Spanish Property Deals Grab Investor Interest

At least a dozen large international investors are lining up to look at a large Spanish property-loan portfolio sale that will take the temperature of one of Europe's most distressed real-estate markets.

Commerzbank AG CBK.XE -2.28% recently began shopping around the portfolio—code named Project Octopus—that includes loans with a face value of €4.4 billion ($6 billion) that are backed by shopping centers, hotels and offices. 

The loans were originally extended by Eurohypo AG, a unit of Commerzbank that is being wound down after suffering large losses in recent years. 

The deal is expected to be one of the biggest of its kind in Europe this year and will be a key test of investor faith in Spain's budding economic recovery. Any buyer of the loans likely would pay a discount to their face value. Still, they would be making a multiyear bet on the euro zone's fourth-largest economy, which late last year emerged from more than two years of recession. 

Investors looking at the deal include Blackstone Group BX +0.67% L.P., Cerberus Capital Management L.P., Värde Partners, Apollo Global Management APO -0.81% LLC, Lone Star Funds, Kennedy Wilson, KW +1.64% Pacific Investment Management Co., Starwood Capital Group LLC, CarVal Investors, Colony Capital LLC and Centerbridge Partners L.P., according to people familiar with the deal. Some of these funds have teamed up with large lenders such as Deutsche Bank AG DBK.XE +0.56% and Wells Fargo WFC -0.02% & Co.

Commerzbank, which is among a number of European banks that have been unloading loan portfolios to align with new banking regulations, hired investment bank Lazard Ltd. LAZ +2.96% to run the sale. Commerzbank declined to comment. 

European banks still are digging out from an avalanche of bad real-estate debt that crushed them when the financial crisis hit. In 2014, more than €40 billion in European real-estate loans could be put on the market, a 32% increase from 2013, according to a report last week from real-estate broker Cushman & Wakefield.

Big sellers include so-called bad banks that were set up in Spain and Ireland to manage soured real-estate assets. Those banks are increasing their disposal activity, while sales in Italy also are expected to pick up, said Andrew Sim, head of European investment at Knight Frank in London.

Spain's real-estate market has seen a revival of late. The government, through its bad-bank structure Sareb, is expected to put several large property portfolios up for sale in the first quarter, and local banks also are looking to reduce their exposure to real estate.

However, there are reasons to be cautious, say some analysts. A shock to the economy would be a "particularly big problem" for the property market, where asset values have fallen far less than in other troubled countries like Ireland, said Matthew Richardson, European real-estate research director at Fidelity Worldwide Investment in London.

"If you're an institutional investor running third-party money, it's a heck of a risk to take," Mr. Richardson said.

Last week, Commerzbank sold €710 million of nonperforming Spanish property loans to hedge funds. In December, it sold €280 million of shipping loans to a buyer affiliated with Oaktree Capital Management L.P.

The latest Commerzbank Spanish portfolio sale is expected to be completed this summer. Interested investors will participate in the first round of bidding within the next four to six weeks, a person close to the deal said.

The deal could be structured similarly to Commerzbank's £4 billion ($6.6 billion) U.K. real-estate portfolio deal last year, said people familiar with the ongoing process. About half the Spanish portfolio consists of performing loans, while the other half is split between nonperforming and subperforming loans, these people said.

The U.K. sale was broken into two parts, with Wells Fargo taking control of £2.7 billion in performing loans, while Lone Star took on £1.3 billion of nonperforming loans.

There also is a chance one investor could buy the whole portfolio, said Adolfo Ramírez-Escudero, managing director in Spain at CBRE Group Inc., which is representing one of the bidders. He noted only a handful of bidders have the resources to consider this option.

Large asset managers such as Lone Star and Kennedy Wilson have opened local offices in the Spanish capital, and funds including Apollo Global Management and TPG Capital LLP have purchased real-estate servicing units from local banks, giving them a platform to manage the assets they buy.

