It is a clear fact that foreign capital is strongly committed to the recovery of the real estate sector in Spain. Fundamentally since 2014, several firms have entered in Spain through the purchase of office buildings, shopping malls or logistics complexes. Subsequently, several funds landed in SOCIMI’s that have raised more than 3,000 million to invest in tertiary assets. In recent months, these international companies have taken the leading role in the purchase of land and residential development in Spain, looking for the returns offered by a market that is waking up.

In the last year these foreign funds have entered with force to the residential business. The soil is still cheap compared to the period before the crisis. In addition, there is confidence in the recovery. These funds are interested in buying land because they have to meet their high capital returns, of around 20%, and it is in the residential where they are now finding these returns.

These are safe investments for this foreign capital, because there is a lack of new housing after the break due to the brick crisis started in 2007.

Funds have become in recent months to buy land or reactivate housing, unlike other segments such as offices or shopping centers, where competition is greater. They have injected capital to companies stopped since the crisis and have relied on local knowledge of Spanish partners. It is essential to consider that there are sectors, such as tourism, which are always key to the Spanish economy. Others, such as finance or real estate, are once again gaining prominence and have been among the most active in 2016. By type of investment, foreign direct investment has greatly changed its sectoral composition. There’s a notable increase from 2012 investment in real estate, which in 2015 represented 12.9% of the total productive foreign investment, which has increased to 27.1% in March 2016.

Real estate investment in Spain will close the year marking a new high. In the absence of a month to finish the exercise, the data indicate that it will exceed 13.9 billion euros, 8% more than in 2015 and 45% more than in 2014. The SOCIMI’s have played the leading role, the main operations in Spain and represent 40% of the total investment. Although the national investor shows increasing enthusiasm (its weight has increased five percentage points compared to last year), so far more than 37% of the investment has come from abroad.

For foreign investment, we offer legal assistance regarding funds from other countries for investment in real estate and business. Our team has extensive international experience and cooperation agreements with international firms. We are also members of the Association of International Property Professionals (AIPP).This allows us to offer detailed advice in the field of internationalisation by providing services such as: International Trade Consulting, recruitment, formation of companies, subsidiaries and branches and Advice on tax issues

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The Government of the Balearic Islands has recently published the latest developments in reference to the tourism law in the Balearic Islands. The Balearic Government aims to guarantee the coexistence between tourists and residents in the islands and move towards a sustainable tourism model, which will give neighboring communities the appropriate instruments to solve any problems of coexistence.

The insular consells of Menorca, Ibiza and Formentera will decide the areas of these islands where the tourist rental of houses will be allowed, as in the case of the Consell de Mallorca. Meanwhile, the Palma City Council will establish on its own in which neighborhoods the city allows this type of rent. In the same way, it has been informed of the beginning of the processing of the preliminary bill that will regulate the tourist rental, in order to establish a real limit of tourist places, to order the tourist rental and to guarantee the access to the house.

Among the new exceptions are deleted in the exchange of places that had so far, everyone who wants to open a tourist establishment or commercialize tourist stays in a home must purchase the seats in the corresponding insular bag, provided there is available. In the case of multi-family housing, tourist places will be acquired for a term of 5 years renewable, provided the residential area in question is considered suitable for the marketing of tourist stays, according to the insular or municipal regulations. In addition, new commercialization of tourist stays in homes located on rustic land will be forbidden.

In all cases, housing must comply with a set of minimum legal, urban, sustainability and energy efficiency and tourism quality requirements. The web pages that sell tourist stays can only announce those houses that are legally registered. The Govern will reinforce the service of inspection of the rent and will raise the amount of the fines.

This context, in which there are very few new housing developments and tourist rental is triggering the quote of used floors. Both factors form a combination that explains that Balearics is the community in which the prices of the floors increase the last year, according to the data that yesterday made public the National Institute of Statistics (INE).

If you are thinking of rent a holiday villa to enjoy your vacation time or has a property in Mallorca and want to get a rental income don’t hesitate to contact us. Ripoll & Mateu Solicitors in Mallorca will advise and report you on the Law of Tourism and the situation of vacation homes in Balearic Islands.

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