As investors become more reluctant to lend money to Spanish regional authorities, real estate has been one of the first items to hit the auction block. The regional government of Madrid has slated 100 office buildings in the center of Madrid for sale to help reduce the region’s deficit and keep public services going, as Sharon Smyth reports.
Bids for the first 15 buildings, which have been valued at about 62 million euros, will be accepted over the four months from the end of July, according to Jose Luis Moreno, a local government official who is overseeing the sales. Leaving aside the question of why a regional authority owns 100 office buildings in central Madrid in the first place, it’s clear that the timing for these sales couldn’t be worse. There’s little chance they will raise the amount of money the properties would get is calmer times, given the current real estate bubble and the fire-sale atmosphere.
Madrid may get a price advantage over other cities that follow their example simply because they’re the first to market — indeed, they may be the first of a flood of authorities offering up property for investors who can see a way to turn a profit.
Funds that have the money to invest are getting ready. El Pais reports on investors looking for bargain investments in Spain under the headline “’Vulture Funds’ Circle Over Spain” – a look at investment funds that are scouting for companies in need of cash and real estate that might get more valuable. The report quotes Felix Rivera of KPMG Corporate Finance as saying there has been a “massive influx” of funds looking for opportunities.
Investors are looking for offices, commercial real estate and logistics centers, the report says. That means regional authorities may be luckier with the offices they want to sell than the banks trying to offload residential property – that’s where the real fire sale has yet to happen.