In a client note, Savills said the creation of the Irish NAMA 'bad bank' has had some positive impacts and some of these could be expected after the recent creation of the Spanish model SAREB. Unlike NAMA, however, which will ultimately be beneficial to the commercial markets, the assets held in SAREB are mostly residential and loans including land and developments at various stages of completion. In addition SAREB, structured as a private entity – with at least 50% of shareholders intended to be private - has a €50bn disposal program over 15 years. Its first sales will be key to kick-starting property investment which have dropped 75% in volume from a 2007 peak.

Angus Potterton, Managing Director of Savills Ireland, commented: “Ireland is entering what is expected to be its third consecutive year of growth, and there is a greater sense of renewed confidence, marking a turning point in the markets. We expect investment turnover to reach €1bn in 2013 supported by the return of investors and higher supply levels of quality assets.”
“Ireland is already one year into a new cycle with Spain sitting behind,” said Borja Sierra, CEO of Savills Europe and a Spanish native, in the client note. “Despite very different economy sizes the two countries are behaving similarly with Spain suffering a lag of 12-24 months. It is just a question of timing and we believe the lag will be narrowing as the pricing gap dissolves”
Appetite for property stock in both locations is driven by very similar investors but the markets are still at different stages of recovery with investors believing that there is now value to be found in Ireland while Spain bottoms out. Interestingly, similar product trading in Spain has achieved 100-150bp less than its Irish equivalent. Savills believes this is due to the perception of sustainability of rents, which have dropped up to 55% from their 2007 peak in some cases, and the scarcity of deals. Therefore certain Madrid and Barcelona CBD deals are attracting surprisingly high investor interest. Amongst the bidders are opportunity funds, Latin American investors, Spanish domestic investors and even German funds, which compete with very different strategies for the very little product available.

Jose Navarro, Deputy Managing Director of Savills Spain, added: “The Spanish economy is expected to go through another year of further depression but in real estate markets we believe prices will bottom, having dropped by up to 45% from peak. This, coupled with a vehicle to improve transparency, will encourage further investment from international parties.”

חזרה למהדורה המלאה