International investors believe the Spanish property market is ripe for the picking. Since this summer, some of the largest US and European investment funds have taken up positions in the residential market and names such as Blackstone, Cerberus, H.I.G. Capital, Lone Star, TPG and Centerbridge will become familiar to buyers over the coming years.
According to Neil Livingstone – partners of Colliers International, opportunist investors are putting pressure on the Spanish market due to attempts to place considerable liquidity in Europe – to the tune of some 700,000 million Euros.

According to some analysts, the objective is the wholesale purchase of homes to be sold on individually or in small lots at a profit of up to 30% and the Madrid town hall has already opened its residential market doors to Goldman Sachs and Blackstone.

The number of investment funds looking for opportunities in Spain is increasing daily and of the ten or so interested in the residential sector, three of four are expected to become the new major property developers in Spain when construction is resumed, says the manager of one of the funds which is close to investing in the Spanish market.
First steps are cautious and in general rather than buying the properties held by the banks, they are buying their sales and marketing platforms and staff, seen as the prelude to a wave of purchases, which could total some 30,000 homes within a matter of months.
Traditionally investment funds have only been interested in investing in offices, commercial buildings and industrial units, with the bolder funds investing in hotels, private clinics and retirement homes or student accommodation.

As soon as thousands of homes fell into the hands of the banks, things changed and investment funds could see an opportunity to buy up hundreds of properties. According to some experts, we will see investment funds buying up lots of 1,500 to 2,000 homes at a time.

Over the coming months, investors will start buying up selections of homes from the banks. To maximise on their returns, they are studying a range of options including selling on homes to the more stable institutional investors – local or sovereign investors – for refurbishment or destined to the rental market. One senior economist says we should be in no doubt that the rental market will double in size to between 25 and 30% of the real estate market.

Following six months of calm and negotiations, in August Goldman Sachs bought 3.000 homes and Blackstone bought 1,860 leased homes (in 18 developments). Most sales at the moment are concentrated around Madrid but it is a matter before investment of this type is seen in other parts of the country. One fund manager said everyone was waiting to see who was going to take the first step and several others have since followed suit.