The Spanish government's attempt to revive its deflating property market by introducing tax-transparent real estate investment trusts (REITs) will not work unless room is made for the major property companies, Testa CEO Daniel Loureda Lopez has said.

The Spanish government's attempt to revive its deflating property market by introducing tax-transparent real estate investment trusts (REITs) will not work unless room is made for the major property companies, Testa CEO Daniel Loureda Lopez has said.

Speaking to PropertyEU last week at Barcelona Meeting Point, Lopez said Spanish legislation currently restricts companies from holding more than 5% of the shares in a REIT. 'We don't see any REITS being created with that requirement. The limit has to be pushed all the way to 40-50% so that big companies can push through to create REITS, buy the assets and manage them,' he said.

Testa Inmuebles en Renta is one of the larger listed property groups in Spain. It has a market capitalisation of EUR 1.8 bn. Reyal Urbis is just behind in terms of market capitalisation, while the largest Spanish real estate firm Metrovacesa has a market capitalisation of EUR 3.8 bn.

Lopez said that large companies have traditionally been the driving force behind the country's property groups. 'Traditionally, it was the banks like Santander, now it is construction companies, such as Grupo Sacyr Vallehermoso with Testa.'

The Testa chief said talks with the Spanish government are ongoing about changing the rules on maximum shareholdings. 'If there isn’t a big shareholder to push the whole project through, we don't see REITs coming. So this has to change,' he said.