Mariano Capellino expressed his opinion about the new real estate boom: Spain, in an article published in El Cronista.
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Spain: new real estate boom?
With sales recovery currently in place, the Iberian Peninsula is offering prices between 1000 and 2000 euros per sq. m. with annual profitability up to 20%, as informed by experts. The opportunities are stated below.
Market recovery is more than a mere sensation in Spain. The figures informed by different entities agree that property reactivation is a fact. Thus, regardless of the election results, during the first half of the year, the sales of property were growing steadily, as affirmed by analysts at BBVA Research, among others.
In fact, the bank is not the only institution pointing out this positive tendency. According to Mariano Capellino, CEO and co-founder of INMSA, a company based in Miami, Madrid and Buenos Aires, engaged in the management of real estate investments, for the first time in many years, at the end of 2015 the real estate operations reached a record amount of more than 12 billion euros in the housing submarket, which exceeded its previous maximum record of 9 billion euros obtained in 2007.
Figures climb to 23 billion euros when including commercial properties. “Banks have stimulated the market and they have been encouraged to dispose of their excess assets in portfolio, estimated in more than 100 billion euros including property and mortgages”, as explained by Mariano Capellino and he also mentions other factors which contribute to this current situation. “The exchange rate in relation to the dollar was very competitive throughout the last year, and this situation still persists today”, he says.
“The beginning of a new economic cycle, the expectation of high appreciation levels, as it happened in Argentina in 2004 or in the city of Miami in 2009, with annual net returns between 15% and 20% in rentals and asset appreciation, largely explain the current situation”, affirms Job Carrera Díaz, co-founder of Spain Time, a company engaged in real estate investments focused on Spain and Argentina. “The reactivation of mortgage loans is another good reason which explains the situation today”, he says.
According to INMSA the Premium assets demanded by ABC1 clients are the ones driving the demand; even when, as they express, recovery has not been homogeneous. “In Madrid and Barcelona there is a remarkable recovery in class A segment, in very consolidated areas as well as in Class B products at good locations”, as informed by Capellino. “In the capital cities of the provinces there is also a good activity”, he adds.
Spain Time also adds the good performance observed in Sevilla and the Western part of Costa del Sol. “Estepona, Benahavis, Marbella, Mijas, Fuengirola and Benalmádena”, Carrera says, making reference to the increasing number of operations being conducted in the Mediterranean cities, where, he affirms, it is possible to access property with a view to the sea at amounts under the replacement costs (from 1000 to 2000 euros per sq. m.) with potential 2-digit annual rental profitability.
Argentine investors
All these variables aroused the interest of investors from different parts of the world and Argentinians are not the exception to this. “The cultural part also plays an important role”, Carrera says, when he is asked about the interest showed by local investors.
Who are they? How much do they invest specifically? “They are between 35 and 70 years old and they are from the most important Argentine cities. The average investment is between 150,000 and 300,000 euros. Also, there are pools which invest between 500,000 and 1.5 million euros and also developers, with projects involving amounts ranging between 10 and 20 million euros”.
In turn, Capellino speaks about a “sophisticated investor” which invests between u$s 1 million and u$s 10 million, attracted by very high returns of about 10% and 15% annually in euros. “They are people who have already put their money abroad”, he says. In addition, the CEO of INMSA affirms that there are also products targeted to other segments at amounts starting from u$s 200,000.