real estate

Spanish market cooling

Developers seek new opportunities in Eastern Europe and Latin America, including Panama.

Big companies are moving into the office, commercial, and industrial real estate markets.

LA PRENSA

Recession: According to the Spanish housing ministry, total home sales during the second quarter of 2007 fell 16% compared with the same period in 2006. 975424

As the real estate bubble in Spain deflates, Spanish investors and developers are looking for new markets that don't show the signs of exhaustion symptomatic of markets in Europe and the U.S. Some have already made inroads in Eastern Europe and Latin America.

Adolfo Olloqui, vice president of the Spanish Corporación Iberoamericana de Negocios, says "the recession in Spain has forced developers to seek markets with new potential, as is the case in Panama."

The Spanish real estate market clearly moved into a recession in 2007 after many years of vigorous growth.Ignacio Pindado, CEO of the consulting firm Grupo i, noted that "in 2006 the market didn't enjoy the same rhythms of absorption as earlier." In 2007 demand dropped and unsold houses sat on the market.

The global economic situation has contributed to the slowdown in real estate, as have climbing interest rates in Europe. The U.S. subprime crisis has affected Spain as well. According to Pindado, most people don't understand what's happening very well, "but they've been dissuaded from buying a home."

Small developers have been putting the brakes on some of their activities, said Javier Illera, the marketing director for Grupo i, while larger developers are opting for diversifying their business.

The G-14 group, one of the most import developers in Spain, has noted that the big real estate companies are trying to offset losses in the residential home sector by betting on the market for offices and commercial and industrial centers.