Though things carry on much as normal from an internal point of view, many international investors may start to regard Spain’s three month-long (and counting) stint without a government as a sign of worrying instability. Sectors of the Spanish economy that benefit most from foreign investment are therefore at risk if the deadlock isn’t resolved by a new election - which is looking the most likely outcome of the current political freeze.
It is the Spanish real estate and construction industries that have most to lose if foreign money is directed to other countries perceived as more stable than Spain. Between them, these two sectors accounted for a third of foreign investment in Spain in 2015, bringing in a joint total of €7.7 billion. This figure’s wider context is a property market in Spain that’s returning to rude health following the recession: international investors are attracted by cheap prices and an economy that has been growing quarter-on-quarter for the last couple of years.
If asked, Spaniards are likely to be disparaging and gloomy about the current state of their country, perhaps citing corrupt politicians, mass unemployment and divisive identity politics as factors holding back progress. But despite all its recent upheavals, Spain is becoming more and more popular to the rest of the world, and nowhere is this more obvious than among international investors putting money in Spanish property. According to recent figures released by CBRE - an international real estate advice and research company - Spain is now the sixth most attractive destination in the world for real estate investors, up from 11th place in 2014.
Will international property investors start to think twice about Spain if its political freeze continues indefinitely? At the moment they have little reason for increased aversion: estate agents and experts report that Spain’s property market has been largely unaffected by the three-month political stalemate, and the country’s economy is still stable.
But foreign investors need developments to invest in, and the care-taking Spanish government cannot authorise any costly long-term construction projects until the present deadlock is broken. At least in this respect, the international property investors’ community will be hoping that, in Spain, things return to normal as quickly as possible.source surinenglish