Foreign investors return to Spain

A year after fleeing Spain as its economy tottered on the brink of a full-blown sovereign bailout, foreign investors are coming back.
The prospect of relatively high returns in a eurozone economy emerging from recession with a strong corporate presence in Latin America is apparently proving irresistible.
Among the latest converts, Microsoft co-founder Bill Gates snapped up in September a 5.7-percent stake in Spanish construction and services group FCC for 108 million euros ($147 million).
News of the US billionaire's decision sent FCC stock surging more than 10 percent in a single day and made headlines in the Spanish media.
"Foreign investment is returning to Spain," said state secretary for business Jaime Garcia Legaz as he presented a report last month on sovereign funds by the Spanish business school ESADE.
"They are expecting a Spanish economic recovery," he added.
"It is clear that the perception of Spain has changed. It is improving week by week."
Spain would enjoy a surplus in its current account -- the broadest measure of trade including financial flows -- equal to two percent of its economic output at the end of this year, he forecast.
That would be a far cry from the 10-percent current account deficit Spain posted in the depth of the financial crisis, which erupted in 2008 after the collapse of a decade-long property bubble.
Between January and August this year, foreigners ploughed nearly 19 billion euros in net direct investments into Spain, twice as much as they had in the same period a year earlier.
The money is welcome in a country gingerly emerging from a two-year recession as it narrows its public deficit, boosts competitiveness and struggles with a jobless rate of 25.98 percent.
"The Spanish market is regaining its attraction," said France's ambassador to Spain, Jerome Bonnafont, describing the change as "a turning point".
"There is a clear increase in spontaneous questions from French companies about Spain," said Richard Gomes, local director of Ubifrance, an organisation that helps French firms to operate internationally.
Sovereign funds are banking on Spain, too, showing particular interest in companies that have a strong presence in Latin America, according to the ESADE study.
Among the most emblematic investments, Singaporean sovereign fund Temasek has ploughed money into Repsol, and Abu Dhabi's IPIC is now the full owner of Spanish petroleum and gas group Cepsa.
Maria Victoria Zingani, financial director at another Spanish oil giant, Repsol, said Temasek had also approached her company in 2012 as it toured Southeast Asia to lure foreign investors. Today the fund, which has visited Repsol installations in Brazil and Bolivia, holds a 6.23-percent stake in the group.
Sovereign funds are looking for highly diversified companies with long-term growth prospects and a presence in Latin America, she said.
"It is a phenomenon that is growing and will continue to grow," said ESADE professor Javier Santiso.
The ESADE study identified 82 sovereign funds in the world with total assets of more than $5.5 trillion.
After initially targeting infrastructure and energy industries, they are increasingly looking at the new technology sector while also casting a cautious eye at property, Santiso said.
According to the ESADE study, Asian funds especially from Singapore and China are emerging as the big investors in Spanish companies, a change from just two years ago when Arab funds, in particular Qatar Holdings, were the leaders.
Qatar Holdings took stakes of more than six percent in Banco Santander and energy group Iberdrola, spending more than $2 billion on each investment as it banked on their strong presence in Brazil. It is now the main shareholder in Iberdrola with 8.18 percent of the company.
"Sovereign funds anticipated the return of foreign investors, betting on Spain since 2011," said Antonio Hernandez, analyst at financial advisory group KPMG, predicting they would continue to do so in 2013.

Source: au.news.yahoo.com

Distressed Property Investors In Spain Turn To Buy2let Market

Domestic and overseas real estate investors are engaging in bulk-buying of foreclosed properties in Spain so that they can rent them out. Repossessed property assets in prominent urban centres in the country can be purchased at 71.6 per cent below their original price, on average. During 2012, a legislation that enticed people to invest in rental real estate was passed, and under this law, inflation will have no association with rental rates. Landlords can now increase rental rates more frequently.

According to the same law, duration of leases was reduced along with the waiting period for the eviction of tenants who do not meet payments on time. In addition, the law stated that overseas owners who rent out properties to employed individuals who are under thirty years of age could claim tax relief between sixty and hundred per cent on the income from their rental properties.

Individual property buyers, however, have seen tax breaks set aside. Regular citizens who are struggling with a falling disposable income as well as the credit crunch, have now lost hope of entering into the property market. The main reason for this is that the demand for rental homes is expected to rise dramatically in the coming years. The recession has officially ended for Spain as it recorded an economic growth of 0.1 per cent during Q3 of 2013.

