Spain Property Investment to Beat 2007 Peak

Spain Property Investment to Beat 2007 Peak

Spain Property Investment to Beat 2007 Peak

Real estate investment in Spain is continuing the recovery that began in early 2014 and this year is on track to beat its annual record of over 10 billion euros reached in 2007.

This is no mean feat considering the battering the industry took when a decade-long property bubble burst, depressing prices by up to 40 percent at the height of the crisis and attaching a “toxic” tag to many assets languishing on the books of Spanish banks.

Consultancy firm CRBE expects real estate investment to rise to around 12-14 billion euros in 2015, with the number of transactions also outpacing pre-crisis levels.

So what’s driving this investment boom? Well a couple of factors could be at play:
• Large acquisitions by real estate funds
• Increasing access to financing

In the first half of 2015, investment in Spanish real estate totalled 8.434 billion euros, more than double the figure registered a year earlier.

SOCIMIS MAJOR PROPERTY PLAYERS

One of the biggest operations in the first half of this year was the 1.79 billion euros acquisition of property management company Testa by the SOCIMI Merlin Properties.

SOCIMIS are listed real estate investment trusts with significant fiscal advantages, promising high yields and a relatively conservative approach to taking a punt on Spain’s property recovery.

Over the last two-three years, SOCIMIS have become the preferred arrangement for large foreign investors with a medium to long term view, targeting the residential, office and commercial sectors in big cities like Madrid and Barcelona.

Easier access to financing is also rekindling the demand for housing across Spain. Banks are granting mortgages again and current rates are at the lowest they have been for some time.

Euro weakness over the past few months has also fuelled interest from buyers from the UK and the Nordic countries, mainly focused on Spain’s costas and islands.

 

NEW URBAN DEVELOPMENTS IN VOGUE

One of the more interesting features of the property market revival is the resurgence of urban developments like the Canalejas project in Madrid. Top Spanish businessman Juan Miguel Villar Mir is behind this idea which has attracted both domestic and overseas investors.

Buildings and commercial spaces in the emblematic Canalejas square and surrounding area are changing hands rapidly as property investors and commercial firms vie to participate in the initiative.

These kinds of projects are also fuelling strategic alliances between international investors and local partners – overseas cash meets domestic know-how!

With Spain’s economy forecast to outpace its eurozone peers in the next two years, and property prices still well below pre-crisis levels, investment in the real estate sector will continue to grow.

For information on investment in Spain, please contact corporate law firm Argali Abogados.

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