Malaga Becomes a Focal Point for Investment Funds: Global Institutional Investors Transforming the Costa del Sol’s Economy Across Various Sectors.
The majority ownership of the Malaga metro lies with a French investment fund, while the city port’s container terminal is under the control of an Abu Dhabi-based fund. Another fund linked to the Qatari royal family has plans for a hotel in the Levante dock and a marina in San Andrés. The savings of pensioners from places like Arkansas, Sydney, and Quebec are invested through pension funds in hotels on the Costa del Sol, where retirees from across Europe choose to stay. This is a prime example of globalization in action.
Investment funds, particularly institutional investors, have become significant players in the Malaga economy. They are involved in various sectors, including hotels, housing developments, office buildings, logistics parks, motorways, ports, and companies, and they are actively seeking more opportunities.
Malaga is no longer just a sought-after destination for tourism and technology; it has also become a target for investment funds from various backgrounds. Real estate and investment management consultancies are facilitating these investments by identifying opportunities, preparing reports, and negotiating on behalf of these large investors.
According to Íñigo Molina, the director in Andalucía at Colliers International, Malaga started attracting this type of investor back in 2016, particularly in the real estate sector, but the real surge occurred after the pandemic. Malaga has positioned itself as a dynamic and attractive city with solid economic foundations in the post-Covid era, leading to a significant influx of investment.
Rosa Madrid, CBRE’s Andalucía director, echoes this sentiment, stating that Malaga has garnered a high level of interest from both national and international investors. José Félix Pérez Peña, executive director of Savills Andalucía, notes that Malaga is now competing on par with major cities like Madrid and Barcelona.
Investors are drawn to Malaga due to its potential for real estate development, driven by a significant disparity between the growth in demand and the growth in supply for various uses, including housing, hotels, offices, and logistics. The city’s competitive pricing and the need for new real estate products further attract institutional investment.
The influx of investment funds has transformed the real estate market in Malaga, with large institutional investors playing a crucial role in filling the void left by banks after the economic crisis. These investors often collaborate with local and national developers or operate through their own development companies.
The presence of investment funds is also seen in the ‘socimis,’ publicly listed property investment companies specializing in acquiring, developing, and rehabilitating urban assets for leasing. These entities have gained significant traction in Spain due to their accessibility.
The hotel industry on the Costa del Sol witnessed a shift in ownership and management dynamics when investment funds entered the scene. They invested in outdated hotels, enhanced their value, and partnered with international brands, making them highly profitable assets. The pandemic accelerated many deals as hotel owners sought external capital.
The Catalyst for Investment in Costa del Sol Hotels: A Look Back at Hispania’s Pioneering Move in 2014
In 2014, Hispania made a significant investment in the Guadalmina hotel, marking the inception of investment funds’ interest in Costa del Sol hotels. Owned by tycoon George Soros, the socimi acquired the property for 21.5 million euros, including the mortgage.
This venture triggered a series of similar operations, particularly in the Canary Islands, where investment funds recognized the potential in holiday hotels. Prior to this, hotels typically maintained a unified ownership and management structure. However, the arrival of funds transformed the hotel business model, initiating a new era in the Costa del Sol’s hospitality industry.
Gonzalo Gutiérrez, director of the corporate finance department at Colliers consultancy firm, noted that numerous opportunities existed as many hotels were outdated and required substantial investments. Investment funds stepped in, improving hotel values and seeking international brands to manage them, effectively converting these properties into lucrative assets. The pandemic played a catalytic role in facilitating these deals, prompting owners to seek external capital.
Blackstone: The Dominant Force
Among investment funds active on the Costa del Sol, Blackstone stands out as the most influential player. Operating through its subsidiary, HIP (Hotel Investment Partnerships), Blackstone proudly holds the title of Spain’s largest hotel owner. The American giant’s strategic move came in 2018 when it acquired Hispania, capitalizing on its established presence and amplifying its operations. Blackstone’s impressive portfolio now includes prominent hotels such as AC Málaga Palacio, Vincci Málaga, NH Málaga, Mett in Estepona, Barceló Marbella, Occidental Torremolinos Playa, and the aforementioned Guadalmina.
In the realm of global investment, the top three players are Blackstone, Brookfield, and Apollo. Canada’s Brookfield made a significant entry in 2021 by acquiring the Hotel Don Carlos in Marbella as part of its purchase of Selenta Group. In the same year, it added the Palladium Costa del Sol in Benalmádena to its portfolio. Meanwhile, the US-based Apollo took over Sol Aloha Puerto in 2020, transforming it into Ocean House Costa del Sol, expertly managed by ADH Hotels & Resorts under the Affiliated by Meliá brand.
Another noteworthy participant in the dynamic Costa del Sol investment scene is a joint venture between Stoneweg Hospitality and Bain Capital Credit. Their recent acquisition of Los Monteros is currently undergoing renovations. Prior to this, they successfully revamped H10 Andalucía Plaza, reopening it as the Hard Rock Hotel Marbella a few months ago.
Malaga’s entrepreneurial activity has garnered attention from investment funds specializing in technology companies, startups, and deep tech. These funds have made significant acquisitions in the city’s tech and entrepreneurial scene.
In recent years, Malaga has become a hub for startups, drawing the attention of investment funds that provide financial support to these emerging businesses. Demium Capital, a fund associated with the Demium accelerator, has been particularly active in supporting startups originating in Malaga. Bullnet Capital, focusing on deep tech startups, has also made investments in the city’s tech sector.
Malaga’s attractiveness to investment funds is attributed to its growth and potential in various sectors, making it an enticing destination for international investors and contributing to the city’s economic development.
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