The end of the crisis in the Spanish real estate sector is still far away. While some real estate markets, such as the one in the United States, has begun to recover, the depression will remain in Spain, at least for two more years.
For five years in a row, the real estate market has continued to fall, but it has still not reached the bottom. In fact, according to some forecasts by Euroconstruct, the sector will shrink by 21.1 percent in 2012 and it will continue to drop by 8.1 percent in 2013 and 2.1 percent in 2014.
According to Euroconstruct, the reactivation of the sector will depend to a large extent on how the residential sector evolves, and in particular on how long time it will take to sell out the stock.
Euroconstruct foresees that the new higher provisions that the financial entities will be expected to set aside as protection for its real estate assets, will not only have positive effects. When applied on the assets in the sector, it can lead to a decrease of housing prices, but for the new projects and mortgages it could be an obstacle. The same occurs for the non-residential segment.
The worst predictions, however, are those related to civil engeneering, where the adjustment measures adopted to slow down the deficit will end up with at a high cost. Last year, this segment registred a slowdown of 34 percent which will be even higher this year; up to 40 percent, according to the estimates.
Europa, at four different speeds
On a European level, the real estate sector could be divided into four big groups, according to Euroconstruct.
The first group would consist of the markets where the crisis is expected to continue during next year: Spain, Portugal, Holland and the Czech Republic.
The second group would be the group that will leave the negative numbers in 2013, some in a modest way, such as Italy and Finland, and other more considerably, including Great Britain and Sweden.
The third group, led by Germany, includes those markets that will continue to grow, while the fourth group include Poland and France, two countries that expect to see good results this year, but where the market is expected to slow down again in 2013.
This difference between the European markets means that the prospect for growth in the sector during next year does not look very promising and in total it is expected to increase by only 0.4 percent.
All the expectations on the European real estate sector were centered on the residential segment, which grew by 2.7 percent in 2011, but as the economic situation gets worse, Euroconstruct estimates that in the next two years it will remain on the same level. Also, it points out that as long as new office buildings are not constructed, the non-residential segment will not see the end of the tunnel.
This article was translated and edited by Stina Lunden.
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