The wretched Spanish housing market has been giving timid but solid signs of recovery since for several months.
Last data bring some new life into the sector: investment increase of 60% to €4 bn, which will mainly be led by international investors, as appraisers at Spanish firm Tinsa reported. Meanwhile, midcap Colonial symbolizes the falling as well as the revival of national property sector thanks to a new debt refinancing contract signed partly with sovereign funds and a capital increase also entered by foreign
Spanish appraisers of real state assets Tinsa are the most followed by rating companies. They foresee that investment in property market in 2014 will increase by 60% reaching to €4 bn. The money would mainly come from foreign investors but in many cases they are likely to need a local partnership.
As reported by Tinsa, the outlook for national housing market “made almost a 180º turn” with the massive entering of those international players. Furthermore, the office market as well as retail one will be the forces pushing the industry up, while residential sector will remain weak, having management difficulties and low profitability, but also a high potential. In fact, short financing does not mean to restrain investment yet since it slowly starts flowing. Other reasons such as different expectations between buyers and sellers or the lack of assets are behind that property market’s shift of direction.
The outstanding type of investors during year 2014 would be vulture funds, although core ones will follow them closely after they appeared to be strongly attracted by recovery expectations.
The Spanish midcap Colonial’s story fits the falling and rising of the countrys’s real state sector as a glove. The company were saddled with a €9 bn debt when the housing market bubble burst. After a long period of restructuring, the company’s debt currently stands at € 2,1 bn and will presumably be cut to €1,04 bn with its new refinancing contract. On Thursday, the firm announced a deal including an equal amount with a group of recognized sovereign and pension funds as well as financial entities. “This agreement is to allow the company face its short term debt with maturity by 2018,” experts at Bankinter said earlier this morning.
On the other hand, the company’s shareholders approved a capital increase of € 1.26 bn, which makes twice the amount initially estimated, thus “enabling Colonial to reorganise its balancesheet with no need of selling part of its French subsidiary Societé Fonciere Lyonnaise,” analysts added.
The Spanish company assumes that the capital increase will include for sure an amount of € 572 million, of which 308 are a contribution from Group Villar Mir, a prestigious national family-owned industry business, with the aim of keeping its 24% stake in Colonial. The remaining money will come from Colombian firm Santo Domingo (€ 164 million) and also from Amura Capital linked to Andorra’s Banca Mora (€ 100 million).
Anyway, Spanish analysts at Bankinter recommends selling Colonial “cautiously” given that it prices over book value and that initially estimated for the capital increase.
Finally, Tinsa appraisers said the index they use to analyze housing prices registered a quarterly descent of 5.5% in March.