Skyward dreams • Chapter summary

fter years of struggling under the weight of the 2008-9 financial crisis, resulting in eight consecutive years of declining house prices, the Spanish real estate and construction sector began a period of expansion in 2014. Since then house prices have increased by 24% and annual house sales have risen by 13%.

A number of factors have contributed to this growth, not least falling unemployment, which was estimated at 14.02% in 2Q2019, a record low in the last decade. Growing financial stability and an increase in disposable income, coupled with rising foreign investment, helped perpetuate this. It is expected to continue growing into 2020, promising gains for the country, whose reliance on the sector comprises 5.8% of GDP and accounts for more than 6% of total employment.

Traditionally, the majority of foreign house sales were made to Europeans, namely German and British. Now, the number of buyers coming from outside Europe is also growing thanks to the Golden Visa in place since 2013, allowing any non-EU national bringing an investment of more than EUR500,000 to automatically be granted a Spanish residency permit. Foreign purchases amounted to 17% of house sales across the nation in 2018. As the tourism sector continues to grow, so too does the promise of activity in the real estate sector.

Another segment of increasing focus are logistics centers. With the growth of e-commerce and the automation of warehouses, demand for large logistic spaces has grown significantly. Goodman CEO Ignacio Garcia Cuenca notes that logistics warehouses are no longer merely warehouses but

Arather production centers reflecting a change in client demands. The growing demand for logistic and residential spaces, and the scarcity of supply in Spain, translates to growth in the construction sector, increasing value added activity by 3.8% in the last year alone. However, when asked about the sector’s challenges, a common criticism that emerged from interviews with construction companies included the rising cost of materials and the difficulty with which licensing from the public authorities are awarded. In this sense the public sector often hinders rather than helps construction companies looking to increase their activity across the nation.

Internationally, the presence of Spanish construction companies has also seen growing opportunity. According to Lantania’s Federico Avila, it was the 2008 financial crisis that pushed Spanish companies to look for business in other markets. Most notably, activity has grown in Latin America and the Middle East. For example, the large-scale project of building infrastructure in Saudi Arabia, between Mecca to Medina, was one by a consortium of 12 Spanish construction companies.

In spite of the sector’s success in recent years, its continued growth has been put into question by external factors, including the government’s ability to create a stable environment for construction and real estate companies to thrive, as well as growing political instability including the Catalan region’s demands for independence. Whether or not this will result in a slowdown of growth or be overcome by efforts of the public and private sectors is yet to be determined. ✖