International funds (some say vultures) have placed big bets on the Spanish property market in a sudden wave of deals, implying that the best funded investors think we are at a turning point. But it’s not great news for vendors, as it probably means even lower house prices to come.

In the last few months the following deals gone through:

• July: Blackstone buy 18 housing blocks from Madrid city council for €125.5 million.
• August: Goldman Sachs bought 3,000 rented homes from the municipal authorities in Madrid for €201 million, 20pc more than the original offer price.
• August: Kennedy Wilson and Värde Partners agree to buy CXI, the property servicing division of CatalunyaCaixa, a bank, for around €40 million.
• August: H.I.G. Capital and it’s division Bayside Capital invest around €50 million in a portfolio of close to 1,000 homes sold by Spain’s bad bank, the Sareb.
• September: Cerberus invest up to €90 million in the property servicing division of Bankia, a nationalised bank.
• September: Texan fund TPG buys 51pc of the La Caixa Bank’s property servicing firm Servihabitat for €189 million.
• September: Baupost group buys 1,000 homes value at €100 million from BBVA (discount not made public).

Always under pressure to deliver high returns, these funds have turned their attention to Spain after five consecutive years of falling house prices have finally driven values down into bargain territory. “With so much liquidity in Europe – around 700 billion Euros that needs to be put to work – the pressure on opportunistic investors to get into Spain is high,,” said Neil Livingstone, a partner at Colliers International, quoted in the Spanish daily El Mundo.

These funds wouldn’t be investing hundreds of millions of Euros in Spanish residential assets if they didn’t think the worst was behind us. They also bring fresh capital to the economy, all of which is good news for Spain.

Some funds have begun their assault on the Spanish housing market by acquiring the residential sales platforms of banks like Catalunya Caixa, Bankia, and CaixaBank. It’s the first step in a plan that could end with 30,000 homes for sale on their books, according to El Mundo. It also helps the funds get a better idea of the market before they start investing in portfolios of properties.

Others like H.I.G. have dived straight in. The way these funds work is buying in bulk at a price low enough to be able to liquidate the portfolio quickly whilst earning a good margin – typically around 30pc according to El Mundo – or to rent out with a good yield.

Rental investments aside, speed is of the essence in this business, as they quicker investors can get out, the better the returns, and the lower the risk. They will be keen to liquidate their investments fast, and only way to do that in this market is to offer an attractive discount to buyers. So expect to see even lower prices when these funds start selling; if they can’t undercut the market it means they have paid too much.

Which is not exactly good news for vendors in Spain, in the short-term at least. Many vendors will now have to drop their prices even further to compete with a flood of homes coming onto the market at heavily discounted prices. Vendors of unique homes in prime locations still have some pricing power, but vendors of mass-produced homes will have no option but to drop their prices even further. It is, however, good news for bargain-hunters.

But there will be no market turnaround in the short-term, agree a group of experts participating in a recent conference organised by an association of distressed asset managers (Asociación Profesional de Gestión Adjudicados) in Madrid. “There will be no change in direction in the next six months. Nothing will change overnight,” said Gonzalo Jimenez, of Finsolutia, an advisory. Despite these funds dipping their toes in with discounts of 50pc or more, the Spanish property market is still in a state of collapse, said another participant. They all agreed there won’t be any turn around until mortgage credit starts flowing again.