While there are many new contenders to the throne of George Soros, the leading hedge fund manager for many years now, there is no doubt that investment by the great man himself can move markets. Indeed news that George Soros, as well as the world’s fourth ranked hedge fund manager John Paulson, has invested €92 million in Spanish real estate company Hispania Activos Inmobiliarios has certainly caught the eye of investors.
It would be wrong to suggest that the Spanish economy is on the verge of a strong recovery, it would be wrong to suggest that Spanish real estate is much sought after but there is no doubt that the downward pressure of the last three or four years is reducing. We must also remember that Spain is a vital element of the European Union economy and as such could never be allowed to fail. So why have the two hedge fund giants each taken a €92 million stake in a company which is not exactly world renowned?
Is the real estate market in Spain turning?
Time after time we have heard about Spanish banks inheriting an array of property by default as many of their customers were unable to cover their mortgage payments. This has been a cloud over the Spanish real estate market for some years now and while we are nowhere near the end of the sell down of unwanted property, much of the downside is already factored into the market. It is becoming more obvious that developers in Spain are not willing to reduce their prices for a quick sale which would tend to give the impression that they also feel the recovery is just around the corner.
Quote from PropertyForum.com : “As we have mentioned on numerous occasions, Spanish banks have been left with an array of troubled property loans after many mortgage holders defaulted on their payments and effectively gave up their properties. There are literally thousands of empty homes across Spain although there is a worrying trend in black market trade in Spanish homes…..”
Many people also dismissed the property investment for a residency visa scheme as something of a gimmick but it is actually attracting the attention of many well-heeled international investors. There has been enormous interest from the likes of China and Russia, using this particular inroad, and this is unlikely to reduce in the short to medium term. While Chinese and Russian investors may have taken up some of the slack in the Spanish market in the short-term, many experts believe we will see a recovery in genuine international investment and domestic demand.
Was Bill Gates right?
In the final quarter of 2013 we learned that Bill Gates invested $148 million into a Spanish building company which at the time seemed to be rather premature and optimistic. The situation surrounding the Spanish real estate market has improved slightly since October 2013 but perhaps Bill Gates beat even the infamous George Soros to the call?
The investment by Bill Gates did attract some attention at the time but it was nowhere near the level of attention which this recent investment by George Soros and John Paulson has attracted. There is no doubt that Bill Gates is a very shrewd businessmen, there is no doubt that he is vastly underestimated by many in the investment arena and his experience and skills go far beyond Microsoft. We now have three major players in the worldwide investment market effectively calling the bottom of the Spanish real estate sector, what more evidence do we need?