Country Report Spain Q4-2018
“We are currently experiencing two different realities”

Dear readers,

following the negative stock market trends in the third quarter, they fell even further in the fourth quarter. When you consider those developments alongside the past year in real estate, then it becomes clear that we are currently experiencing two different realities. The Spanish real estate market remains in very good shape. The transaction volume has increased again compared to the previous year, demand remains high, and the overall impact of the conflict in Catalonia is hardly noticeable. However, we should bear in mind that the REECOX acts as an early indicator. If the current political uncertainty does not end soon, then sooner or later it will have an impact on our industry. Because political instability is poison for investors!

Maria Teresa Linares Fernández

Contact

Ms María Teresa Linares Fernández
Managing Director Spain

Phone: +34 618 109905
E-mail: Maite.Linares@Deutsche-Hypo.de

Spanish Real Estate Economy Index declines further

Following the fall below the 200 point mark in the third quarter, the Spanish Real Estate Economy Index did not recover in the fourth quarter of 2018 either. Instead the index declined further: at the end of the year it reached a level of 191.8 points, which represents a decrease of 2.4 % compared to the previous quarter. However, the drop in the fourth quarter was lower than in the rest of Europe. Be that as it may, 2018 as a whole was characterised by almost constant negative development – following the highs of 2017.

Clear drop in leading share indices, business climate worsens moderately

All the market variables contributed to the current trend in the Spanish Real Estate Economy Index – although there were significant differences between the individual indicators. The IBEX 35 saw a further clear drop: It declined by 9.0 % compared to the previous quarter, to 8,539.9 points, a level not seen since June 2016. The real estate index ES BCN 5 Property displayed a similar development: It decreased by 9.4 % compared to the previous quarter, to 911.2 points, which was equal to the level at the end of 2016.

Meanwhile, the business climate only declined slightly in the fourth quarter, cushioning the negative developments of the other input variables. The assessments of real estate experts as reflected by the Economic Sentiment Indicator (ESI) resulted in an index value of 104.1 points at the end of the year, a fall of 1.3 %.

Synopsis of Input Variables and Real Estate Economic Situations Q4-2018

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q3-1810/1811/18Q4-18Delta (%)
Q3-18 / Q4-18
DE
dodo
do
do
eq
do
312.8
306.0
308.2
298.2
-4.7
GB
dodo
do
do
eq
do
216.5
213.1
206.8
204.9
-5.4
PL
eq
do
eq
eq
dodo
188.3
185.6
188.8
187.5
-0.4
NL
dodo
dodo
do
eq
do
199.3
195.3
194.8
191.3
-4.0
FR
dodo
dodo
dodo
eq
eq
236.2
229.7
228.6
223.7
-5.3
ES
dodo
do
do
eq
eq
196.4
195.8
196.4
191.8
-2.3