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British Land is looking to exit its £255m retail property business in mainland Europe after their assets lost almost a fifth of their value on the back of the economic crisis in Spain and Portugal.
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A friend of mine works for British Land in Spain. He managed the build and rental of Puerto Venecia in Zaragoza. He says business has been a success, but I guess capital values have fallen even if all the sites are renting well. Too bad. Wonder how long it’ll take them to find a buyer.
Yesterday I went past a shopping centre in Madrid that some Venezuelans have just bought for something like €5m, changed hands in the boom for something like €100m (figures just approx, but you get the idea).
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It seems to me that the whole world is looking to buy and open an hotel in Barcelona, and the city is starting to feel like one big theme park 😕
Ardun, send me an email with the search criteria if you like. I’m starting to look at buildings in Barcelona right now for investors – you never know, I might see what you want.
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When a giant and astute commercial property operator like British Land starts to sell off property, you know that the recession is a deep one, because those companies are normally well structured to survive them.
I remember Canary Wharf running into trouble when it was nearly built, and we had a similar sell-off to complete the project.
In the seventies recession commercial property operators were also able to hang on long after other sectors collapsed, until they had to bring in the American expert (who had closed the coal industry) and he promptly sold off the major commercial property company.
Such sell-offs are an accurate barometer of the property market on a global basis, not confined to Spain by any means.
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Mark, it wasn’t astute, but that’s what property bubbles are like, and Spain’s must have been one of the largest. As you know, many 1000’s of people, investors, companies were burnt by the Spanish boom that was constantly being talked up by agents, developers and at those awful property shows, oh, in the Press and on TV too. No-one could see it ending 😥
I imagine they’ve just had enough of Spain to get out now, maybe that’s wrong too, or do they know something we don’t this time? 😉
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@mark wrote:
British Land invested heavily in Spanish real estate at the peak of the bubble in 2005, and have decided to exit at the bottom of the crash (that’s more or less where I think we are today). Buy high sell low 😕 Doesn’t sound very astute to me 😉
I take your point about buying property in Spain in 2005 not being an astute idea, but we can only reach that conclusion with the benefit of hindsight. I can’t think of many economists who advocated caution in 2005, Lehmans were powering ahead with their sub prime mortgage packages and it took another three years for the experts to realise what was happening.
I have a lot of friends who bought property in Spain eight years ago and considered it a safe investment, and I wouldn’t have disagreed with them at the time.
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“I remember Canary Wharf running into trouble when it was nearly built, and we had a similar sell-off to complete the project.”
“Canary wharf ” was being managed/developed by a Canadaian company managed by two brothers ” Rachmann” Their reputation was not guilt edged. The knowledge we have about Canary Wharf may not be the true reflection of the underlying events.
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Despite the sell-off the Company seems to be doing ok in the UK. The European holdings are only 2.4% of it’s business.
“Our core business will be resilient as we benefit from our focus on the better-performing markets in London and the Southeast and on high-quality retail around the U.K.”
If what Mark posted is true they should have no problem selling 😆
According to a RICS report there has been a “spectacular” increase in foreign investment in Spanish commercial property investment in Q1.
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When a recession strikes every 20 years or so, all the experts have it wrong again, otherwise we wouldn’t have had any. They always also have it wrong when recovery sets in.
We have casino capitalism, and you can read Keynes and the others until you’re blue in the face but you will be none the wiser when you place your bet.
I tend to agree with Mark that we may have reached the bottom with Spanish property, but taking the EU and tax laws into account, we may bounce along it for quite a bit longer.
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