Spain’s Property Development Sector Will Continue its Expansive Cycle for the Next 3 Years

30 May 2018 – Eje Empresas

The CEO of Neinor Homes, Juan Velayos, has highlighted that the “healthy and strong bullish cycle” that the property development market is experiencing at the moment, will result in a “positive” performance over the next three years, before reaching “a situation of stability lasting many years”.

The main challenge (facing the market) is to “become more predictable”, in aspects such as the time it takes to obtain licences, a problem that may be resolved because “the market is going to continue helping”, according to Velayos.

The Director of Strategy and Investment at Aedas Homes, Sergio Gálvez, explained that the situation in the property development sector is “unique” given that it is recovering from “a very low level”.

The Executive President of Inmobiliaria del Sur, Ricardo Pumar, agrees that “the macroeconomic forecasts point to a very good situation for the next three years”.

Pumar stressed that the recovery is “widespread” but he has opted to facilitate access to housing for young people to “boost the whole sector”.

The President of Quabit Inmobiliaria, Félix Abánades, predicts that the expansion cycle “will last for six years” and he agreed that there will be “significant increases in prices” over the next three to four years.

The market for property developers is clearly expanding and growing with a very “solid” demand, he added.

Investors back the property development sector

The Partner at the consultancy firm Deloitte, Alberto Valls, highlighted that “investor appetite continues” but is still a long way off the levels seen before the economic crisis.

“There are barriers to entry, such as capital, the lack of available land to build on and the limited production capacity”, he said.

He said that half of the property development market is concentrated in Madrid, Barcelona, Alicante, Málaga and Valencia.

The Spanish sector is more fragmented than those of other European countries, given that the top five property developers account for just 6% of the market, whereas in the UK and France, they represent around 40%.

Nevertheless, Valls pointed out that “the trend is towards corporate concentration and the stock market debut of new players”.

Original story: Eje Empresas

Translation: Carmel Drake