Chinese Investors Await Edificio España Verdict

3 June 2016 – Expansión

The negotiations between the Town Hall of Madrid and the Wanda investment group, the owner of the property, over the future of Edificio España, has had the sector on tenterhooks, and not only the main players involved, but also the Chinese investment community in general, which is waiting for the outcome before deciding whether Spain is an appropriate destination for their capital.

The Chairman of Wanda, Wang Jianlin, said recently in an interview with Chinese state television CCTV that he is waiting for “written” permission from the Town Hall of Madrid to demolish Edificio España, whilst, in parallel, he analyses offers to resell the building. In the interview, Wang Jianlin complained about the change in the conditions surrounding the building’s renovation following the arrival of the new mayoress.

Recently, the Chinese ambassador to Spain, Lyu Fan, acknowledged that some Chinese companies are determining their future plans on the negotiations being held by the Chinese giant in Madrid.

Investments in 2015

Interest from Chinese capital in Spain has grown considerably in recent years. The Director of the Economics Department at Casa Asia, Amadeo Jensana, explained that in 2015, total investment (by Chinese players) amounted to €850 million, compared with an average of around €100 million five years earlier. (…).

The Head of Development and Expansion of the company Christie & Co in Asia, Joanne Jia, said that Spain has always been a very active market, but she acknowledged that what is happening with Wanda will undoubtedly have an effect. According to Jia, investors are waiting to see what will happen with Edificio España before they take their investment decisions. “If it is resolved favourably, it will be promising. If not, it could cause some investors to stop looking for opportunities”…given that a blockage in negotiations would mean less confidence in the legal system, in addition to the cultural barriers. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Large Chinese Investors Pounce On Spanish Hotel Sector

27 April 2015 – Expansión

The Asian giant is taking centre stage / Since HNA acquired shares in NH, interest from Chinese investors looking to buy hotels in Spain and forge alliances with chains such as Melia and Barceló has skyrocketed.

The Spanish tourism sector has sparked significant interest amongst Chinese investors. Since HNA knocked on NH’s door for the first time in 2011, interest in investing in Spain has been unleashed. In recent years, hotel purchases by Chinese investors and alliances between Asian groups and major Spanish (hotel) chains, such as NH, Melia and Barceló, have exploded, as all parties look to explore opportunities in Europe and Asia.

In the past two years, China has invested more than €870 million in Spanish hotels and chains. Of that amount, €420 million relates to the funds disbursed by HNA to become the major shareholder of NH. The industrial conglomerate paid €234 million for a 20% stake in 2013 and last year, it purchased the shares owned by Amancio Ortega, owner of the textile empire Inditex, and Intesa Sanpaolo.

Furthermore, in 2014, Chinese investors signed five transactions to purchase hotel assets, including the deal between Barceló and Kangde for the Hotel Santiago in Tenerife (pictured above), which was agreed at the end of last year and signed in 2015.

Platinum

Out of all of these deals, the one that attracted the most media interest was Dalian Wanda’s purchase of Edificio España (Madrid) for €265 million. The intention of Wang Jianlin, who owns Wanda, is to create a residential, retail and luxury hotel complex. However, for the time being, Jianlin is focusing on the five-star hotel that he is preparing (to open) in London, where he will launch his Wanda brand in Europe.

Platinum Estates, the group led by the textile businessman Harry Mohinani and headquartered in Hong Kong, has closed two deals on a smaller scale. In February 2014, Platinum acquired the Estel building, in Barcelona (Telefónica’s former headquarters) for €56 million. In the autumn, it purchased Hotel Asturias (Madrid), near Gran Vía, from the Salazar family for €35 million.

The company plans to convert both properties into luxury apartments. According to experts in the sector, that is one of the keys to explaining the Asian interest in Spain, where foreign citizens are required to invest €500,000 in a residential asset to obtain a (resident’s) visa (known as the golden visa). Other factors include the measures promoted by the Chinese government to encourage investment overseas and the revaluation of the Yuan against the euro. Sources in the sector confirm that interest from Asian investors has increased, but they say that they do not seem to follow any particular investment pattern, and that, to date, they have focused on individual assets. Despite all of this, the large consultancy firms in the sector are optimistic about the potential of the Asian market – they have already recruited Chinese employees and are now preparing tours around the country to bring the two markets closer.

