In today's article we are going to describe and study how the real estate sector in Spain and its actors. You can understand which are the types of companies and needs they are going through. To do this, we will begin by analyzing how the crisis in the real estate sector in Spain affected and what is the trend for this year 2019. We want to develop this topic after studying several clients who need developer loans. We hope that at the end of the article you will be able to understand a little better the current players in the sector as we understand them.
The real estate sector in Spain
The crisis was so serious that sometimes it even hurts to remember it. In 2008, a sector that was the workhorse of Spain's boom years blew up. Economic recession, falling prices, the end of great promotions, large construction companies began to fall, And so we could go on long and hard. A time that oddly enough we should not forget. We must not forget why one learns from history and according to various sources, it seems that the sector has done so.
According to various industry sources, the forecast for the year 2019 is from a real estate sector in expansive cycle. Contrary to what happened in the past, this growth is based on the improvement of the Spanish economy. In the past, the improvement of the economy was based on the growth of the real estate sector.
According to Bankia studies the sale grows by fifth consecutive year. As in the general economy, the housing market in Spain is cyclical and goes through different stages over time and this year it will be installed in the Expansion market.
There are four distinct phases:
Source The confidential based on CaixaBank Research based on data from the INE and the Ministry of Public Works. Note: excludes the 2010-2011 period due to the effect of tax incentives
Therefore the future of the sector is promising, but what has changed compared to the past?
Changes in the sector. from yesterday to today
There are two major significant changes compared to the last expansive phase of the real estate market. One of them is that home prices rise by area and not generally throughout Spain and the other is the Lack of funding for promoters
According to various industry sources certain areas of Spain are concerned where house prices have skyrocketed. They worry above all Madrid, Barcelona, Palma, and certain coastal areas where the lack of new construction has caused housing and rental prices to skyrocket. The growth pattern of these areas it's completely different to the rest of Spain where in certain places it is still stable or even still decreasing.
lack of funding has caused that the builder's profile nowadays be a lot more solvent and with projects with some minor risks than in the bubble years. The sector has become much more professionalized.
How does the lack of financing affect
Promoters have had to reinvent themselves over the years. Many of them have passed through their particular desert and have even disappeared during these years. Large, medium, and small construction companies fell, their size was not important, but their debts.
Those that have survived or those that have emerged again they have had to reinvent themselves and open up to another type of financing, not just the bank.
From Alter Finance we have realized the types of construction companies that currently exist and what their needs are:
1 – They can buy cheap land but they have no financing
The banks nowadays they don't get involved anymore in this sector as cheerfully as before. Now they do not grant credits until the construction company has sold a certain number of homes and in view of this scenario the builder faces the following dilemma:
“ I have access to land purchase opportunities at a very good price but I do not have sufficient own resources for the purchase of the land, project and licences..”
2 – They have the land but not the financing to start
there are certain regulatory impediments that make banks they cannot finance real estate projects in the project and/or execution phase. Greater control and demands on developers prevent projects that lack significant capital contributions from starting up. ANDThis makes it impossible for many promoters to not be able to start the project.
So whatever the situation of the companies, from Alterfinance we can affirm that the Alternative financing for the real estate sector has innumerable benefits. Resort to non-bank financial solutions like bridging loans for developers Avoiding the common problems of construction financing is a trait of today's companies.
Non-bank financial solutions are the most affordable alternative for your real estate or construction project and at Alterfinance we can provide you with the help you need. We are experts in non-bank financing, studying each particular case and offering adequate solutions to the needs of our clients.
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