Equity-rich investors grab the action in Spain

Foreign investors wishing to buy commercial real estate in Spain need to put cash on the table given the relative dearth of debt financing, according to Aldolfo Ramirez-Escudero, president of CBRE in Spain.

‘We’re seeing a lot of pure equity deals,’ he said during a panel discussion on distressed investment in southern Europe held by PropertyEU at the London office of TIAA Henderson Real Estate on Tuesday. ‘Investors who see an opportunity in the Spanish market need to move with speed…they need pure equity. They may refinance at a later date, but it’s important that they don’t rely on the availability of debt to take a decision.’

The availability of debt remains weak, but on the positive side, the Spanish market is not oversupplied, Ramirez-Escudero said. One of the key challenges facing the market is the large amount of old versus new stock and the polarisation between tier-one and secondary and tertiary cities, he added.

Another important consideration is the economic situation. ‘Economic growth is not strong and the availability of debt is weak although I think we will manage on that front. The key question is: are we going to grow or not in Southern Europe?’

In the past year or so, Spain has seen far more liquidity being created in its public real estate markets. ‘Before the crisis, we had listed real estate companies that were a mix of developers and property owners with excessive leverage. Those companies have been restructured and recapitalised and we’re seeing new listed vehicles – the SOCIMIs – that will generate more liquidity. But overall you still need to take into account that Spain is not as liquid as other markets.’