SPAIN - An oversubscribed share issue last week from Spanish property firm Realia suggests a partial recovery in market sentiment from last month’s jitters over asset sale irregularities at another property group.
Of the shares on offer, 52% went to foreign investors, 15.6% to local funds and 32% to retail investors.
"Sentiment is negative in Spain but not as negative as the international press seems to think it is," said spokesman Ivan Paja.
"There will be a slowdown but we don’t consider a significant slowdown for players, including Realia. We’ll sell the same number of units."
He acknowledged, however, the IPO’s timing was far from perfect.
"We planned it six months ago," said Paja. "It isn’t our fault that it’s taken six months to conclude."
Realia’s positive value assessment is based on the fact that only half of its property is in "jittery domestic residential", with the other 50% is in rental of offices – notably in the capital, Madrid – and shopping centres.
"The weight of rental will increase – probably in the next quarter," said Paja.
The firm has already made its first forays outside its domestic market with the acquisition of landbanks in Portugal and Poland.
But in the longer term, demographics will slow the Spanish real estate market considerably, according to Nils Kok of Maastricht University.
"The supply side is short-sighted but institutional investors’ long-term view spans 30 years. Demographics have a major impact not only on liabilities but on investment," he told IPE Real Estate.
According to Kok, immigration will be unable to mitigate a projected 40% decline in the labour market. The skills gap will likely be in the service sector – with a direct impact on the office market. Current immigration targets primarily construction and agriculture.
"The high-skilled, Spanish-speaking immigrant labour force available is limited," he said.
However, in the short term, Kok is optimistic for retail. The forecast population decline for retirees is 8%, comparable to that in the Netherlands. In addition, the growing population of retired immigrants tends to have considerable purchasing power.
"In the shopping space there’s a positive scenario," he said.