Institutional investors buying properties in bulk

A good number of respected property investors such as Goldman Sachs and Blackstone Group concentrate on purchasing foreclosed properties in bulk, especially apartments that have already been occupied in major urban centres such as Madrid. The demand for homes in these centres is high, and tenants are usually able to afford rental payments. Three months ago, Blackstone Group purchased eighteen apartment buildings from Madrid’s local government for more than 125 million Euros. A month later, Azora Capital and Goldman Sachs purchased more than 20 social-housing establishments from the city government.

Madrid has several portfolios to attract high profile institutional investors to Spain. Most portfolios are huge and contain more than 1000 housing units in addition to garages and other amenities. The asking prices are set over 50 million Euros for these portfolios, and investors are ready to bid their way to the purchase.

Source: property-abroad

Deeply ambitious in Calpe

CALPE was named the ideal site for the deepest swimming pool in the world.
The Oceanus 51 group announced its choice of location during the Mediterranean Dive Show held recently in Calpe.
The 51-metre deep pool is the brainchild of Calpe diver Julio Parra who revealed that the Marina Alta town and its tourist infrastructure provide an ideal setting for the project.
The Calpe pool, designed to represent a cave, would be 18 metres deeper than the Nemo 33 pool in Brussels.
“Calpe is definitely our first option.  Now we must get this across to the town hall ,” Parra said.
The pool, entirely funded by private investment will cost between €5 and €6 million but the town hall would have nothing to pay, according to Parra.    All Oceanus 51 requires is approximately 3,000 square metres of municipal land for the pool and its installations for which it would pay ground rent.
The project would bring around 300,000 divers and the families to Calpe each year, the diver predicted and would low-season tourism.  “Divers would come year-round,” Parra pointed out.

Source: euroweeklynews.com

Spain's economic outlook improving, says Moody's ratings agency

Ratings agency Moody's has raised its outlook for Spain's economy from "negative" to "stable".

Moody's said there had been a real improvement in the economy and government finances.
Last week, the Standard and Poor's ratings firms also raised its outlook for Spain on signs of economic improvement.
Debt-laden Spain has emerged from a two-year recession, with export growth and companies becoming more confident.
But unemployment remains high, at 26%, and economic growth is expected to be shallow.
Nevertheless, Moody's said: "The external accounts continue to improve, the situation in the labour market has stabilised and the private non-financial sector continues to deleverage."
Moody's left the overall rating for Spanish debt unchanged at Baa3 - just above junk-bond level - but the change in the outlook reduced the likelihood of another downgrade as the country works to rebound from its financial crisis.
"The external accounts continue to perform better than expected, with Spain among the few EU countries to see its export market share increase over the recent past," Moody's said.
The firm said that it "expects the strong export performance to continue, as competitiveness is supported by very low wage and price increases."
Another key change is the government's increasing access to private capital markets, Moody's said.
Last week, S&P raised its outlook from negative to stable, and re-affirmed its BBB- long-term sovereign credit rating.
Spain's economy grew 0.1% in the July-to-September period, after contracting for the previous nine quarters - officially lifting it out of recession.
Prime Minister Mariano Rajoy's government is hoping economic growth will help reduce Spain's spiralling public debt, currently 943bn euros (£792.5bn; $1.3 trillion), or more than 92% of the country's entire gross domestic product (GDP).
The country's banks, which received 41bn euros of EU bailout funding in 2012, have been gradually reducing their borrowings from the European Central Bank over the last year.

Source: www.bbc.co.uk

Will this week's data support further Sterling strength?

Sterling finished off Friday with a final flourish, rounding off a strong week for the UK currency with data highlighting that mortgage grants were at their highest level since 2008.

Sustained strength saw new heights on Friday as sterling reached the highest level in over two years against the US dollar after a fourth consecutive weekly rise, whilst also experiencing a three week high against the euro. This week, there is a whole range of data being released in the UK which is liable to cause some movements in the markets.

The manufacturing, construction and services sectors will release their Purchasing Managers Index (PMI) figures on Monday, Tuesday and Wednesday respectively. Thursday then holds the regular Bank of England’s decisions over the quantitative easing and official bank rate, with the accompanying statements of higher impact, before Friday closes with the less influential consumer inflation expectations.

Given recent movements and events for the currency, all of the above will be important in seeing whether the currency can consolidate its position and hold on to these very strong levels. Get in touch with your trader now for the latest sterling rates at the start of another