Since mid-2022, the real estate market for large-asset transactions has been going through an unusual period. After the European Central Bank (ECB) started raising interest rates which are currently at 3.75% – owners land they stopped their liquidationA phenomenon known in the industry as “wait and see” as potential buyers prefer to wait to see if they can invest more cheaply.
Right now, 20% difference between what sellers want and what buyers are willing to payAccording to Antonio de la Fuente, managing director of the Corporate Finance department of consulting firm Colliers during the Madrid Real Estate Show (SIMA).
Federico Bros, head of the M&G fund in Spain, believes this will be delayed in the coming months. “Unless the rate hike ends, the returns demanded by investors will not stabilize. All forecasts point to a weak first half, but will last all year. Operation volume fell 35% in the first quarter.
Despite the uncertainty, Antonio de la Fuente believes that those who have not been able to invest in recent years due to high prices, now is a good time to do so. family office (family cars) and private investors. “This is a good time to make long-term investment decisions where there is no risk of lack of demand.as in rental housing” commented.
Investors took advantage of the Madrid Real Estate Fair to request measures from the central government that allow them to increase their operations. Mariam Martín Ferreiro, managing director of the Víveme management company, complained: 25% of the sales price of a newly built house is tax., something that has an impact on the final selling price. You can go to much lower tax rates,” he said.
In terms of taxes, too, investors have no incentive to build rental housing, said Jorge Pereda, director of housing at Grupo Lar. “Leases subject to the Urban Lease Law are exempt from VAT. This means that the VAT incurred during construction cannot be transferred to others and the parties will incur losses.”
Another issue discussed at SIMA was the maximum selling price of subsidized housing. As the maximum amounts are set by each autonomous community, some, such as Madrid, have not been updated for ten years. Luis Roca de Togores, head of the Valdecarros Compensation Board, asked the Manager to update the prices of the basic module: “If the cost of land and work is higher than the selling price, subsidized housing will not be built.. “No one does a project that will lose money,” he said.
Another claim put forward is that bureaucratic obstacles are removed and deadlines have a start and an end date. “Our job is to move capital as soon as possible. Currently, it is impossible to do this before 24-30 months. It’s no use betting on industrialized construction to save ourselves three months if we lose 10 or 12 while getting a building permit.“, explained David Botín, manager of real estate services at organizer Aedas Homes.