End of Spanish Golden Visas

Ahead of Espana GRI 2024, conversations at this week’s Ibero-American GRI 2024 in Madrid saw real estate leaders from both Europe and Latam come together to address how Latin American investors looking to diversify their portfolios are turning to Europe, especially considering the appeal of the continent’s more secure investment environment.

At the same time, European investors are seeing attractive prospects for growth in Latin America, considering the size and array of opportunities in these less mature markets - although political risks necessitate strong local partners.

• The event also included site visits to Panattoni’s Park Getafe I, Real Madrid C.F.’s Santiago Bernabéu Stadium (recently renovated by CBRE), Distrito Natural’s Tomás de Bretón project, and All Iron Group’s Madrid Chamberí.?

But there will be more to consider for these cross-border investments with this week’s announcement by Spain’s Prime Minister Pedro Sánchez that the country's Golden Visa program will be discontinued following agreement between government ministers.

• The end of the scheme, which granted residency to wealthy foreigners investing in real estate in the wake of a housing market crash and euro currency crisis, follows similar moves by Portugal and Ireland, driven by critiques from the European Commission regarding security risks and potential corruption.

However, the direct impact on the property market from this change is expected to be minimal, as indicated by statistics showing that only a small percentage of homes were sold under the scheme.

Look out for more news next week following the conclusion of Espana GRI 2024!

Mid-Market Funds Report

Following a period of initial optimism in early 2024 for increased mid-market real estate transaction volumes and potential interest rate drops, the stark reality set in by February, as discussed in the recent GRI Middle Market Funds Club Meeting.?

• Expectations for distress opportunities have not been met, and cautious sentiment persists, hindering transaction volumes. Senior market executives emphasised the disparity between intentions and actions, noting the abundance of capital but questioning its accessibility.?

The meeting highlighted the necessity for significant shifts, either in the form of lenders “pulling the plug”, prompting asset market reactivation, or the market's acceptance of current rates and pricing, to revitalise transaction volumes.

This GRI report delves into this impasse and other key topics, including fundraising, development financing, and ESG considerations.

Read the full report HERE!

Eurozone RE Distress Trends

German corporate distress has surged to its highest level since 2020, according to a report by law firm Weil, Gotshal & Manges LLP, indicating significant challenges amidst Europe's largest economy's slower growth trajectory. This was also a key topic at this week’s GRI Club Meeting in Frankfurt with CRE leaders active in the country.

• Real estate emerges as the most distressed sector across Europe, particularly in Germany, where concerns over real estate lending and investor appetite persist amidst higher interest rates.

In the residential sector, European house prices saw their first decline in a decade in 2023, with the EU experiencing a 0.3% drop and the eurozone seeing a 1.1% decrease, driven by declines in several northern EU states despite growth in some eastern and southern countries, according to data from Eurostat.?

Germany saw one of the steepest declines at 8.4 per cent, followed by Luxembourg, Finland, and Sweden, while countries like Croatia, Bulgaria, and Portugal saw significant price surges.?

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To get the latest insights on the CRE distress situation in Europe, be sure to join us for GRI Club’s Real Estate Distress & Financing Opportunities Forum, taking place next week in London on April 17.

Find out more and register HERE.

UK Resi Resilience

Meanwhile, the UK housing market has shown resilience, with consecutive monthly demand surges and stabilised prices reported by the Royal Institution of Chartered Surveyors (RICS). However, UK house prices fell by 1% in March, diverging from economists' expectations, amidst challenges posed by rising borrowing costs.

• The London housing market is rebounding, evidenced by a quarter of homes selling above their asking price in the first quarter of 2024, suggesting growing confidence in the market's recovery.?

In parallel, UK lenders are increasing mortgage supply at the fastest pace since 2021, coinciding with heightened buyer interest and a surge in mortgage approvals. However, concerns persist regarding rising mortgage rates and potential dampening effects on the market's recovery.

Amidst this backdrop, Big Society Capital and other financial institutions have urged the UK government to facilitate private investment in social housing to address poverty and bolster affordable housing, proposing measures to unlock ￡50bn in funds.

For more on this situation, don’t miss out on GRI Beds Europe 2024, a special price discovery experience, with bespoke networking opportunities, pre-arranged matchmaking, and open, peer-driven conversations, taking place in London on June 27th.?

See full details and reserve your seat at the table HERE.

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