Foreign investment funds snap up half-price flats in Spain's Valencia

Investment funds are rushing to buy plots of heavily discounted homes in Valencia, local media reports have revealed.

Big banks and investment groups including Israeli, American, Swiss and German funds are focusing their efforts and money on the Valencian capital, benefiting from discounted properties and then selling them at market rates.

Real estate agencies in Valencia are reportedly "handling lists of up to 1,000 flats from these large investors, who are getting them at half price," Valencian newspaper Levante reports.

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The funds reportedly buy up discounted lots filled with properties that come from unpaid bank debts, then sell the homes through real estate agencies at market prices.

The rush is such that many investors are block buying properties without even seeing them. "Most funds buy lots. They send a representative to view the flats and sometimes even film them on video. Sometimes they buy them simply for their location without even seeing them," explains Vicente Díez, spokesperson for the Association of Real Estate Agents (API) in Valencia.

Cristina Recasens, founder of Recasens Real Estate, adds that in recent months there has been an increase in purchases by funds. "They tend to be Israeli, American, Swiss and German funds, and to a lesser extent Spanish," she points out, adding that these investors often buy the debt on the property and keep it to sell at a higher price.

This comes as property prices have surged in Valencia and around Spain in recent years. Affordable housing has become a huge socio-political issue in Spanish society.

Last year, saw anti-tourism protests across the country, many of which were directed at the property market pricing out locals at the expense of short-term tourist rental accommodation.

But it's not only foreign tourists or digital nomads using housing stock in Spain's third city. Many of the largest property owners in the region are now American investment funds.

Three of the six largest “mega-landlords” in the wider Valencian Community are American investment funds, according to the latest data from the Regional Ministry of Finance on deposits published by Civio.

These are Cerberus, which has 980 homes through three subsidiaries, CBRE, with 971 homes in one subsidiary, and Blackstone, with 774 homes through four subsidiaries. The TPG fund ranks as the eighth largest holder of housing in the Valencian Community with 568 homes through two subsidiaries.

The regional government remains the largest landlord with 5,000 homes.

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However, the number of homes for sale in Valencia has fallen to an all-time low, with less than 1 percent of total housing stock available for purchase. Valencia has around 430,000 homes but the number of properties for sale has dropped from over 10,000 to less than 3,800 in three years.

Díez adds that the lots purchased by investment groups usually consist of between ten and twenty homes.

The API spokesperson also explained that in many cases local authorities are not exercising their right of first refusal, which would allow them to purchase the homes for the same price and allocate them to social housing.

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