Spain’s overpriced property stocks came crashing down on Tuesday, as panic selling in the sector signalled the end of a 10-year construction boom. Financial Times
After meteoric rises in recent years, real estate shares plummeted as investors rushed to sell.
Valencian developer Astroc, whose shares have risen 1,000% since it listed last May, have fallen 70% since last week when its audited accounts revealed some of last year’s profits came from the sale of Astroc assets to Enrique Bañuelos, its chairman.
Meanwhile, the heavy debt of some real estate groups and worries about oversupply – 800,000 housing starts have been approved for this year, compared with an estimated demand for 600,000 – also contributed to the sell-off.
The top five real estate groups – Colonial, Metrovacesa, Fadesa, Urbis and Inmocaral – rose 132% last year.
'The real estate bubble has not burst,' said Natalia Aguirre, head analyst at Spanish broker Renta 4. 'It is the inflated valuations of some real estate companies that has been pricked. The sector was trading at a 20% premium to its net asset value. This was not sustainable.'