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When the big fish move to a market, the small fish…

Big property investors are positioning themselves in the Spanish property market. Not only the market, but also timing   seems to be crucial.

Blackstone is the biggest mutual fund in the world, and, in the housing market alone, it manages 64 billion dollars in assets.  According to one if its top executives, “the housing sector in Spain is absolutely one of the areas where we are focusing.”

The fund has landed in Europe to buy everything: hotels, offices, apartment portfolios, housing complexes… “Prices are much, much lower, and if we look out four or five years from now, and can improve these assets-with the model of buying, fixing, and selling-Spain is interesting,” emphasizes the Manhattan executive, because “everything is a question of supply and demand and housing assets “can be maintained” while the market resurges.”
Two months ago, Blackstone paid 128.5 million to the Madrid Municipal Management of Housing and Land (EMVS) for 1,860 homes built with public money to be rented out.  At an average of 69,000 euros per home.  “It observes the prices of assets-they add-the large discounts and repositioning values,” that is, the price of building a similar home in actuality.

In Spain there is a need to sell what was built at the price of gold on the cheap, and the “bargain hunters” are prepared to buy NOW.

A few days ago, Caixa Catalunya sold their housing to a Swiss mutual fund and to one from the United States.  At the bidding, twenty candidates presented themselves.

Necessity and darkness
Little by little, foreign capital is taking over the supposed housing bargains.  Supposed, because nobody except their managers knows what is being sold, at what price, and with what margin.  The opaqueness is complete, despite the fact that those selling the assets in large lots are institutions like the FROB or the SAREB (The Bad Bank), from a majority of public or state capital, a formula that stops the average citizen from accessing them.

And a margin that, in addition, depends on when the valuations were done, many already obsolete.  So, the interesting thing at the moment is seeing how the mutual funds are washing their hands with the Spanish market.  “The banks are starting to sell and meanwhile in the merger and sales markets everything is going very slowly, but in the housing market it’s not like this,” affirms Solotar.

The dates when these operations are closing, in the last weeks of July and in the first weeks of August, are one more characteristic of the shadows that they are moving in.

Of all the risk capital funds, Blackstone is the biggest in the world, and this year it just strengthened itself in Spain.  In February, it incorporated itself with the Iñaki Echave firm as general director with responsibilities over Spain and Portugal.

The directive joins itself to a team presided by the investment banker Claudio Boada, president of the circle of businessmen between 2004 and 2012 and HSBC adviser.  Before, he had acted as president of Lehman Brothers in Spain, where he worked for 16 years.

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