Lone Star Funds, the private-equity firm founded by billionaire John Grayken, will invest as much as 500 million euros ($565 million) this year buying land for Spanish housing developments as demand picks up.
“Despite the glut of homes in Spain, there are areas where stock is running out and we aim to fill that gap,” said Juan Velayos, chief executive officer of Neinor Homes, the Lone Star unit seeking to become Spain’s biggest home builder. “We aim to build homes where there is solvent demand and where people can afford to and want to buy.”
Lone Star’s blueprint for Neinor signals the changing sentiment toward the nation’s residential property market, which is rebounding after a six-year slump when prices fell as much as 40 percent. The company will buy land in Madrid, Barcelona, the Balearic Islands and some coastal areas where stock is being depleted, Velayos said in an interview in Madrid.
Dallas-based Lone Star bought Neinor from Spanish lender Kutxabank SA in December for 930 million euros. It has already signed contracts to purchase 230,000 square meters (2.5 million square feet) of land for 187 million euros to construct 2,050 homes, Velayos said. The firm will target middle class homebuyers aged 40 to 50, he said.
House prices rose 1.5 percent in the first quarter from a year earlier and there was a 9.4 percent surge in transactions. The Madrid region is helping to lead the revival, with sales jumping an annual 20 percent in April, while business climbed 18 percent in Catalonia.