* Private families will be main investors in Spain in 2009
* Office market likely to recover first, opportunity in 2011
* 2008 Spanish office leases fall 35-45 percent yr/yr
* Banks to save firms from fire sales, market not distressed
By Ben Harding
MADRID, Dec 15 (Reuters) - Spain's super-rich will emerge as the key investors in its troubled property sector next year and would do well to take up positions in the office market, the head of consultants Cushman & Wakefield said on Monday.
Roger Cooke, Cushman's managing partner in Spain, said traditional investors like German property funds had the money but not the ability to open new funds in Spain, while private equity buyers were still waiting on the sidelines to swoop on distressed assets.
"I expect that in the early part of next year, Spanish private families will be the strongest investors in the market," he told Reuters in an interview in Madrid.
Spain's richest individuals, such as Amancio Ortega, the owner of Inditex, famous for its Zara fashion chain, have long targeted the property market and have a tradition of more hands-on involvement than others in Europe, who pass investment decisions to fund managers.
"They've got the money, yields have adjusted, they are not looking for really distressed levels of pricing, so there's more on offer," said Cooke.
Investment in smaller lots of up to 50 million euros would be the trend next year, as they are easier to finance and match the buying power of family firms.
Cooke added that office space was probably the best defensive bet in the downturn. "I suspect the office market will begin to return before the retail market. We haven't seen the last of retail sales problems, and the office market (in Madrid and Barcelona) is not oversupplied like it has been in previous cycles," he said, adding that office leases had fallen by 35 to 45 percent this year.
"I think the first half of 2011 will be quite an interesting time to be delivering a building."
Retailers' hesitancy to occupy new units and tenants pushing for rent cuts as consumer sales weaken, put pressure on shopping centre investments, he said.
STRESSED BUT NOT DISTRESSED
Spain's 10-year residential property boom was snuffed out this year by massive oversupply, rising interest rates and the credit crunch, while the commercial business caught the same cold sweeping global property markets.
"There is a complete lack of confidence, and that applies across the board, whether it be residential, development, occupational. The whole Spanish market is very uncertain." The sector racked up billions of euros of debt in a wave of ambitious expansion, and Cooke said funding that debt while revenues shrivelled had turned almost every Spanish property firm into a stressed, though not distressed, seller of assets.
"Pretty much all have an interest in a sensible sale of assets. We are talking, quite literally, of survival in many cases."
However, the market would not degenerate into a fire sale because banks would seek to avoid loading their balance sheets with toxic debt, he said.
"The banks are not letting them sell at any price. If you get to a situation where the banks push too far, and they don't survive, is anything served by that?
"Whether we see more distressed sales next year all depends on the attitude of banks, regulators and even politicians."
Spain's biggest property firm, Metrovacesa, was forced to sell HSBC's London headquarters back to the bank earlier this month, recording a 250 million pound ($376 million) loss on its 838 million pound investment after it failed to refinance a loan secured on the Canary Wharf tower. (Reporting by Ben Harding, editing by Will Waterman)