Deutsche Bank's investment arm is still on the hunt for prime real estate opportunities in the Iberian Pensinsula, a briefing focusing on investment in Spain and Portugal at Expo Real has heard.
August saw Deutsche Bank complete one of the largest deals of the summer as they paid Northwood €495 mln for top Barcelona mall, Diagonal Mar. Deutsche Bank's investment arm, Deutsche Asset Management, emerged ahead of several other bidders including ECE, CBRE GI and TH Real Estate in the bid to acquire the asset from Northwood Investors for €495 mln for its Grundbesitz Europe fund.
Carlos Manzano, Deutsche Bank's head of Real estate Iberia, confirmed to the briefing that the Deutsche Asset Management is still on the hunt for prime real estate opportunities in the Iberian Pensinsula, at a panel focusing on investment in Spain and Portugal at Expo Real.
Manzano told Expo Real delegates: 'Spain is a really interesting country for investing in at the moment. There are broad expectations for a 2-3% rise in GDP, and while unemployment is still a challenge, it has come down from a peak of 27% to about 20%. Where once only opportunistic investors feared to tread, now big institutional investors, including Deutsche Bank, are in the market.'
He added: 'We have a lot of belief in Portugal, as well. Right now there’s a clear lack of product in Spain so we’re actually looking even harder at its neighbour. We acquired three Portuguese assets last year and more are set to follow.'
Following its purchase of Diagonal Mar in the summer, Deutsche AM said it intended to invest more than €30 mln in several projects to ready the centre for the next decade.
'This investment is intended to bring the asset to its full potential, by rebalancing the commercial mix as well as refurbishing it both internally and externally,' explained Manzano. 'We believe that the scheme currently allocates an excessive weight to both leisure and restaurants and that this space could be optimized through the creation of a new area dedicated to fashion, where additional trend setting international retailers could complement the centre’s offer. The food-court will also be given a new image, as well as several areas of the shopping centre, where we believe the asset’s “look and feel” does not match its potential.'
The acquisition of Diagonal Mar brings Deutsche AM’s Iberian real estate investment business to more than €950 mln of transactions in the last 12 months, lifting the division's total assets to 17.
Manzano concluded: 'We haven’t been given a budget, we have money to invest in the right assets. If we see the right property we will buy it. We’ve done well in the last 18 months, but now there’s no room for mistakes as there’s only potential for about 15-20% of value creation in the assets you can acquire.
'Once there's not much more product available in the Spanish market, further mergers will come in the country’s real estate industry. It's a sign of the times.'