Stampede of real estate funds in Eastern Europe: Spain prepares to ‘steal’ part of the investment

Money is fearful, and a war is the best argument to fold candles and seek refuge in other markets. The funds have already halted planned new investments in Eastern European real estate due to the conflict between Russia and Ukraine. Now – and with a market overflowing with liquidity– seek refuge in other countries. Spain or Portugal earn integers to absorb part of that investment.

“It is possible that we have a greater investment influence. Spain, Portugal and also Latin America, that is, the markets that are furthest from the conflict will benefit,” explains Víctor Salamanca, CEO of the professional services company Auxadi.

The expert is aware that in political contexts similar to those we are now experiencing, there is a paralysis of the investments that are underway. Of course, at the moment the impact of the conflict cannot be quantified. “What we anticipate is going to happen is a slowdown in decision-making to contemplate the scenario in greater depth, and for that time is required. The operations that were underway in the areas closest to the conflict, such as Poland, Hungary, Slovakia or the Czech Republic, are being paralyzed”explained Salamanca in the presentation of the report The future of the Real Estate sector in Spain, made by Auxadi.

The study carried out before the outbreak of the war found that 82% of real estate fund managers saw likely or very likely to invest in Europe in the next five years, a percentage that exceeds the 66% of those who prefer Asia-Pacific and the 60% who prefer Latin America. Regarding the last market, the countries that arouse the greatest interest are Argentina, Mexico, Peru, Brazil and Panama.

The factors that are most taken into account when betting on South America are cultural elements and linguistic similarities, the abundance of natural resources, the high growth potential or good local infrastructure.

Recovery and challenges

The report prepared by Auxadi reveals that the majority (78%) of the Spanish real estate funds trust that the complete recovery of the European sector of the Real Estate will take place over the next two years. In addition, the specialists agree that the segments of logistics (74% of those consulted), retail trade (72%) and hotels (70%) are the ones that will experience the greatest recovery, followed by residential (68%) and shopping centers ( 62%).

With regard to the challenges that managers face in the face of abroad are taxation and due diligenceaccording to 56% and 42% of those surveyed, respectively, while political stability is only mentioned by 34%.