Spanish property is attracting the interest of billionaire investor Wilbur Ross, who sees the potential for high yields at current pricing.
The chairman and chief executive of WL Ross focused on the Ireland and Spain property markets during a recent interview with CNBC. In Ireland, “well-tenanted, first class buildings” are available in big cities, with deals offering 7 to 7.5 per cent capitalization rates, he said.
But there are different types of opportunities in Spain, Mr. Ross said.
“There they tend to not be as fully tenanted. And therefore you have a little bit more upside if you can fill in the rent rolls,” he said.
Mr. Ross noted that foreign buyers are returning to coastal resorts. “That part is starting to be on the mend,” he said, referring to growing foreign buyer interest in property for sale in Spain.
But Mr. Ross believes many of the “speculative developments” will never be completed.
“Some of the projects that were so ill-considered they never should have been done, those’ll revert to farmland,” Mr. Ross said.
Asked where clients would come from in Spain, considering the “complete tsunami” of foreclosures, unemployment and other economic issues buffeting the country, Mr. Ross was vague. But Mr. Ross offered his own theory about why Spain’s stark unemployment numbers may not match the state of the economy.
“You go down the streets of Madrid, you go down the streets of Barcelona, and you know what? You don’t see any beggars,” he told CNBC. “That makes me wonder if the official figures may not be capturing a lot of people who may be working in the grey economy.”