Little Real Estate

The appetite for real estate investment has not gone away for fear of a cyclical change or because the asset prices are high. In contrast, investors in all segments they want to continue telling their portfolios with a sector that has given much joy for years. But in a world of increasingly complex products, real estate can not be left behind and more when the market is mature and is not worth it. These are some of the conclusions of a meeting with industry experts hosted by Banco Madrid and the newspaper Cinco Dias.

In line with these ideas shared launch other posts: the funds are no longer the only collective vehicle to access these assets. However, Spain did not get all the care products than other countries. An example are the REIT mentioning, a very American figure who has landed in several European countries but that have not already done here.

“Real estate funds may be suitable for institutional investors such as pension funds, but private banking clients demand more sophisticated products and a willingness to invest more flexible ‘says Carlos Ferrer, a partner at Cuatrecasas. Add that to these customers, especially the Spanish real estate funds fall short of objectives. “They have many limitations, including the obligation to have a portion of assets invested in the residential area,” he adds.

They may not have come all the innovations, but the outlook of real estate investing is changing in Spain, especially for those who have a higher volume of money. Miguel Hernandez, a partner of Proactive Asset Management, agrees that demand for these customers are more sophisticated and some prefer different funding structures, such as car companies. ‘They offer other possibilities. You can enter specific real estate products and partners involved in the management, “he says.

In the same vein, Antonio Soler, director general of Monteverde, stresses that members of these societies share the decision-making and financial partners not to use. But stresses that they face a problem: the lack of real estate. ‘There is pressure of money and a lot of liquidity, but the products are scarce. Therefore, the assets are first searched and then mounted the financial vehicle, “he adds.

Strong competition

Solera refers to another aspect of the investment in this difficult environment that has an increasing importance: the fierce competition for funds Dutch, Austrian, Irish and other countries, both as buyers of real estate in Spain and Customers sensors. On the capacity available to them to attract investors, the director of Monteverde reiterates the point made by other experts: they do it with advantages over the Spanish funds, since they have more freedom to choose products that add to their portfolios.

But in addition to analyzing the characteristics of the investing structures, what other criteria exist for choosing the most suitable real estate investment?

Inigo Gutierrez Nergosa counselor, says there are basically two ways, and each weighs more depending on the profile of the buyer. ‘On the one hand, one could choose to enter active to ensure a lifetime income that can be. This system is often chosen by small investors who try to ensure a secure income or leave their children, “he says.

Although this attractive, secure income, is also used by holding companies, the Minister of Nergosa said that the largest fortunes generally prefer more capable assets revaluation where to put their high liquidity. With regard to the way addresses the operations, said that these investors tend to opt for ‘holding companies, which are small funds, but with a different structure. “

Luis Regalado, director of Madrid Bank Private Banking, added that some large estates are moving into buildings with very low yields because they focus on the revaluation. And he believes that this is an idea that has solid base. ‘It is run for many assets. Besides real estate investing is a stabilizing element in the portfolio and has low volatility ‘he says.

In that vein, José Miguel López-Frade, CEO of Banco Madrid, adds that they have come across operations with a gross rental income below 3%. “Investors are confident in particular the possibility of revaluation of certain items such as business premises,” he says.

Active star

And is that the Spanish scene has another factor weighing on the strategy of institutional investors. For some real estate assets, the demand far exceeds supply, and no changes are seen in the skyline. Scarce goods are safe and which are disputed funds from various nationalities, building societies and other financial vehicles to the very wealthy.

To Inigo Gutierrez, Nergosa, investing in prime, ie the most emblematic areas of cities, especially in prime locations, is a guarantee of success. ‘There is great demand for commercial premises in certain areas in almost all Spanish cities. There are many companies and brands French, Italian Americans who want and need to install here. I therefore believe that there will always travel to these places’ he adds.

Other factors cited Inigo Gutierrez can add value to the premises, as is the proximity to the establishment of the English Court. ‘Crean commercial areas in your environment and give a guarantee of continuity. Because these stores are owners of their property, not to relocate close to ‘he says.

Although the demand pull of establishments by major international firms in the heat of the rise in Spanish per capita income is a generalized process throughout the country, the Minister of Nergosa says that the main drivers of investment property are Madrid, Barcelona, Valencia and Sevilla

But not everything goes. Inigo Gutierrez gives an example of the different situation of local malls. Front to the appeal of the first, the crisis of the latter, which are largely owned by foreign groups. There are too many, so they ended the series’ he concludes.

Precisely this advisability of investing in certain sectors, ignoring others, is one more aspect that pushes that professionals ask that new avenues of investment. And they are better adapted to current market reality, especially for investors with less money. Also to compete with foreign entities that do have them.

‘Are More ways to channel investment. Spain has a great heritage, but the instruments may not be at its height, “says Luis Regalado.

These formulas quoted REITs, born in the U.S. for years, and which are listed companies that invest in real estate assets. ‘They can be diversified or invest in houses, offices, and other products. Their characteristics are also more accessible to small investors than alternative funds, “concludes the director of private banking at Banco Madrid.

But there is another central theme in this sector can have significant weight in the ROI, and that complexity must be controlled with experts. And taxation. As highlighted by Carlos Ferrer, in the tax treatment can influence from the assets that investment goes, the country or funding formulas.