Industry insiders have warned that political instability resulting from the recent municipal elections could be a problem for the Spanish property sector.
During a roundtable discussion at the XI Medcap Forum (mid-sized companies) industry representatives said that the uncertainty and fragmentation of the Spanish political scene is already scaring off investors.
Spain held municipal elections on Sunday 24th May, ushering in the likelihood of left-wing coalitions in cities like Barcelona and Madrid, and a long process of political wrangling.
Ismael Clemente, head of the Merlin SOCIMI – a real estate investment fund – said a fund similar to his that has lost between €25 and 30 million in a recent financing operation. “This is money that will not be going in bonuses to their employees and by extension, isn’t taxable, leading to a loss in tax revenue,” he said. “The problem is that in Spain we don’t see the numbers.”
Cristina García-Peri, head of the Hispania SOCIMI, pointed out that international capital is “easily scared” and will not like the uncertainty thrown up by the election results, which could leave Spain harder to govern. “It’s not so much about who governs but about actually governing,” she said. “The problem is that the governability in many councils and regional governments is up in the air until the general elections [later on this year].”
She said that three new development projects in Madrid have already been halted because special permission is needed from the city council.