On Tuesday, a portfolio of seven shopping centers in Spain was sold to U.K.-based GreenOak Real Estate Advisors L.P. and Spanish investor Grupo Lar Real Estate Investments SA for €160 million by Dutch property fund Vastned Retail VASTN.AE -0.25% NV.

The rising number of investors looking at distressed Spanish assets also may drive prices higher, increasing risk. A person familiar with Project Octopus noted the deal was "extraordinarily" well bid.

"You look at the bigger picture and it sounds pretty good. But on second look, you're thinking the good news might be priced in," the person said.

Source: online.wsj.com

Foreign investors even more confident about Spanish property investment

FOREIGN INVESTORS have done a dramatic U-turn on Spanish property investment, with two thirds now believing Spain has attractive buying opportunities.

A total 67% of participants in an Urban Land Institute and PwC survey said they were feeling more confident about investing in the country.

Marc Pritchard, Sales and Marketing Manager for leading Spanish home builder Taylor Wimpey Espana comments, “It is very encouraging to see the experts such as the Urban Land Institute and PwC highlighting the turnaround which Spain has undergone and the vast potential which remains. We have been saying for some months now that the situation, especially within the second homes market, is steadily improving.

“Last year we at Taylor Wimpey Espana recorded our best year since 2006 in terms of sales volume and you only have to look at the vast sums being invested into real estate by both private individuals such as Bill Gates and large investment funds, to see that ‘good opportunities’ still do exist in Spain.“

Source: theolivepress.es

The Expat’s Guide to Buying a House in Spain

If you’re contemplating leaving your home country (or have already done it), you’ll undoubtedly need a place to live. For many expatriates, this means buying a house—perhaps a simple task in one’s home country. If you’ve got your eye on Spain, your dream of homeownership can definitely be accomplished, especially if you’re willing to do a bit of research and follow our handy suggestions!

Spain is the perfect place to get a great deal on a fantastic house. Due to massive overbuilding revealed by the credit crunch, there is an abundance of real estate to be had at reasonable prices—many offered for less than half of their original price. The Spanish market is certainly one meant for buyers.

If you’re ready to buy, you’ll first need to find a realestate agent with a reputation to back him or her up, as anyone can set up as an estate agent. Make sure that your agent is fluent in both Spanish and your own language to best meet your (and the seller’s) needs. 

Next, don’t worry about having a house built. Because there are so many sitting empty, you’re likely to find a much better deal if you’re able to find a house that already exists. Additionally, many builders go out of business quickly, and this might mean a lot of waiting for you.  When you find your house, insist on a surveyor’s report, which will ensure the safety, security, and quality of your new home. While some sellers won’t want to provide the surveyor’s report, it is important that you make it happen to best protect your investment—EUR 400 now is worth a lot more later. 

Make sure you’re set on a home before you offer a deposit too. In Spain, a deposit is a commitment and you’ll be required to complete the purchase. Otherwise, you’ll lose your deposit (10-15% of the asking price). Also remember that your property debt is now associated with the property and not you, so make sure your lawyer or agent has proof that the seller has fulfilled all of his or her financial obligations.

You’ll also want to make sure you have a Spanish bank account—it will be extremely difficult (read: impossible) to set up utilities without it. Find a bank with an English speaker, which shouldn’t be difficult, and ask if it might be possible to get bank statements in English too.  

Finally, make sure that you’re familiar with the 1988 Law of the Coast governing coastal development. Make sure to purchase a property that is unable to be reclaimed by the government. Also look into the Valencia Land Grab Law of 1994, as some properties, especially in rural areas, may be impacted.

As with any home purchase, make sure to conduct a variety of research and learn the basic vocabulary associated with buying a home. A well informed buyer is a good one! Happy hunting.

Heidi Andrews roots for the LA Dodgers and the freedom to eat chocolate for breakfast. When she isn’t learning to make those cool designs on espresso drinks, you can find her writing about financial freedom, new technology, and investment opportunities for Jason Hartman Media. 

