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Venezuela's ruin is fuelling Spain's property boom
THEIR country is in economic ruin. Hunger is rampant. Inflation is dizzying, expected to hit one million per cent by year's end. Hospitals run out of medicine, equipment, even rubber gloves.
But as millions of Venezuelans wage a daily fight for survival at home, others have found a safe haven for their money across the Atlantic: Madrid's real estate market.
During a walk around Salamanca, an upmarket district of the Spanish capital, Luis Valls-Taberner, a real-estate investment adviser, pointed out on almost every street a building that he said a wealthy Venezuelan had recently acquired.
He would not identify the buyers. Some properties, he said, were purchased through investment companies based in Miami or elsewhere - but the money always came from Venezuela.
Madrid's housing prices surged about 17 per cent last year, the strongest rise among Spanish cities, raising the cost of living downtown to levels last seen in 2007, before Spain's construction bubble burst.
The Salamanca district, with its fashion shops and restaurants, has been at the heart of the boom, partly thanks to rich Venezuelans.
Many are opponents of President Nicolás Maduro, fleeing their country's political and economic turmoil. But some are linked to his government and perhaps worried about their futures in the face of international sanctions and social unrest.
"I now sometimes find myself sitting in restaurants in Madrid right next to people whom I wouldn't feel comfortable ever seeing in Caracas," said Leopoldo López Gil, the father of Leopoldo López, a leading opposition politician who has been kept under house arrest in Caracas, the Venezuelan capital.
In Salamanca alone, by the estimates of some Madrid real-estate companies, over 7,000 luxury apartments are now owned by Venezuelans.
While some of this Venezuelan investment money comes from associates of Mr Maduro's regime, the bulk is from families who became rich decades ago, in an economy whose main asset, oil, was nationalised in the 1970s.
"The big fortunes in Venezuela have always been connected among themselves and dependent on having a good relationship with the state," said Rolando Seijas, the Venezuelan founder of SNB Capital, a Madrid-based investment firm whose activities range from insurance services to an electronics component factory in southern Spain.
Unlike Mexicans and other Latin Americans now investing in Spain, he added, "We're here as survivors who know that the bridges to our home country have probably been burned."
In fact, some Venezuelans have become successful entrepreneurs in Spain, starting delivery services, opening restaurants and shops or taking over franchises, like that of the US fast-food chain Subway.
To escape Venezuela's crisis, Andoni Goicoechea left his medical studies and moved to Madrid, where he founded Goiko Grill, which now operates 44 burger restaurants across Spain.
In June, a private equity firm controlled by LVMH, the French luxury group, acquired a majority stake in the business, valuing it at 150 million euros (S$239 million).
"The priority for Venezuelans was to get a home here, but they're now feeling comfortable in Spain and branching out into all sorts of other businesses," said Mr Valls-Taberner.
In turn, self-exiled Venezuelan businessmen say they are encouraging their countrymen to join them in Spain.
"If we have to hire anybody here, we're always looking to add a Venezuelan," said Jorge Neri, whose assets in Spain include Cambio 16, a news publication.
"Even if we weren't all close friends in Caracas, we now share this feeling of having suffered the same tragedy."
Venezuelans have not only been buying Spanish real estate, but also building it.
In 2017, the Cohén family, owners of one of Venezuela's largest commercial real estate companies, opened the Sambil Outlet on the outskirts of Madrid, which bills itself as Spain's largest shopping mall.
The Cohéns are among the Venezuelans who moved to Spain around 2012, just as the government in Madrid was forced to negotiate a European banking bailout.
The timing allowed them to pick up Spanish assets cheaply: Sambil replaced a mall that went bankrupt during Spain's banking crisis.
This year, the Cohén group also bought a building in Salamanca that will be turned into a dozen luxury apartments.
Among Salamanca's other investors is Miguel Ángel Capriles, a relative of Henrique Capriles, a politician and leader of the opposition in Venezuela.
Amid mounting international pressure on Mr Maduro, Spanish authorities have been stepping up their efforts to monitor the inflow of Venezuelan money.
It's a difficult task, according to some lawyers, given that wealthy Venezuelans have always kept money overseas to offset capital controls and currency fluctuations.
"Spain has the obligation to control money inflows, but rich Venezuelans have long learnt that their savings should be in a strong currency, preferably in an overseas account," said Juan Carlos Gutiérrez, a Venezuelan lawyer who moved to Madrid last December.
In fact, the most high-profile detention to date of a Venezuelan in Spain was the result of an arrest warrant issued by Mr Maduro's government.
In April, Spanish police detained Claudia Patricia Díaz, a former treasury official who was also a nurse to Hugo Chávez, the Venezuelan president who died in 2013; and her husband, a former security chief.
The arrests were part of a money laundering case that included an investigation into the couple's purchase of an apartment in Madrid in 2015 for 1.8 million euros.
Given Spain's historical links to Latin America, many Venezuelans have used their family ancestry to claim a Spanish passport.
Several have relatives who fled Spain in 1939, after Gen Francisco Franco won the civil war, while others have tapped into a citizenship programme for descendants of Sephardic Jews expelled from the country in 1492.
Venezuelans are also among the main applicants to Spain's "golden visa" programme, which grants residency to foreigners buying a property worth 500,000 euros or more, a measure instituted in 2013 to help revive the crisis-hit economy.
"Madrid is becoming for Venezuelans what Miami once was for us - and remains for Cubans," said Seijas of SNB Capital, who also heads an investment association and estimates that about 280,000 Venezuelans now live in Spain, of whom about 120,000 have acquired Spanish citizenship.
Tomás Páez, a professor who studies immigration at the Central University of Venezuela, said Venezuelans now formed the fastest-growing foreign community in Spain, more than doubling their presence in the past two years.
Javier Cremades, a Spanish lawyer and chairman of Cremades Calvo y Sotelo, said his Madrid-based firm was representing about 40 Venezuelans applying for a golden visa.
Mr Cremades has also been at the forefront of Spanish efforts to help Mr Maduro's political opponents, like Antonio Ledezma, the former mayor of Caracas, who fled to Spain last November.
In July, Mr Ledezma was among an association representing Venezuelan residents in Madrid that called on Spain's new Socialist government to grant a special asylum status to those fleeing Mr Maduro's regime.
Opposition activists have posted videos showing well-connected Venezuelans enjoying the good life in Madrid. They say their targets include relatives of leading military officers and of government officials.
"We're talking about government officials and their families who reside in Spain, but whose salaries could never normally allow them to buy an apartment of 500,000 euros here," said Mr Cremades, the lawyer. NYTIMES