A new expansive real estate cycle begins in Spain

Spanish real estate sector is entering a new phase after the pandemic
The real estate sector is entering a new phase. A cycle that is being driven by a solvent demand that emerged after the announcements of the vaccines approval. A cycle that will be characterised by a limited and mostly off-plan supply of new housing, by greater discipline in the granting of developer loans and mortgages, and by a wider differentiation between second-hand and new offers, the latter with more and better features.

We are on the verge of an unprecedented economic recovery in Spain: after the collapse of GDP in 2020 due to the pandemic, the country has firmly embarked on a long term path of improvement. In fact, GDP has entered a positive phase for the first time after the first state of alarm, advancing by 2.8% quarter-on-quarter in the second quarter of 2021.
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This positive figure confirms the latest forecasts for Spanish GDP growth of 6.2% for 2021 and 5.8% in 2022, according to the latest projections made last June by the Bank of Spain.

And, on this occasion, the economic recovery will also be boosted by the largest deployment of economic stimuli ever launched by the European Union: an injection of capital through the Next Generation funds, which Brussels began to distribute this summer. This amount will undoubtedly be a further stimulus for the Spanish economy and for all productive sectors, including real estate.

These macro circumstances reinforce the forecasts for the residential development sector, which enjoys healthy conditions: an industry made up of fewer but much more solvent players; highly professionalised management; greater discipline in the financial sector; and very solid and solvent demand.

The pandemic has encouraged the search for new construction. A demand that requires housing with very well-defined post-completion characteristics: energy efficiency, sustainability and higher performance. Nowadays, homebuyers want versatile surfaces, a garden or terrace, a room that allows them to telecommute, natural light, communal areas and a quiet location, but with access to all services.

This strong demand will be one of the levers of this new expansive cycle in the real estate market. Moreover, this demand is accompanied by a savings rate of Spanish households that reached a record high in 2020: 14.8% of their disposable income (just double that of 2019) and the highest since 1999. History tells us that a traditional outflow of these savings is destined for investment in real estate assets as a safe haven. And even more so when inflation begins to appear and does so in an environment of historically lower interest rates, an aspect that will also boost the purchase of housing for those who require external financing.


In this new scenario we will face, among others, two major challenges: on the one hand, the process of transformation of the traditional construction model, which is artisanal and inefficient and with a skilled labour force that has been significantly reduced. It will be necessary to promote a process of industrialisation of construction. A radical paradigm shift is needed to meet the needs of the future.

Secondly, the need to provide housing (rented or owned) for the younger generations, who today have serious difficulties in accessing it. A generation whose savings capacity was limited by the 2008-2014 crisis and, subsequently, by the recession caused by Covid-19, which has prevented them from being able to access the real estate market, especially in large cities. Without young people we have no future, and to be able to create a home for them we need housing. On this point, a more efficient and direct public-private partnership is essential.

We are therefore inaugurating a new cycle that we are going to pursue with determination and commitment, with the aim of contributing to satisfying society's housing needs and expectations, and generating wealth and well-being for the country. We are ready to provide quality, efficient, sustainable and modern housing, as well as to capitalise on the investment opportunity that this new economic scenario offers us. We are starting an exciting real estate cycle.
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