Events

Speaking yesterday at a session about the real estate industry held at ESADE Ignacio San Martín, Research Director of BBVA Real Estate, said that he believes "there is going to be a gentle escape from the crisis. What we think may take five years to sell, might just sell in less time". San Martín also vouched that "we as financial institutions are selling the housing stock, not the developers", adding about the latter that "they have been hard hit and I don't think they'll exit the crisis soundly". Meanwhile, he predicted that "there will be a new real estate model in which specialised property sellers will flourish".

The core theme of the session was whether now is the time for investment funds in the real estate sector. On this subject, Javier García Carranza, Managing Director of Morgan Stanley, stressed that in the current climate "financial institutions will have to lay money on the table in order to encourage the market". On this, he explained that "there is the possibility to bring foreign capital in, but this calls for gradual education, as it is necessary to sell assets less profitably so that the market can start growing and, this way, the last assets to be sold will be profitable". What's more, Juan Pepa, Managing Director of Lone Star Europe, pointed out that "now is when operations should be made. The cost of capital is high, but the benefits it brings to the market and to Spain are substantial".

As for the situation of funds in Spain, García Carranza said that "they will arrive and will solve the problems, but there will also be banks that prefer to undertake a more in-house solution". This was also the opinion of Joan Garcia, Partner at Irea, who vouched that the problem is the mentality of financial institutions. "Funds are here to bail us out, but banks aren't helping by waiting for a positive cycle to arrive", adding that "as long as there is no liquidity, there will be no transactions". This is why he advocated the creation of three-way structured involving funds, banks and developers to try and turn the problem into something viable.

Ignacio San Martín then stressed that "agreements can be reached about funds, but the solution is far more complex and, consequently, the attitude of financial institutions is to hold back". In spite of this, he admitted that "greater effort should be made to ensure that agreements are made between banks and investors".

To close, the speakers talked about the most suitable assets to sell to funds. Javier García Carranza highlighted that "not all assets will be capable of covering the cost of venture capital, for example, attempting to start out by selling rural land to these funds would not work, so the most simple products should be sold first and, little by little, it will be shown how to gain trust and increase volume". Juan Pepa also agreed that it is too soon for land sales and advocated "the completion of building works as a realistic alternative".

The session also featured Eduard Mendiluce, Vice-President of the ESADE Alumni Real Estate Club and CEO of CatalunyaCaixa Inmobiliaria, as moderator.

 

For further information:
clubinmobiliario@alumni.esade.edu