Spanish Real estate

Since the start of last summer the Spanish real estate market is coming back to life after several years in a catatonic state.

The first investments made by foreigners were related to the hunt for yield: mostly bond-like investments with real estate underlying and inflation protection features, Some funds have been holding securities related to the sale and lease back of Spanish Offices since 2010.

Then it was the time for commercial real estate, which made sense given that the yields that one could find in Madrid and Barcelona were 50% higher than those of Paris or London and those higher yields also included huge room for rent growth.

After that, Spanish banks began selling their divisions of real estate management to private equity firms.

Most recently, it has been direct investments in huge packages of dwellings, one of which was purchased from BBVA by Klarman’s Baupost Group, an investment guru who usually buys hated assets (like bonds of Lehman after it had filed for Chapter 11 or shares from Bernard Madoff’s fund after it had blown up) at rock bottom prices.

Taking into account Mr. Klarman’s track record, it seems like a bad idea to be at the other end of one of his trades, even if the trade involves a tiny fraction of the assets he manages.

So I ask: Why is Spanish residential real estate a compelling investment six years after the beginning of the recession? There are two things to keep in mind as you read through this: Major holders of real estate (the banks) have been finally forced to take their losses, and the Spanish economy might be at a turning point.

Loss recognition

The Spanish authorities had taken a number of important measures to address the problems in the banking sector before they had to resort to an EFSF loan of €100 billion to cover capital requirements of nationalized banks, as the team that drafted the Memorandum of Understanding on Financial Sector Policy Conditionality (MOU) mentioned in the document.

The measures included the clean-up of banks’ balance sheets increasing minimum capital requirements, restructuring of the savings bank sector, and significantly increasing the provisioning requirements for loans related to Real Estate Development and foreclosed assets (through Royal Decrees de Guindos I and II, see the table below).

However, those measures proved to be insufficient when it was disclosed the capital shortfall of Bankia and afterwards the one of Caixa de Catalunya in May 2012.

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Q&A

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spanish real estate agent? | Yahoo Answers

Agente de bienes raíces.
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Can anyone recommend a bilingual (Spanish) real estate attorney in the Aurora,IL area. Thank You in advance.

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