Spanish real estate equities: Soft but bumpy landing
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Spanish real estate equities: Soft but bumpy landing

Michiel Rang, senior managing director, ING Real Estate Finance.

Get a grip

Between April 20 and April 27, the Spanish Stock Exchange Index, IBEX-35, slid by 4.4%. This is the second-biggest loss in a week in the year to date for this index, which comprises stocks from the 35 most liquid companies traded on the continuous market.

Many commentators believe that the recent development signals the end of the real estate boom in Spain. For the past few months, analysts worldwide had been drawing attention to the listed Spanish property and real estate companies, claiming that there was a stock overvaluation. Although four out of 19 had skyrocketed, attaining growth rates above 100% in a single year, another 10 rose between 30% and 100%.

Spanish real estate sector share prices

Source: Bolsa de Madrid/Euromoney

After these figures, everybody seemed to expect a downturn, and the only question repeated in the market concerned when it would happen. Although it remains to be seen what the correlation between the financial and real sector is, there are some factors that might prevent a financial correction of property companies from expanding its effects to the residential sector.

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