Sotogrande Property Sales

Spanish governments attempts to revive property market dismissed as futile
Friday, 19 September 2008

Government attempts to revive Spanish marketThe latest measures by the Spanish government to revive the country's flagging property market are unlikely to have much effect, it is claimed.

Spanish developers struggling to re-finance their debts will have access to a €3 billion credit line from the Institute of Official Credit, a government agency, if they put unsold property up for rent, it was announced.

The government is also introducing real estate investment trusts (REIT) to try to boost property investment.

But Spanish property expert Mark Stucklin believes these are 'half hearted measures' and do not go nearly far enough to help the industry.

'Given the hundreds of billions of Euros of debts accumulated by developers in recent years, fresh funding of €3 billion is a drop in the ocean that is unlikely to make much of an impact,' he said.

However the move has been welcomed by the developers associations who say it will help keep some developers going.
The other downside of the measures is that many of Spain's 500,000 unsold properties are holiday homes on the coast and they will not qualify for the credit scheme.

Opinion is divided as to what good, if any, the introduction of REITs will have. 'For a start, the timing couldn't be worse. In the present market most investors are giving Spanish real estate a wide berth,' said Stucklin.

'That said, Spanish REITs are unlikely to appear anytime soon, given the complexity of these investment vehicles, the legislative changes required to introduce them, and the slow pace at which the government is likely to move,' he added.

'All told, the government's new measures may do nothing more than give breathing space to a few favoured developers at the tax payers' expense.'