In yet another sign that the Spanish property markets are attracting significant interest from foreign investors, Warburg Pincus agreed last month to acquire a significant stake in Grupo Pinar, owner of one of the country's largest real estate portfolios,
Madrid-based Grupo Pinar, a private company, primarily develops residential properties in Spain's primary and secondary cities. The firm currently has 62 ongoing projects, totaling approximately 5,000 units, with developments in eight cities and provinces, including Malaga and Estepona on the Costa del Sol.
The Spanish market has been booming in recent years as the country has become a favored destination for second-home purchases and retirees from Northern Europe. Although some argue that opportunities for property investors are drying up, the residential boom has also created companies that have become experts in their fields, many of which want to export their know-how to new geographic regions.
Pedro Aznar of Warburg Pincus said the firm had been studying the Spanish market in detail, analyzing half a dozen companies before approaching Grupo Pinar. He argues that although Spain's residential market will probably undergo a soft landing in the short-term, it has attractive longterm fundamentals driven by immigration and “household formation.”
“We came across Grupo Pinar where there has been a generation change from the original founder to management,” says Aznar. “It is ready to grow and has the potential to go public. Warburg Pincus has been very good at helping these companies grow.”
He says one of the attractions of the company is its land-bank and its strength in local planning. But it also has ambition overseas. He also adds that the firm is investing at a time of huge corporate activity in the Spanish construction industry, which has seen a number of public-to-private transactions recently.
Warburg Pincus is not the only overseas firm investing in the region. Earlier this year, the California Public Employees' Retirement System formed a $231 million (€180 million) fund with US developer Hines to invest in the Spanish residential market. The new fund, HCS Interests, is focusing mainly on Spain's Mediterranean coast, betting on continued demand for second homes, vacation properties and foreign tourists.
London-based Patron Capital has also been active in the country. Last year, the firm bought a mixed-use portfolio, including 244 residential flats, from La Caixa bank for €207 million.