Be Bold to be Sold

Selling a property is different from selling goods on eBay. Of course, eBay is a good way to be found. However, there are lots of things to consider. Remember that if you make a little mistake, your home might end up collecting dust or become ruins –a would-be UNESCO heritage site. The market value of the property decreases the longer it stays up for grabs in the market. It becomes overpriced, thus, losing potential buyers.

AGENT

007 might not be capable of selling properties despite his charm. Look around for an agent that is competent enough to do his job. You can contact an agency and select the best agent for you. Choose somebody who has the most excellent listings. Make sure to read the contract before giving the green light to the agency. Ensure that the length of the term is suitable for you. Also, check the fees for advertising and if it’s possible to cancel it. Once an agent is chosen, negotiate his commission. He might cut the amount because the competition among them is steep. Another thing to commit to memory is to listen to the agent. Nowadays, people think that they are geniuses when reading some articles on the web. Agents are there for a reason. They are professionals that can hold your hand as you go along the selling process.

PRICING

Look for comparables around your area. Comparables are properties that resemble yours. If you have a chalet type house, don’t compare it to a castle. Owners metaphorically regard their homes as castles that they get attached to them. Hence, clouds their decision to figure out the right price. Pricing is a tricky thing because it involves emotion at times. Real estate agents can guide you through it by teaching you about CMA (Competitive Market Analysis). Luckily, this service is likely to be without charge. They can also point out a unique feature at your property that can boost up its value. If not provided by the agent, ask him to give you with active and sold comparables, and market statistics. These will help you understand the pricing more.

FIRST IMPRESSION

Tidy up before an open house. Who would like to live in a place that is nasty? A place like a murder scene with bullet holes might be attractive to a few. The majority don’t want to see that, though. They want to see firework (or at least feel it) as they enter your house, feel like they are in Disneyland…well, that’s exaggerated. You get the picture, right? If it’s within your budget, hire a stager. Agents can be confused what to do or improve for home showings. Home staging is getting more and more popular. Professionals beautify the house by adding furniture and decorations that can amaze the buyers. Some would even bake a pie to stimulate not only the sense of sight but also the sense of smell. Don’t forget to take care of the outside as well. Mow the lawn is the least you can do.

OFFERS

Pick the best offer. Choose wisely not according to the price but the conditions. The highest bidder may not be the best if the conditions are at your disadvantage. The high price can blind you when deciding and the conditions may be concealed by the bright amount of hefty lot of cash. For that reason, a lower offer may be the finest option if it doesn’t have any conditions that would lead to your doom.

Bio:

Ernest works with home and real estate sites which really gives him the thought of materializing his passion about kitchen furniture and home designs especially in housesfor sale in Calgary.

Spanish Citizenship with Property Purchase attracts Foreign Buyers

Desperate times call for desperate measures, and last year Spain was so anxious for an economic quick fix that it was prepared to give away citizenship for a song.
For property purchases of a mere €160,000 (HK$1.7 million), foreign buyers would gain automatic residency, Trade Minister Jaime Garcia-Legaz announced in November last year. With more than 700,000 unsold houses remaining from the 2007 real estate collapse, and no sign of improvement domestically given Spain's 25 per cent unemployment rate, Chinese and Russian investors were targeted, he said.

The plan was widely condemned by other EU nations with higher entry levels - Spain was seen as "selling itself too cheaply", says Barbara Wood, director of The Property Finders, a property search company. But a year is a long time in real estate, and when the law was finally ratified on October 1, the threshold for residency had been lifted to €500,000.
Non-nationals also have to buy mortgage-free, and citizenship is no longer a given. The initial visa will be for two years and will be renewed if the property is still owned at that time. Application for citizenship will be allowed after 10 years.

