Special focus : Real Estate
Investors in Spanish real estate need to find ways to enhance the value of assets
With ‘ tier one ’ property assets being sold at very high prices , investors need to find good local contacts who can identify the best market opportunities
With high-end real estate assets in such short supply , international investors hoping to identify new opportunities in Spain need to rely on contacts with a good knowledge of the local market , says Juan Gómez-Acebo , head of Real Estate at BDO Abogados .
“ Right now , it ’ s a challenge to bid for ‘ tier one ’ assets with a view to making money ,” he explains . “ There is not only huge competition from lots of potential investors , but these assets are already being sold at a very high price .” Given such prices , investors need to move away from standard ‘ plain vanilla ’ transactions and find creative ways of identifying opportunities to enhance the value of assets , Gómez-Acebo adds . “ But this is only possible with an in-depth understanding of the real estate market .”
“ Investors are in a much better position when there ’ s not a competitive process ,” says Gómez-Acebo . “ That ’ s why when the market is hot , they need someone local acting on their behalf to help them identify opportunities , find ways to enhance value and assess the legal risks involved – then they can then go back to the seller with a structured and reasonable offer .”
Local knowledge Furthermore , with the substantial reduction in available assets forcing investors to take more risks , having the right local knowledge is becoming an essential component of rigorous risk assessments . “ The market is very much based on contacts , people who are well placed within it ,” Gómez-Acebo says . “ International investors can ’ t just sit in London hoping to find opportunities by waiting to see what comes up – they need to talk to local people and know which sellers have properties or land with potential in a good location .” He adds : “ Only then can they see how they can add more value to their portfolio and confidently establish the level of risk they are willing to take .”
Juan Gómez-Acebo
Foreign investors targeting student homes and housing for the elderly in Spain
Spain ’ s commercial property sector is returning to pre-crisis levels of activity , with € 8.8bn invested in the country in 2015 . According to a recent report by the global real estate consultant Knight Frank , this represented the highest level of investment since 2008 . Though the majority of the activity is taking place in key sectors such as retail , office space and tourism , there is also expected to be growth in more niche areas such as student accommodation and elderly care .
“ I see a particular interest from foreign investors in student residencies and also residencies for old people ,” says Xavier Serramalera Cercós , a Barcelona-based real estate partner at Roca Junyent . “ In Spain , it ’ s a market that exists , but there is a huge opportunity to grow in the future .”
The demand for student accommodation is largely dominated by German , British and Dutch investors , who see Spain as an increasingly attractive market thanks to its large number of students – over 1.4 million enrolled in 2013-2014 – and the high numbers of foreigners who come to study in the country .
With regard to the elderly care sector , while there is strong interest from foreign investors , Serramalera Cercós acknowledges that one problem investors ’ face is that the high cost of care means that it remains out of reach for many Spaniards still suffering from the economic crisis .
Serramalera Cercós adds that despite the fact that deal activity is , in general , picking up in the commercial property sector , this has yet to translate into higher rates for lawyers . “ Our challenge is always the same ” he says . “ Despite the fact that the market is increasing in terms of the number of operations and deals , it is still very difficult to increase our fees .”
Xavier Serramalera Cercós
www . iberianlawyer . com September / October 2016 • IBERIAN LAWYER • 55