Spain will overtake Ireland as the top location for investors interested in acquiring riskier real estate, says a report by Cushman & Wakefield, the international property advisers.
It estimates European banks and asset managers plan to sell or restructure €584 billion of riskier property as they clean up their balance sheets in the “coming years”.
The wall of assets being prepared for sale in Europe means there will be stiff competition for Ireland as it accelerates plans to wind up Nama.
Spain, according to C&W, has €200 billion of assets it needs to sell versus Nama which has commercial property assets with a face value of €61 billion still on its books.
Investor target
C&W said Spain's bad bank – Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria (Sareb) – alone earmarked €102 billion to be sold. "The Spanish market has sparked into life in H1 2014 and is now at the top of investor's target lists," said Reno Cardiff, C&W partner.
“With almost €200 billion of non-core real estate exposure on the books of Spanish banks and Sareb, many of the big-name investors are well positioned to take advantage of any potential opportunities.”
The UK and Ireland, C&W said, accounted for the majority (63 per cent) of closed sales in the first six months of 2014, but Spain was catching up.
It said Spain accounted for 29 per cent of sales in the second quarter of this year, and one third, or €28.5 billion, of “live transactions” on the market in Europe were in Spain.
Key vendors
Irish-owned institutions were the top two biggest sellers of commercial property in the first six months of this year, C&W said. IBRC, former Anglo Irish Bank, closed €17.2 billion in sales versus Nama with €8.7 billion.
“Investor focus will not completely switch to southern Europe,” C&W concluded. “UK and Irish banks have a combined exposure of €244 billion to non-core real estate, and therefore will continue to be key vendors in the market.”
Estate agent RBS said it had €25 billion of non-core real estate loans to sell or restructure, and about 60 per cent of this related to Ulster Bank.
C&W said American private equity firms dominated the market but Irish real estate investment trusts (REITs) played an increasing part.
Kevin Nowlan, chief executive of Hibernia REIT, said his firm hoped to take advantage of "rapid deleveraging" by Irish-based banks and Nama.
“Accessing properties through loan acquisitions is an approach we have already successfully used. We would certainly assess any future Nama processes as we have been doing thus far.”
