime (by Jabier Izquierdo)
Translation: Carmel Drake