Viewpoint – South for the summer
The summer holidays are upon us here in the UK, with many of us Brits taking the well-trodden route down to Spain. But it seems we won’t be alone, with Spain being the second-most visited country in the world … second only to France. Not sure that is what I would have guessed, but there you go.
Holidays aside, our own 90 North has been investigating the Spanish real estate market and the Islamic investments there. Firstly, the economy is doing a lot better than you may think. While unemployment remains relatively high, GDP is projected to show a 2.2% growth this year, comfortably ahead of the European 1.2% average and materially above that of Germany with a projected paltry 0.8%. Meanwhile, inflation is under control and projected to show a 1.2% growth in prices this year.
While real estate itself, particularly in the residential sector, was a key driver of the doom and gloom that Spain suffered during the last economic downturn, an economy previously heavily reliant on construction has reinvented itself toward services and technology. This can be most clearly seen in the Barcelona office market which witnessed an unprecedented 15% rental growth last year and the success of the innovation driven office district known as 22@ in the downtown area.
However, while QInvest was comfortably ahead of the game with its OneOcean
Port Vell marina investment two years ago in Barcelona, we have not identified
much additional Islamic investment into the Spanish real estate market since. I suspect this may be due to the country’s improvements being largely unrecognised to date. However, judging by the prices sought for prime properties in Madrid and Barcelona, it seems that others have certainly seen the potential.
So, time for Islamic investors to catch up. It is only a month until the Spanish football season starts again. At the very least, it is a great excuse to take in a Real Madrid or FC Barcelona match, but from what we have witnessed ourselves in the property sector, this may not be the only delight.
Wishing a great summer to all.
This article was first published in Islamic Finance news dated 17th July 2019.