What's changed, apart from international sentiment, is the real estate landscape itself. According to official data, residential sales volume increased by 2.3 per cent year-on-year in June - a modest jump, but a gain nonetheless. Purchases by foreigners increased by 28.4 per cent in the second quarter, making year-on-year growth for eight consecutive quarters.

Agents and developers anticipate that the relaxed laws on foreign ownership - known as the "golden visa" - will encourage a raft of overseas buyers. The €500,000 spend doesn't have to be on just one property - the amount is accumulative, so buyers can build a portfolio of two or more cheaper properties.
Lucas Fox, a Barcelona-based estate agency and Knight Frank's representative in Spain, has already noticed an increase in inquiries from Russian, Indian, Chinese and American investors. Furthermore, "sales have begun to rise more recently as British and Scandinavian buyers return to the market", the agency says.

Wood believes the previous 90-day visa was a disincentive to buy, whereas now non-EU citizens can come and go as they please. "I get the sense that even if the purchaser is not thinking about full-time residency now, they are thinking about somewhere safe to invest in property in case they do want or need to move," she says. "Western Europe is seen as a safe, stable environment, with good health facilities, good education and free movement within the Schengen Area" of common international borders.
According to Lucas Fox data, prices in some of Spain's most desirable areas have fallen up to 50 per cent since the property crash. By its reckoning, prices have bottomed out in some areas of Barcelona, the Costa Brava region, Ibiza and Marbella, while sales are up, by 13.5 per cent in Barcelona alone from January to May compared to the same period last year.

Alexander Vaughan, co-founder of Lucas Fox, says: "The first six months of 2013 saw further encouraging developments in the property market in prime areas of Spain. In all regions we cover, the numbers of offers and sales completed were significantly up on the same period in 2012."
The luxury property market is doing particularly well, primarily in Barcelona, the Costa Brava region, Ibiza and Mallorca, where the average sales price of properties sold by Lucas Fox in the first six months was over €1 million. In these key areas, the property markets are still being driven by international clients, Vaughan says.


Marc Pritchard, sales and marketing manager at Taylor Wimpey España, reports "staggering" increases in overseas buyers of its developments in Mallorca, Costa Blanca and Costa del Sol: 2,500 per cent more from the Middle East, and 300 per cent more from Russia and Lithuania from January to May compared to the same period last year.
Buyers are looking for new or modern, well-priced properties in a good location, Pritchard says. "With market prices currently at the level of a decade ago, clients are buying a second home for lifestyle reasons - a property to enjoy holidays with the family in a warm and nice area, close to the Mediterranean Sea."

Spain's housing market pain may be around for a long while yet, but the industry is taking heart from the latest 0.8 per cent price drop in the second quarter, the smallest drop since the fourth quarter of 2010.
Vaughan says Spain remains a buyer's market. "Even the best properties [are] transacting at 20 to 30 per cent below their peak prices, and sellers are increasingly open to negotiation on asking prices. Our advice to potential buyers is to focus on location and quality.
"There are some great deals to be had, and we think that in most areas - particularly Barcelona, the Costa Brava and Marbella - prices are at, or very close to, the bottom. We expect the trend of sellers lowering asking prices in line with buyer expectations to continue for at least the rest of 2013 and quite possibly the next couple of years."

Wood, whose Putonghua- and Cantonese-speaking colleague Pei Ching Eh deals with the Chinese and Asian markets, says inspection flights from China have been arriving for several months in anticipation of Portugal's "golden visa" law change, "and Chinese are buying".

"Spain is a much bigger market, better climate - I would expect much more interest," she says.
However, Wood cautions those not familiar with the market. "Just because something looks cheap doesn't mean it is a bargain. The market is still very price- and location-sensitive. In my opinion, prices in the non-prime locations and of lower quality still have not hit bottom and, although Chinese buyers will see what looks like incredibly cheap prices, they need to take great care - not everything is a good buy."

Source: scmp.com