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Soros and Pimco latest big name investors to target Spain

Two more big-name investors are reported to be looking for opportunities with exposure to Spanish real estate, in a further sign that international sentiment towards Spain has improved recently. What impact might this have on house prices?

George Soros
George Soros
First came Goldman Sachs and Bill Gates, with substantial investments in the Spanish real estate sector earlier this year. Now the billionaire investor George Soros, and Pimco – the largest bond investor in the world – are reported to be looking for opportunities related to real estate. With such illustrious names from the investment world now considering Spanish property, you can bet the rest will follow.

Soros is no stranger to Spanish property, having invested in holiday-home resorts during the boom. Through Perry Capital, he took a stake in the resort developer Medgroup, owner of the La Manga Club and Bonmont, but got out in 2010 reportedly “tired of the property crisis.” Assuming he invests, it will be interesting to see if he goes down the same road again, investing in resorts, or tries something different this time.

Bond vigilantes Pimco were bearish towards Spain until recently, but now that investor sentiment has improved so sharply (a Spanish asset manager I know says foreign investors will now buy all the distressed debt he can offer them) Pimco are reportedly looking to take advantage of depressed asset prices before the market turns.

Goldman Sachs, Bill Gates, Pimco, Soros, to name just some of the big-hitters currently invested in, or looking at Spanish real estate. Many others will follow, so what does it mean for prices in areas where foreigners tend to buy?

On the one hand it could drive retail (i.e. end-buyer) prices down, as fund investors try to liquidate their portfolios quickly, using a combination of attractive discounts and slick marketing.

On the other hand it might drive up wholesale (i.e. investor) prices, limiting the scope investors have to offer discounts to end-buyers.

Time will tell, but my guess is that prices in über-prime areas will see modest increases, whilst prices in the mass-market will continue falling in 2014.

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