Spanish bulls

The charms of Palma de Mallorca

It started in earnest about a year ago when Guo Jindong, the chairman of Nanjing-based petrochemical producer Jiangsu GRPO Group, bought a luxury hotel in Mallorca. He paid €52 million ($57 million) for Valparaiso Palace and Spa.

Since then, the euro has slumped 18% against the dollar while Spanish developers have begun offering serious discounts to move housing stock. These two factors, say local agents, have attracted bargain-hunting Chinese buyers.

Last year China invested around $4 billion in Spain. That figure looks set to rise. In March representatives from Chinese investment groups amassed for a meeting in Palma de Mallorca. They were there to discuss assets for sale in Spain’s tourist and real estate sectors.

Two months later, and Prime Minister Li Keqiang was in town with a 120-man entourage hashing out a 10-year plan to “deepen mutual trust and expand two-way investment” with the Spanish government.

Spain is returning the love. Jose Luis Rodriguez Zapatero, the former Spanish Prime Minister, attended the Silk Road Economic Belt Forum in Zhejiang province’s Yiwu this year, seeking to encourage more Chinese funds for his country. “The assets in Spain now are good targets for investors. They have high quality and low price, so it’s quite an opportunity for Chinese companies,” he was quoted as saying.

Much of this investment will come from wealthy mainlanders buying Spanish commercial and residential real estate, said Alejandra Vanoli, managing director of Mallorca Sotheby’s International Realty. “Luxury property and tourism are high on the list, largely due to the expectation that many more Chinese nationals will holiday and live in Spain in the future,” she said. An estimated 300,000 Chinese are predicted to visit Spain this year, rising to a million by the end of the decade according to the World Tourism Organisation, which explains the interest in purchases the like Valparaiso Palace hotel.

Fourteen hotels in Spain have now been rated ‘Chinese-friendly’, meaning they have menus in Mandarin and never give Chinese guests either a room on the fourth floor or with the number four in it (because it sounds similar to the word for ‘death’ in Chinese).

These include the five-star Vincci Hotel in Málaga, VP Jardín Metropolitano in Madrid and the Barceló Sevilla Renacimiento Hotel in Seville.

But it is not just the holidaymakers flocking to Spain. As at the end of last year, the Chinese were the third largest non-European nationality in Spain, with 191,078 residents, according to Spain’s Permanent Immigration Observatory.  The country’s Golden Visa programme has also attracted 530 foreigners since its introduction in September 2013, with most applicants Chinese, Russian or Arab. With the purchase of a €500,000 home, applicants can be granted a visa to live in Spain. In March the government relaxed the requirements even further so that applicants can be economic dependents i.e. children. The visa process can now begin on arrival in Spain as opposed to applicants needing to apply from overseas.

Earlier this year Sotheby’s sold a seven-bedroom refurbished waterfront property to a Chinese buyer and a second large sale is under negotiation. “As the Golden Visa requirements continue to relax and Chinese authorities keep up their constant flow of money to Spain, we will certainly feel the effects,” predicts Sotheby’s Vanoli.

Some are looking beyond property. In March Dalian Wanda bought a 20% stake in Spanish football team, Atletico Madrid, for a reported €45 million. Wanda chairman Wang Jianlin has also been splashing out on other Spanish assets including the Edificio Espana and Picasso paintings (though he declined an offer to buy the naming rights to Real Madrid’s Bernabeu stadium, see WiC268).

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