8 February 2018 – Cinco Días
The official results just keep on giving to the property developer sector and, therefore, to the banks as well. Sales are growing, the cranes are multiplying and credit is flowing; and best of all, according to the experts, all of these things are happening in an increasingly more homogeneous way, in other words, in more places around the country.
Since we are dealing with a market in which the laws of supply and demand apply, house prices are also moving upwards, but in a much more moderate way than in the past. Moreover, there are no signs whatsoever of a slow down. So much so that the property developers and banking experts agree that, unless we are hit by an economic catastrophe, the current cycle may continue for another five years, until 2022.
Currently, the most worrying thing is that this rally in prices may come to an end and lead to a situation involving the reemergence of the ghosts of the past. According to the Executive Director of Companies at CaixaBank, Luis Cabanas, speaking yesterday in Madrid, “We cannot allow another bubble to occur in the real estate sector”.
Cabanas made that reflection on Thursday in the context of the third edition of the Meeting of Real Estate Financing in Madrid (Efimad), organised by the property developers of Madrid’s trade association (Asprima) and CaixaBank. In addition, the President of that business organisation, Juan Antonio Gómez-Pintado, regretted that during the years of crisis, the legislator did not take advantage of the opportunity to reform the legislation in order to avoid the problems inherited from the former boom.
Above all, he highlighted the slowness of the process to develop land, the inefficient management of licences and the excessive “judicialisation” that exists in the sector, which increases legal insecurity in an alarming way. Carlos Casanovas, Corporate Director of Real Estate at CaixaBank, insisted that the fundamentals of the economy are solid and expressed his desire for players to continue being cautious “even though things are now going better”.
In terms of the challenges ahead, the property developers Aedas and Aelca agreed that the professionalization of the sector is now a reality, as is the industrialisation of the construction process. The risks include making the same mistakes again, such as buying very expensive land because of expectations of future house price rises.
Original story: Cinco Días (by Raquel Díaz Guijarro)
Translation: Carmel Drake