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