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
