Domestic and international family offices are entering Spain as its real estate market moves beyond opportunistic investment, according to Christopher Hütwohl, managing partner, Valid Real Estate Strategies.
The latest development follows the wave of big, mainly American private equity players, that converged on Spain in the wake of the crisis and is a sign that the market is maturing, Hütwohl said.
'Private wealth is making a move and these smaller investors are often cherry-picking from large portfolios acquired earlier by the major opportunistic investors. They are able to create and add value to these investments and may well bring them to the core market in a year or two.'
Whereas the opportunistic invesotrs were primarily financially driven, private investors are more focused on real estate fundamentals, he added. Many are willing to accept initial yields that core investors would find very demanding, with the prospect of IRRs in the low double digits, or around 10-11%.
'These private investors are willing to assume some risk, but there is also more attention for real estate on a professional level. The current phase in Spain is a move away from the big private equity funds towards asset-based value-add investments. In this climate, technical companies, market specialists and specialised real estate businesses do well.'
