Construction

Struggling Spanish Real Estate Market Set for PE Boost

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April 1, 2014

Few markets across Europe were hit harder than real estate in Spain was during the economic crash at the end of the last decade. Five years removed from the worst of the crisis, construction projects still stand incomplete across the country, particularly in growing coastal cities such as Valencia and Bilbao.

 

Of all the global markets that were hit hard, it is perhaps a measure of how far Spain fell that in the interim period very few, if any, investors have been willing to take a punt on the region. However, while the Spanish real estate markets remain at a low ebb, private equity (PE) is now looking at the region and the industry sector.

 

A combination of factors have played their part in this, including healthy returns for many PE firms across other European investments, a realisation that the situation in Spain isn’t going to get any worse, and a sense of urgency given that Spain will likely become a target for firms seeking maximum profitability in the near future.

 

Spain’s real estate boost isn’t a result of firms deciding they need to spend their dry powder, either. Many are looking at raising independent funds specifically for investment in various locations around Spain. PENews.com reports that Altamar Private Equity are among the firms planning such a move.

 

In the case of Altamar, they are also moving into direct investments for the first time, making it clear they sense a big opportunity stands on the horizon. It is reported that Altamar are looking to raise in the region of €200million in total to invest in various Spanish real estate projects.

 

It is currently unknown whether Altamar and the other PE firms looking at the area, which include Apollo Global Management and Cerberus Capital Management, are predominantly looking at new opportunities or favour taking on paused, existing projects.

 

The Apollo and Cerberus, in addition to Blackstone Group, have, however, shown an interest in taking on board and managing some of the real estate debt that Spanish banks remain holding.

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