That is another one of the advantages that the alliances with Chinese groups offer the Spanish hotel chains. For example, NH will enter the (Chinese) market hand in hand with HNA. Both have created a joint company, with a Chinese majority, which will begin operating in 2015, when NH takes over the management of 6 of HNA’s hotels. In the case of Melia, the chain operates two hotels owned by its partner Greenland in China, and in 2014, it teamed up with the travel group Ctrip.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Only 490 Homes Sold In Exchange For “Express Visas”

17 February 2015 – El Mundo

The Government has raised €369 million in 15 months from its offer to grant residency to those buying property for more than €500,000.

Spain does not attract as many foreigners as Portugal does through its program.

The controversial express visas that the Government introduced through the Entrepreneurs Act, in order to raise foreign capital, have only attracted 530 international investors in the 15 months since the legislation came into effect, according to data provided by the Secretary of State for Trade. The millionaires that have moved to Spain in exchange for a residency permit have invested only €446.8 million, of which only €369.7 million has been spent on house purchases.

These figures are much lower than those recorded in Portugal for its golden visa program. The neighbouring country has managed to secure more than €1,100 million for the 1,649 golden visas that it has granted (figures to November 2014).

Given the limited interest from the very investors that the Government sought to attract by granting them permanent residency in an EU country, and given the suspicion with which the European Parliament views these types of programs, the Government is preparing rules for the enforcement of this legislation which, amongst other things, will give more guarantees to investors.

The so-called golden visas were approved, not without controversy, in the summer of 2013 as part of the Entrepreneurs Act. The idea of the Executive was to attract foreign investment through these permits and whereby reduce the huge stock of housing in Spain. As a result, it was decided that residency permits would be granted to those investors buying properties worth more than €500,000 (excluding taxes) and those deciding to invest significant quantities in Spanish company shares, domestic bank deposits, public debt or any other general interest project.

A year and three months after the Act came into force, the program has only facilitated the sale of 490 properties (out of a total of 830,000 properties sold during this period), according to the National Institute of Statistics (el Instituto Nacional de Estadísticas or INE) and investors have been incentivised to close only 29 transactions to purchase shares and another 12 transactions of general interest, according to data from the Secretariat that reports to the Ministry of the Economy.

Portugal has had more success with these visas and the key reason for this lies in the fine print of the legislation, which is more favourable for investors. “In Spain, we grant residency in exchange for investment, rather than nationality for investment like in other countries. Moreover, in Portugal, it is possible to become a citizen once you are a permanent resident. By contrast, in Spain, permanent residency only lasts for two years, rather than five years, which means that documentation must be renewed and residency justified on a more frequent basis”, explains Pamela Mafuz, Associate in Employment at Baker & McKenzie.

However, Portugal’s first-mover advantage is also behind its success. “Portugal was able to get ahead and be one of the first to implement this policy and that always has a positive influence” says Borja Ortega, Director of Private Wealth at JLL.

Whilst in other countries, such as Malta, there has been a lot of overseas publicity about the existence of the programs to grant visas to rich people, the Spanish Government has barely promoted its initiative, partly for fear of controversy.

Most of the beneficiaries of the visas granted to date are Russian and Chinese citizens. But, Baker & McKenzie report that their office also receives lots of questions from investors interested in these visas from the Persian Gulf, Egypt and Jordan.

“Many Latin-American investors are also interested in purchasing property (in Spain), due to the special bond that they have with the country. But, for them the visa is usually a secondary consideration because they tend to have other means of obtaining residency”, says Margarita Fernández, also an Associate at Baker & McKenzie.

Just like with the large funds, the majority of the investors seeking golden visas want to buy homes in big cities. “Housing is in highest demand. Specifically, single family homes and in terms of location, the region of Madrid is clearly the preferred destination”, says Ortega.

Original story: El Mundo (by María Vega)

Translation: Carmel Drake