Spanish property picks up, institutional investors move in

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Spanish cities, towns and coastal areas are popular destinations for shopaholics and tourists alike. Increasingly, they are also attracting institutional investors, too. A record €12 billion was invested in commercial real estate in Spain in 2015, a figure almost as high as before the crisis hit in 2008.

In 2012, when Spain was in the middle of the meltdown, only opportunistic investors, predominantly from the Anglo-Saxon market, invested in the country. At the time, their key acquisition targets were low-priced assets – in any range.

That changed in 2013, when the economy started to show moderate signs of recovery. Almost immediately, other funds from Europe showed interest in Spain again. In the meantime, this trend has intensified. European and Asian institutional funds are moving in and the Spanish REIT regime (Sociedad Anónima Cotizada de Inversión en el Mercado Inmobiliario, or SOCIMI) has grown considerably too, acquiring assets worth more than €4 billion.

A property crisis that is well and truly over

Such developments suggest that the market is in recovery mode, but the question everyone is asking is “Could the Spanish property crisis truly be over”?

In real estate — yes is my clear and confident answer. As the managing director of PATRIZIA Activos Inmobiliarios España, the national subsidiary of PATRIZIA Immobilien AG that is responsible for Spain and Portugal, I have an excellent overview of the situation on the ground. And it’s complex.

Tricky market requires local knowledge

Competent experts based in the country are needed to advise investors how to legally and financially structure an acquisition, how to execute the transaction and how to manage the assets once they are acquired. In a market as tricky as Spain, such local expertise is essential for success.

It’s important to understand certain local conditions when investing in the Spanish market - Borja Goday

It’s important to understand certain local conditions when investing in the Spanish market. PATRIZIA has been monitoring the Spanish real estate market for a very long time now and is considered to be one of the main players in the Iberian real-estate market.

Based in Madrid, the team has the knowledge to ensure a diversified property portfolio that caters to the region.  

Madrid or Barcelona — Bilbao or Malaga?

The residential market is particularly peculiar to Spain, due in part to the high levels of home ownership. And it’s the main reason why the company recently purchased a residential value-add asset in Madrid, which is currently in the process of refurbishment.

For core investments, PATRIZIA has identified commercial property in specific cities and regions: In office, Madrid and Barcelona are interesting.

In high-street retail, we have Madrid, Barcelona and also Bilbao, Valencia, Malaga and Seville.  

Recently, Goday led the purchase of the prestigious retail space in the iconic “Plaza de Félix Sáenz” building in Malaga for the company’s real-estate fund. The listed corner building, which underwent a complete renovation in 2011, is in a prime location in the middle of the pedestrian area of the Andalusian city.  

As Spanish city centres are generally characterised by small spaces, large spaces such as this are in high demand. This property is something special.

Borja Goday, managing director of PATRIZIA Activos Inmobiliarios España