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Banks still seen as Iberian real estate’s ‘best partners’

Christopher Hütwohl, Managing Director, Corestate Capital Advisors

Banks in Iberia are still the real estate sector’s best friends, delegates heard at Real Asset Media’s Outlook 2021 –Iberia briefing, organised with Iberian Property, which took place online this week.

“Banks seem to be interested in financing microliving and student housing projects,” said Christopher Hütwohl, managing director, Corestate Capital Advisors. “We’re re-capitalising parts of the portfolio to create joint ventures with partners and we’re finding project finance from banks. The market for us is very accessible.”

Banks take an asset-by-asset approach, acting with great prudence, but they are still willing to lend to good projects.

‘We find that family offices and private investors are a lot more cautious now, because some have been hit badly by the crisis’, said Hütwohl.

“Financing is not an issue, but banks are more selective,” said José Araujo, director, specialised credit and real estate department, Millennium BCP. “Retail and tourism are less easy to finance now, but funds for residential are always available.”

Residential projects viewed as safe bet

Given the demand for housing, financing residential projects is seen as a safe bet provided some conditions are met. “Banks are more prudent and ask for more equity,” said Pedro Silveira, chairman, Grupo SIL. “We’re looking at different kinds of financing, like pre-buying apartments at a discount with a re-call option, starting a real estate fund that sells units to developers and also partnerships with a preferred dividend payment. But to tell the truth banks remain our best partners.”

The market now offers different options of alternative financing.

“Retail banks in Spain are less keen to finance developments, so we are looking at all options,” said David Martinez, CEO, Aedas Homes. “We’ve issued commercial paper, we may issue a bond later this year and we’re also looking at alternative financing. The market is in very good shape.”

The market is also in good order because there is a widespread belief that the crisis will pass.

“I don’t think the Spanish economy will take a very deep dive,” said Hütwohl. “Investors are not turning away and institutional money is coming our way. There was a dip, but there will be a recovery.”

The positive sentiment extends to Portugal as well.

“It is a niche market but investors are still looking for opportunities and prices are still competitive,” said Araujo. “Portugal will recover for sure.”