4 November 2015 – El Confidencial
An air of tranquillity has returned to the offices of the large international funds following the uncertainty that was unleashed on 24 May. Then, the success of groups linked to Podemos in the municipal elections caused many institutional investors to rethink their positions in our country, they slammed on the brakes and chose to move cautiously, as they awaited developments.
This attitude affected the rhythm of several sectors that were enjoying a real boom at the time, including the real estate sector, where large buyers were responsible for driving the recovery. The electoral calendar meant that they had no choice, with the upcoming regional elections in Cataluña (which Junts Pel Sí was trying to hijack as a referendum on independence) and the general elections scheduled for the end of the year, the second half of the year was set to be very quiet. But the latest election polls are changing everything.
The decline of the group led by Pablo Iglesias and the growing expectations surrounding the alliance between PP and Ciudadanos has given the large international funds reason for hope. The results of the opinion polls are showing them that our country’s politics will continue in line with the reforms undertaken in recent years and, above all, that it will not fall into the hands of a leftist coalition involving a Government seeking to resemble the Greek Syriza party.
As one source in the sector explains “now that Podemos is becoming weaker, our concern regarding the country’s political risk has decreased siginficantly – any scenario involving stability is welcome. In other words, the change in the perspective of the international funds has not been driven so much by the rise of PP-Ciudadanos, but rather because the decline in support for Podemos significantly reduces the risk of instability”.
In fact, to say that overseas investors have a preference for one party or another is, in the opinion of the professionals in the sector, completely incorrect. “Investors are not saying ‘I want this party or that party to win’, overseas investment in real estate has been the same under the PSOE and the PP. The good news now is that Ciudadanos is no longer regarded as a risk”.
Several investors specialising in the real estate sector acknowledge that this change of perspective is being felt by the day, a domino effect that has been accelerating with the wave of polls in recent weeks, all of which are marked by the common denominator of the decline of Podemos with respect to the rising trend that started with the European elections and peaked with the municipal elections, and the consolidation of Ciudadanos as the great emerging force.
Tensions continue in Cataluña
(…). The only exception to this rule is Cataluña, “where the separatist tensions mean that there is a great deal of uncertainty”, says one M&A expert. “I have decided to delay any decisions until next year, it only means waiting a few more months. What difference does that make?”.
Just as there is a general feeling of calm amongst the large international investors regarding Spain in general, their views regarding the future of Cataluña are divided. Many are convinced that independence is a utopia that will never actually happen, but there are others that regard it as a credible option, in which case they prefer to wait and see.
The direct consequence of these fears, besides the delay in terms of closing operations, is the downward pressure on the prices of those operations already underway. Similarly, the return of confidence is a revulsive in favour of the vendors, which still have almost two months to reach agreements (before year-end), but now with the factor of economic stability in their favour. Provided that is, that the opinion polls are correct.
Original story: El Confidencial (by Ruth Ugalde)
Translation: Carmel Drake