Investing in commercial real estate in Spain

08 Jun '16

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We share an article published in Apertura.com where Mariano Capellino, CEO of INMSA Real Estate Investments Company, has been consulted about how to invest in commercial real estate in Spain.

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How to purchase commercial real estate in Spain

Spain is getting the attention of large real estate investors. On the one hand, this is due to the macroeconomic recovery signs: GDP increased 3.2 percent in 2015 and about 500,000 jobs are created annually. In addition to this scenario, there are encouraging signs in the real estate market. “No doubt, Spain is today the most attractive country to invest in real estate, considering the risk-return ratio in the mid-term, if compared to other countries with similar risk level in Europe or other countries or regions such as USA or Latin American countries. After a strong decline for 7 years, they start to show clear signs of recovery in most classes and types of assets” says Mariano Capellino, CEO of INMSA, a global real estate investments company.  

The year 2015 reached a historic record with more than 12 billion euros in the Spanish housing market, thus exceeding the 9 billion reached in 2007; the highest number in its history. In addition to this, after a decline of more than 7 years, the average value of the housing units last year went up 2.4 percent annually, while mortgage loans rates are at their lowest price ever, near 2 percent annually, due to risk premium reduction and a wider monetary policy established by the European Central Bank.

The real estate demand is not only focused on local buyers, demand from foreigners increased 11.7 percent during 2015 and today they represent 17.7 percent of the total transactions.

 “The acquisition of real estate by foreigners is one of the signs showing an initial recovery, as the foreign demand usually anticipates up to 2 years the beginning of the change in the housing price cycle”, indicates Alejandro Schuff, Sales Manager of Soldati Propiedades which, together with INMSA, launched a private investment fund whose assets will be exclusively invested in commercial property such as stores and offices, class A and B, located in Madrid or in the capital cities of the provinces of Spain.

 “The purchase will be focused on products whose prices are under the market value, on their use (adding value through improvements if necessary or renting them if vacant) and on the sale of real estate assets. Thus, revenues from rents are received during the use of the asset and upon its sale, a revaluation benefit will be obtained”, as detailed by Schuff.

Capellino makes it clear that the fund is oriented to a prudent investor with 36-month investment horizon. The initial minimum investment is 200,000 euros and the initial amount of the fund will be 5,000,000 euros. The subscription period ends on August 30, promising a minimum 9% return annually, with annual 4% coupons advance payments, thus creating a real estate asset portfolio including assets with potential to add value in the mid-term.

 

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