Spain’s construction sector rises from the ashes


Construction companies in Spain once built more residential homes every year than the rest of western Europe combined, fuelled by cheap debt. But a 35 per cent slump in prices after the 2007 financial crisis left much of the sector bankrupt.

Spain still has half a million new unsold homes, many in surreal empty cities that have become monuments to a speculative property bubble that brought down the country’s banking sector and wider economy. “The markets at the time were sceptical about the opportunity [in Spanish house building],” says Mr Velayos.

“They were sceptical about the momentum for residential. They were surprised we were buying land so aggressively.” But Neinor, created by US private equity group Lone Star in 2014, has become a success story, one of the country’s first residential homebuilders able to rise out of the ashes of the ruined sector and build again.

Six months ago Neinor Homes became the first to float on the Madrid stock exchange, with Lone Star selling 60 per cent of the company, which was valued at €1.3bn. Shares have risen 13 per cent since.

“We knew there was an opportunity because the Spanish economy was growing again and for nearly a decade there had been practically no new residential homes built,” says Mr Velayos. Share on Twitter (opens new window) Share on Facebook (opens new window) Share this chart Neinor served as a catalyst for the whole sector, with others entering the market. Companies such as Aedas, Vía Célere, Aelca and Metrovacesa are also building, giving the sector depth for investors.

“Residential construction activity in Spain is finally back,” says Adolfo Ramirez-Escudero, chief executive of the Spanish arm of real estate service firm CBRE. “The demand is there and companies are building again.” Many of these companies are also now considering initial public offerings. Two people with knowledge of the deal say that Aedas is considering a listing this year.

Aedas declined to comment. This comes as the wider Spanish property market seems to have turned a corner. Housing prices fell 35.2 per cent from 2007 to 2015, according to property site Idealista, but are up 3 per cent this year and 2 per cent last year.


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