Big activity in the Spanish real estate market centers on BlackRock, the world’s largest mutual fund manager, making a landmark entry into Madrid. The bid involves the building at number 50 Maria de Molina Street, in the Salamanca district, a move confirmed by major sources and noted as a key transaction for 2023 in Spain’s property sector.
Earlier this year, the Council of Ministers approved the auction of part of the Eurocis building, owned by the Ministry of Finance, marking the third attempt after two unsuccessful bids. The starting price neared 156 million euros. By the bid deadline, the public administration had received six offers. Barnaby Investments, a limited company linked to Grupo Lar, placed the highest bid at nearly 205 million euros, lifting the minimum reserve set by the Treasury by more than 30 percent.
Until recently, public records had only hinted at this deal. It is understood that Grupo Lar, a prominent Spanish developer and manager in the national market, is the vehicle for Barnaby Investments. Grupo Lar is connected to the Pereda family, a major player in Spain’s real estate landscape. The identity of the capital partner backing Grupo Lar, with BlackRock participating in what would be its first real estate operation in Spain, has not been publicly disclosed. Both Grupo Lar and BlackRock declined to comment when approached.
The world’s largest fund bets on Spain
BlackRock’s foray into Spain’s real estate arena marks a notable milestone for several reasons. It is the most significant instance of the fund giant, which manages about 9.5 trillion US dollars, equivalent to around 8.5 billion euros, stepping into local property markets. While BlackRock is a major shareholder in many Ibex 35 companies, including Banco Santander and BBVA, this is its first direct real estate investment in the country.
The move followed a broad European real estate team refresh in May, adding 54 managers across the continent. Adolfo Favieres was named head of BlackRock Spain, taking on the role of general manager, with Jesús Moler as deputy president. The two previously worked together at Barings before forming Neberu Capital in 2021.
Speaking at a regional congress, Favieres suggested real estate investment would regain momentum in early 2024 and that the third quarter would be favorable for new deals. He also noted that upcoming opportunities would stem from fund repayments forcing asset sales, and from asset value declines paired with high financing costs that would drive refinancing challenges as capital becomes scarcer.
Hyper-luxury residences and student housing
Grupo Lar is set to act as BlackRock’s investment manager and delegate in the project. Ownership of the site is fragmented, with the Treasury currently controlling more than half of the property. This dynamic will require careful restructuring negotiations. Industry sources corroborated this situation, and discussions point to a plan that could allocate part of the complex to student housing while reserving another portion for ultra-luxury residences. Earlier reports from idealista/news echoed these possibilities.
Many students study at the prestigious IE Institute located within Castellana’s iconic tower. The planned residence aims to consolidate tenants into a single, renovated space with strong appeal. International students, a substantial share of the tenant base, already pay rents ranging from 1,000 to 1,500 euros per month, highlighting the financial viability of the project.
Additionally, Grupo Lar aims to introduce an unspecified number of branded residences, a term used for luxury properties tied to luxury brands such as D&G or Lamborghini. Context suggests a segment of the market now hit by high demand for branded living spaces. The most recent branded developments near Madrid’s Canalejas Center have commanded price ranges from several million to tens of millions of euros. To guide the project, the executive team has engaged three top consulting firms for layout and strategy.
A hurdle to clear
Before ownership can transfer, the Auction Board must resolve an objection lodged by Whiteni, who finished second with a bid of 197.5 million euros. Whiteni argues that the winners’ bid contains fundamental procedural flaws and asks for close scrutiny of the process.
Whiteni’s legal team maintains that Grupo Lar did not specify exactly how much of the bid would be paid annually, a detail that could violate the prize rules as written. The division of the offered price, as allowed by the auction’s terms, has been cited as a potential defect. Grupo Lar has remained calm about the proceedings, expressing confidence that the award will be upheld in its favor.