As fears grow about Spain’s creditworthiness, so does the risk-premium investors demand on Spanish assets like government bonds and real estate.

International investors are demanding higher yields for commercial property in Spain, implying prices have further to fall. The same might be true of residential property.

“International investors no longer accept a yield of 5.9pc on prime office space on Barcelona’s Diagonal or Madrid’s Castellana, as they did a few months ago. Now they demand much higher yields, close to 7pc.” That was Luis Martín, President of property consultants BNP Paribas Real Estate, talking to the Spanish daily La Vanguardia, and it implies that prices still have to fall another 10-15pc.

“Being able to buy 2 buildings of equal quality, with first-class tenants and equal yields in Frankfurt, London, Madrid or Barcelona, they don’t hesitate in ruling us out,” Martín went on to explain. “We have a lot of international investors looking a property, but they are not interested at the price vendors are asking.”As a result, the market is paralysed.

Commercial property prices are already down 46pc from the peak, reports La Vanguardia. Another 10pc will take the total decline to 56pc, which may be enough to entice foreign investors back into the market for prime office space.

If international investors are demanding lower prices and higher yields on commercial property to compensate for what they see as an increasing risk, that’s hardly good news for the residential property market.