How to invest in real estate at u$s900/sq. M. In Madrid

Mariano Capellino, Founder and CEO of INMSA was interviewed by the journalist Mariano Gorodisch to discuss the launch of Real Capital Funds. In the following link, you can also read this article:

Investing in real estate in Spain is no longer an impediment for medium-size investors. Now through the stock market, with a minimum of u$s 50,000, it is possible to participate in the acquisition of a portfolio of different real estate assets in a market which is currently considered the star market for home sales operations.

The Blackstone fund, one of the largest real estate funds worldwide, invested u$s 34,000 million through the acquisition of thousands of homes in Spain from portfolios which were in the hands of Spanish banks.

The reason for this? Waiting for their revaluation. Today, the prices of class B homes have 50% and 60% discount compared to their values 10 years ago and, by acquiring large portfolios from banks it is possible to get an additional 25% discount.

In addition, Spain offers today an attractive rental return at 6% net annually which can be an option to be considered when starting a real estate business at global level.


Growing more than China

Another important factor is that Spain has experienced the highest growth rate in real estate investments, higher than China, USA and its neighboring countries in the rest of Europe.

One hundred sq. m. apartments in the outskirts of Madrid or in the capital cities of important provinces can be acquired at about u$s 90,000, while in 2007 their prices reached u$s 220,000. This means, paying u$s 900 per sq. m. can even be less expensive than acquiring a unit at Villa 31 (slum area in Buenos Aires).

This situation reminds us of the situation in 2001 in Argentina: in the case of Spain, it took seven years to get stable after the decline. The positive sign was given by the international funds which entered the country as of 2015 and, for this reason, class A properties in Madrid have already recovered their historic value.

But Class B properties in the outskirts of Madrid and provinces have not experienced the same situation yet, as only last year mortgage loans at extraordinary rates of 2% annually started to be granted again. Meanwhile, the Spanish economy continues to recover drastically. Its GDP is increasing twice the average rate in the European Community and with a strong decline in the unemployment rate.


Real Capital Funds, for small investors

With this situation, the launch of Real Capital Funds with real estate assets from Spain was announced. This instrument allows small and medium investors, rather than institutional investors, to participate in large portfolios and residential buildings at lowered prices.

In addition, the investment structuring is listed in the international stock market, thus making a system transparent and permanently audited. Mariano Capellino, CEO of INMSA expressed: “Some time ago, this type of opportunities was available only to great fortunes or global investment funds. Today, with the active participation of the State and private banks through Sareb´s actions, the so called Bad Bank which gathered bank´s nonperforming real property, the opportunity has been expanded and, through the implementation of certain instruments, smaller investors are allowed to access”.