February 2025
Full interview at the following link: Open Hub News
The Spanish real estate sector is undergoing a profound transformation, which makes it essential for its main players to share challenges and coordinate strategies to ensure the future success of the industry. The National Real Estate Servicing Congress, organized by CMS People, took place on Wednesday 13th and Thursday 14th November in Madrid with the aim of guiding the Real Estate Servicing sector towards a path of essential evolution.
Jorge Pérez-Curto, CEO of DOMUS RS was one of the panelists who participated in the meeting. The professional participated in the round table entitled ” Investment trends and risk management in Spanish real estate: What were the year’s results and what is the outlook for 2025? Profitability, security and a look to the future “. Together with other industry experts, he analyzed real estate investment, the role of SOCIMIS and Family Offices, and the rise of value added and luxury in a context of economic moderation.
During the event, Open Hub News had the opportunity to interview Jorge Pérez-Curto about the supply deficit in the residential market, luxury investment and the adaptation of DOMUS RS to the trends of the sector, among other issues.
What do you consider to have been the biggest challenge facing the real estate sector in Spain this year, and how do you anticipate that the context of controlled inflation and moderate interest rates will influence investment and project development in 2025?
I believe that, especially when applied to the residential business, the main challenge we are facing in 2024, in 2023 and probably in the following years, is the huge gap between supply and demand. That is to say, we have a very clear problem of product supply, we are not able to produce a sufficient number of homes for the demand that exists, that there is. We are generating an average of around 200,000 homes per year in Spain and producing less than 100,000 homes. This generates a huge imbalance between supply and demand and is clearly one of the main problems we are facing.
A scenario of lower interest rates will probably generate a greater appetite for investment in housing, that is to say, financing will be more accessible in theory and it will be easier to have access to a more reasonable mortgage payment, so we understand that this appetite, this demand, will be increasingly important. Therefore, we probably foresee a virtuous circle in the next three to five years in the residential market at least, as long as there is not a flood in the land market, which we do not see due to the regulatory process that exists in the country and the current situation of the market.
Given the current interest in value added and luxury assets, do you think these will continue to be the most attractive for investors in terms of yield and security, or will other types of assets start to gain relevance?
I believe that the luxury market goes by zones. Obviously, the Madrid and Barcelona markets are environments for investors in premium housing or luxury housing, or even in hotel assets, where one out of every three hotels developed in Spain are five-star hotels. This is obviously linked to the fact that there is an appetite for this type of investment. The tourism that is arriving in Spain is of an increasingly higher level. The international investment that is investing in residential also invests in premium residential assets and so on, so we understand that this is going that way.
In addition, Spanish family offices, when they invest, invest much more in prime or premium products. It should be noted that a European family office , around 14% of its investment is linked to Real Estate. In Spain, it is generally linked to 44% of the investment in the real estate business. And it is very much their appetite, or it is very much premium asset type, trophy asset, which in the end what they are doing is practically beating inflation.
“We are generating in Spain an average of around 200,000 homes per year and producing less than 100,000 dwellings.”
DOMUS RS manages and markets a wide range of real estate projects. What strategies are you implementing to adapt to new market trends and attract investors such as SOCIMIs, family offices and private wealth?
When we have to serve our customers and provide a value-added service to our customers, all the control layers are very important, all the systems part and so on. We are in a process of technification or of providing technology to the business, which is very relevant when it comes to analysis, investment and so on. Therefore, I believe that everything really depends, on the one hand, on a greater knowledge of the market, and on providing greater segmentation and information linked to these operations.
What does the CMS event bring to you and what are your expectations for this edition?
I think the CMS event is a great event and it is really well organized. It allows all the relevant players in the sector to get to know each other, to share a day and a half, practically two days together. In the end, it is a meeting point where you not only meet and talk about what is happening, but you also have the chance to talk about trends, results and future developments. So, of course, it is always a must-attend event on the calendar and one that we are delighted to be a part of.
