REALX: Iberia’s investment case clear but price is the question

Investors are keeping their faith in Spain and Portugal despite the pandemic, experts agreed at Market Snapshot: Investing in Iberia online briefing, which was held at RealX, the virtual real estate fair organised by Real Asset Media.

‘Transactions in Iberia are 15% above 2019 levels at the moment, which is remarkable during such a severe crisis,’ said António Gil Machado, director, Iberian property. ‘Investors are still keen to deploy capital and money keeps on coming’.

(Top L to R) Antonio Gil Machado, Manuel Puerta da Costa, Roger Cooke,
(Bottom) Eduardo Ceballos, Paula León, Richard Betts.

There are high-profile deals still being done, which shows that investors believe in Iberia’s good fundamentals and long-term prospects.

“The comparative advantages are clear and investors know it is a positive environment and a market that will bounce back,” said Manuel Puerta da Costa, board member, APFIPP, the Portuguese association of investment funds, pensions and wealth. “So it is not a question of why, but of when to invest in Iberia.”

Some investors are sitting on the sidelines waiting for developments, some are looking for opportunities, others have opted for a business as usual strategy.

“Investors still see Spain as an interesting market and see this crisis as an opportunity to make the most of,” said Paula León, head of institutional sales and investor relations, Sareb. “Price is the big question mark. Spain is getting a lot of attention, but sometimes the wrong kind of attention. We’ve had a staggering number of calls from international investors expecting to buy at very low prices.”

The search for bargains is focused especially on the hospitality sector, which has been the big loser this year as the Covid-19 crisis ruined the summer tourist season.

Other sectors have done much better. “The clear winner this year has been logistics, which is attracting old and new investors,” said León. “Residential is also strong and development activity never stopped.”

More room for international banks

Not only have the main investors not left, but there are new ones coming into Iberia now. “It’s partly to do with financing,” said León: “There’s a banking concentration process going on in Spain, which means there are less senior lenders and more room for international banks, who will  bring foreign investors. We’ll see that play out in the next 12-18 months.”

Another factor to watch, she said, is that alternative lenders are coming to the fore: “They will bring a different type of foreign investor, so we expect a lot more activity in the market,” she added.