Spanish Property Market
The real estate market in Spain has entered a stalemate, as has the rest of the economy in most European countries, although it is expected to resume activity in 2021, as the coronavirus crisis follows its natural course.
Regarding domestic demand, the APCE (Association of Promoters and Constructors in Spain) has already put forward a demand to the Government, together with other incentives, for the reduction of VAT on newly built property from an average 10% in most areas to 4%.
This could be one of the extraordinary measures that are now being implemented by the Spanish Government, to prevent that all new housing promotions suffer the consequences of a long term crisis.
VAT is applied to the property so the reduction would benefit all buyers, regarding their nationality.
The general optimistic belief between promoters is that Covid-19 effects on the newly built property market would only be a delay in launching new promotions, but they don´t foresee significant reductions on the price.
The foreign holiday property market might be subject to high and low fluctuations as the crisis progresses during this year, once the movement restrictions are lifted.
Is the Spanish property market improving in 2021?
According to the European Commission, the growth prediction for the Spanish economy in 2020 is 1.9%.
The unresolved political issues to be dealt with by a fragmented Parliament and the demands in Catalonia and the coronavirus (Covid-19) situation are factors that might influence the already weak global economy, in Europe and the rest of the world.
After posting the most drastic fall in GDP in its history in 2020, Spain is forecast to be on track for growth of 4.4% in 2021. With the world still hanging on the pandemic’s next move, it is likely to be late in 2022 before the Spanish economy finds itself back on a pre-covid footing.
Investment in 2021
Activity is projected to pick up in 2021, with investment volumes reaching somewhere between €10,500 and €12,000 million. Alert to any opportunities that may arise, a broad spectrum of ready investors will sustain demand across all sectors.
Continued growth in 2021, driven by the strong imbalance between supply and demand. The biggest firms will continue focusing on consolidation, contributing to build a larger institutional market.
During June, several Spanish financial institutions managed to remove these bad debts from their balance sheets. Banco Santander is negotiating with the Canadian fund CPPIB and Cerberus to sell assets worth 1.5 billion euros. CaixaBank also commissioned the consultancy firm KPMG to sell a portfolio of non-performing mortgages on 4,500 properties valued at 576 million euros.
While Santander is trying to sell €1.5 billion in NPLs, the platform it shares with the Swedish fund Intrum, Deva Capital, has bid for a set of bad debts with a gross value of 1.1 billion euros, put up for sale by the Italian bank Intesa Sanpaolo.
The asset manager Hipoges bought a majority stake in Axis Spa. The Italian servicer has more than €2 billion in assets under management in residential, commercial and consumer loans.