New expansive cycle Spain

The real estate sector is entering a new phase. A cycle driven by solvent demand that emerged after the announcement of vaccine approvals. A cycle that will be characterized by limited supply of new housing — predominantly at the construction stage — stricter discipline in granting developer loans and mortgages, as well as clearer differentiation between secondary and new housing, the latter with better characteristics.

Spain stands on the threshold of unprecedented economic recovery: after the GDP collapse in 2020 due to the pandemic, the country has confidently embarked on a long-term path of improvement. GDP entered positive territory for the first time after the first state of emergency, adding 2.8% quarterly in the second quarter of 2021.

This positive indicator confirms the latest forecasts for Spain’s GDP growth: 6.2% in 2021 and 5.8% in 2022, according to the Bank of Spain’s June projections.

This time, economic recovery will also be supported by the largest deployment of economic stimulus in the European Union’s history: capital injection through Next Generation funds, which Brussels began distributing in summer. This amount will undoubtedly become an additional stimulus for the Spanish economy and all productive sectors, including real estate.

These macroeconomic circumstances strengthen the forecasts for the housing construction sector, which is in healthy condition: the industry consists of fewer but significantly more solvent participants; management is highly professionalized; financial discipline is strengthened; demand is very stable and solvent.

The pandemic stimulated the search for new housing. Demand requires housing with clearly defined characteristics: energy efficiency, sustainability, and high operational performance. Today, buyers want versatile spaces, a garden or terrace, a room for remote work, natural lighting, common areas, and a quiet location with access to all services.

This sustainable demand will become one of the levers of the new growth cycle in the real estate market. Moreover, it is accompanied by a record savings rate among Spanish households, which reached 14.8% of disposable income in 2020 (twice as much as in 2019) — the maximum since 1999. History shows that the traditional direction for deploying these savings is investing in real estate as a safe haven. Especially when inflation begins to manifest under historically low interest rates — a factor that will also stimulate home purchases for those who need external financing.

Challenges

In the new conditions, we will face, among other things, two main challenges. First, the process of transforming the traditional construction model, which remains artisanal and inefficient, while skilled labor has significantly decreased. It is necessary to promote the industrialization process of construction. A radical paradigm shift is required to meet future needs.

Second, the need to provide housing (rental or ownership) for young generations who today experience serious difficulties obtaining it. A generation whose savings capacity was limited by the 2008–2014 crisis and, subsequently, the COVID-19 recession, which deprived them of the opportunity to enter the real estate market, especially in large cities. Without youth, we have no future, and to create a home they need housing. In this matter, more efficient and direct public-private partnership is extremely important.

Thus, we are opening a new cycle that we intend to lead with determination and responsibility, striving to satisfy society’s housing needs and expectations, as well as create prosperity for the country. We are ready to provide quality, efficient, sustainable, and modern housing, as well as take advantage of investment opportunities that the new economic scenario opens. A new exciting cycle in real estate begins.