The funds want more bricks


In the house you go to buy the short or medium term is more than probable that is involved a major international investor. Opportunistic funds, especially Americans, have set their sights on promotion and have started to build new homes in Spain. Also you rehabilitate, but to a lesser extent. The thousands of homes that will raise in the coming years in the most sought after areas and in the centers of large cities.

But not only that. By injecting liquidity more than anyone drive the housing market recovery. And if you read between the lines, there's more. "There is a high correlation between the health of the business of property development and lowering the unemployment rate, so perhaps we could infer that his commitment to this segment could be considered as a prediction of improvement in the economy," says Adolfo Ramirez-Escudero, president of CBRE Spain.

At a time when the domestic market can not or will not invest these funds, which move billions do not want to run out of the cake. "The Spanish market has been and is being analyzed by the big funds globally, over 200. This figure makes the volume of managed funds have shown interest in Spain probably exceed 1,000 billion dollars," analyzes Emilio Miravet, Corporate Finance partner responsible for the real estate sector at KPMG in Spain.

USA ahead

In 2015, around 34% of the total investment achieved in the Spanish real estate market came from US investors, about 3,455 million euros. And until June this year, the US is still number one in terms of origin of capital (39% of total investment), about 1,630 million euros, argues Ramirez-Escudero the country.

The first fund was clearly saw the estadounidenese Lone Star, which in 2014 acquired Neinor and property management Kutxabank aiming to become the largest developer in the country. The company accumulates soil and 800 million euros in the next five years will release 8,500 new construction homes.

One of the last to take the step has been the US fund Varde, last June created a new developer, colon, born from the old structure to the group acquired San José. The real estate investment expected around 2,000 million euros for the next six years and deliver an average of 2,000 homes a year to become also one of the largest developers in Spain. There are many more: Castlelake (with 900 million euros in ground); Kennedy Wilson (who has partnered with Renta Corporation), and so on.

Why the interest in a market that drags eight years of inactivity? This is precisely the key. "There are hardly any new housing production and the market has fallen by 95%, there is a lack of product, but at the same time there is a real demand in Madrid, Barcelona, ​​Valencia, Costa del Sol and Mallorca, the salable stock of large cities is exhausted, the correction has left the market without financing promoters and the promoter is becoming "lists Alberto Valls, a partner at Deloitte Financial Advisory.

In this favorable scenario it is compounded by the fact that currently do not have an alternative investment. "All these funds are interested in residential development in Spain because it can provide the necessary capital costs, which hardly get in the exploitation of other types of real estate assets return," says the president of CBRE Spain.

Although the construction of houses is not your ideal business to be subject to longer terms, they need to achieve high returns achieved in recent years, between 2013 and 2015, and that means more involved in management. "Estimates in other sectors yields began to not reach such demanding returns that these funds promised their shareholders, so they had to start looking less predictable or greater risks management business. So it has gone to the promotion, industry which, they believe, still has a recovery cycle between five and six years, "says Ramirez-Escudero.

While the opportunity exists, they can extend their stay. "The business of promotion usually takes between 18 and 24 months, which would fit with their deadlines without discarding other outlets as an IPO or a potential sale of land," adds Miravet. The new mat takes shape while experts believe that with the entry of these promoters sector will gain professionalism and transparency. And at the same pace, the concentration of large developers cooking. "The top 10 developers could achieve a market share of 30%, while in 2007 the 10 largest not reach even 10%", forecast at CBRE Spain.

Land known

But these large international investors are not strangers. They arrived in Spain between 2012 and 2013, during the crisis. "Firstly because the forecast was for growth in the Spanish economy and, secondly, because capital values ​​in real estate were well below the average of its value," says Maurice Kelly, director of Development and Strategy asset , Residential and Land JLL.

In full crisis began betting on the tertiary sector. Names like Goldman Sachs, Blackstone, Autonomy, Varde, or Kennedy Wilson opted for shopping centers, logistics warehouses, offices, and retail. And many of them pushed for the entry into the servicers majority of banks. A good example of the change of strategy is Orion. This fund began its journey in Spain asmiendo few risks and acquiring good assets at a time when no one dared to operate in Spain to sell when I got the cycle change. He bought Plenilunio Santander in 2009 and sold it in 2015 and did the same with Puerto Venice, achieving significant gains. "Now has come to buy land and promotion (as Sotogrande) because it is where he sees that the cycle time is more interesting," Ramirez-Escudero said.

Different strategies, same goal

Each fund has opted to create its own business plan. Lone Star uses a servicer of your property makes operating partner (Hudson). On the other hand, it has bought a portfolio of Santander, part of Octopus (bank Eurohypo) and Neinor, Kutxabank real estate debt.
American background HMC has bought some land in Madrid (mostly in the vicinity of the A-6) using small local developers for the operating part. Castlelake uses several local promoters in Madrid and Valencia and has acquired land in Levante, Andalusia and Madrid. Just created, along with the Merlin REIT, the Aedas developer, which will be managed by former employees of Vallehermoso, and born with one million square meters of land. Meanwhile, Kennedy Wilson has bought several buildings in the hand Rent Corporation (as operating partner) and part of Aliseda with US fund Värde Partners. Pimco has invested together with Grupo Lar in two operations in Madrid: A new development in Juan Bravo 3 and a rehabilitation Claudio Coello 108, sold to German fund Patrizia Inmobilien by 22 million euros.

The strategy of the funds goes through to market thousands of new homes each year. LUIS SEVILLANO
The strategy of the funds goes through to market thousands of new homes each year. LUIS SEVILLANO