An industry insider explains the important role played by foreign funds in stabilising the Spanish property market, and suggests where the best investments might be found once a recovery is under way.
Adaptation and translation of an article published by El Mundo.
Investment funds, spurred on by the economic crisis, have become the main players in the Spanish property sector. Dozens of them have arrived over the last few years and invested billions of Euro. Now, with the house price adjustment practically at an end, and a budding recovery, it will be interesting to see what role they start to play now that the best cards (assets) have been dealt (assigned).
And who better than someone from the business to explain institutional investors’ plans. Brian Betel, managing partner at ActivumSG, managers of private equity funds, gives us analysis of the sector and the market, and avoids using the label ‘vulture fund’ so often ascribed to players in his sector.
ActivumSG started business in Spain in 2013 “in the face of clear investment opportunities in properties that needed proactive management to add value to them, beyond a simple macro vision of buying at the bottom of the cycle and selling when it improved,” explains Betel. ActivumSG now manages more than €600 million worth of commercial and residential assets, mainly in Germany and recently in Spain.
“The era of quick transactions with a short-term turnaround and competition on the quiet is over,” Betel says, referring to funds who have just arrived or are about to with little experience or local knowledge. “Those who will be successful,” he explains, “are those who are prepared to roll their sleeves up and get down to adding value by active management”.
Within this framework, and with returns diminishing as investors pile into the sector, Betel says that “funds will continue to play the role of providing the property market with liquidity, helping stabilise it, and restructure and reposition assets affected by the long recession.”
Specifically in the residential sector where funds are financing new developments, Betel highlights the demand potential in very defined areas where employment growth has started to consolidate, and there have been few new builds over the last seven years. “We also believe that there are also development opportunities in tourist areas with a renewed interest from foreign buyers,” he says.
Among the property market’s biggest attractions Betel underlines “the huge price adjustment and access to financing”. He doesn’t hesitate to say that “now is the perfect time to buy.”
Turning to the residential sector’s weak points, he says that “problems come from areas where unemployment is still very high, and where there’s still an excess supply of properties that doesn’t meet potential buyers’ requirements”.
Where’s the best place to invest now that a recovery is underway, as he believes it is? “The Spanish property sector is recovering, and that this recovery will continue, above all, in cities where greater and more stable job creation can be seen and in the main tourist locations with better access to foreigners buying second homes,” he concludes.
Spanish Property Insight adapts and translates selected articles from the local press for the benefit of non-Spanish speakers.
This translation is based on the following article (in Spanish): ‘Los fondos ayudarán a la estabilización del mercado inmobiliario en España’