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Another big investment announced today in the FT, this time involving Goldman Sachs.
The regional government of Madrid has sold a portfolio of residential flats to Goldman Sachs private equity and Azora, the investment group, for €201m.
The sale is the latest in a spate of foreign private equity investors buying into Spanish real estate, the highest level of activity since the collapse of the country’s decade-long property bubble forced large swaths of its banking sector into being nationalised.
http://www.ft.com/intl/cms/s/0/16709db6-034c-11e3-9a46-00144feab7de.html
One has to admit that the very smart boys and girls running the biggest global funds are starting to go long on Spanish real estate.
I for one am seeing the most incredible opportunities. The only thing that worries me is the Spanish Government – they could still make the situation worse.
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Is their idea to re-sell these at profit, or rent them out long term? Or rent them out now and re-sell them as and when the market picks up? 😕
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Hmm are Goldman Sachs back in the money. Went to the Pompei exhibition in London and there are signs around saying it has been sponsored by Goldman Sachs 😀
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It’s very hard to tell the reasons for why they invest in Spain right now. One should not forget though that there may be other reasons that they will never mention. These sorts of funds/banks might allready be commited to Spain and the local government in other ways like bonds, derivates etc and may deem a move like this is actually making their earlier commitment safer. Goldman would never buy with hard earned cash so my guess is a swap for bonds.
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What was the Madrid council doing owning all these flats? AFAIK the Spanish equivalent of council houses are “pisos de protección” which I believe are mainly funded by banks (with subsidies from the council). I know they have been trying to offload old offices and council buildings, but I wasn’t aware they owned flats as well.
If GS got them at a discount (which they undoubtedly did) then they got a bargain. Property in Madrid has collapsed completely, but the local economy has returned to growth (not sure how long for though).
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