The blow to SOCIMI puts 61% of property investment in Spain at risk.
A government move aimed at ending the regime of socimis (public limited liability real estate investment companies) in Spain threatens more than half of the total real estate investment flowing in the country, as key market agents warn, “Changes to such like they will scare away international capital.
In particular, foreign investment accounts for an average of 61% of the total. have made real estate transactions since 2014, according to consulting company Savills. This year, that percentage is at a slightly lower level, as of the nearly 9 billion invested to date in brick, 40% – international capital. That is, heForeign investors invested 3.533 million euros in Spain.
Moreover, the announcement of this measure comes at a welcome moment for the global sector, which has been restoring investment activity after 2023, when markets were frozen due to rising rates. The consulting firm estimates activity in 16 major real estate investment markets worldwide will reach $747 billion this year, up 7% from 2023. Likewise, Savills expects investment to approach one trillion euros, with an increase of 25% in 2025.
But this change in the SOCIMI regime could affect not only future investments, but also what has already been done in the sector These vehicles have a capitalization of just over 24 billion euros among more than 124 companies..
In fact, the country’s two major SOCIMIs, Merlin and Colonial, both listed on Ibex35, have already made it clear that if the measure is approved, they will consider moving their headquarters outside Spain.
In this sense, the Spanish Association of Real Estate Consultants (ACI) warns that the government’s proposed tax reform aimed at Socimis will jeopardize investment transactions worth up to 15 billion euros since 2014 in this sector in Spain.
“We believe that the government should reconsider this change in the tax system so as not to jeopardize the long-term journey and success of SOCIMI’s development in our country. “This decision could lead to these companies looking to other destinations outside Spain where they can locate and promote new assets.”says ACI President Ricardo Marti-Fluxa.
“Forbidden territory for international investment”
Merlin explains that SOCIMIs in Spain are equivalent to real estate investment trusts (REITs) and denounces that the tax changes introduced in the treaty “represent in practice a suppression of the SOCIMI regime.” “This regime is a great advantage for the growth of the Spanish economy,” says the company, led by Ismael Clemente. which criticizes the fact that the connection between SOCIMI and housing is repeatedly used as an argument.
In the same spirit, Colonial President Juan José Bruguera condemned the intention to eliminate the Sociami regime in Spain “very seriously” and expressed regret over it. If implemented, this measure will turn Spain into a “prohibited territory” for international investment. “The changes they are proposing are very serious. The social media regime is nothing more than an adaptation to the Spanish case of the norms established in international markets. “Such changes turn the Spanish market into a restricted area for international investment,” the manager emphasized. In his opinion, the legal framework should protect companies that choose to attract international investment and make it compatible with the best social goals.
LinkedIntoo loud