09 January, 2018

By VIVA Team

Metrovacesa's mooted floatation could see the company valued at €2.6 billion, and its return to the stock exchange marks an upward surge in Spanish property confidence.

Metrovacesa’s mooted floatation could see the company valued at €2.6 billion, and its return to the stock exchange marks an upward surge in Spanish property confidence.

The signs that Spain’s property market is on an increasingly upward trajectory are numerous: foreign demand, domestic investment, mortgage lending and rising prices are all signifiers of a healthy sector…

But perhaps one of the boldest confidence boosters arrived this week following the news that Spanish property group Metrovacesa is to issue an initial public offering (IPO) to see up to 25 to 40% of its share on the stock market.

According to the Financial Times, the deal would see the company list on the Spanish Stock Exchange at €2.6 billion, which would make it the largest European residential property developer. That position is currently held by Neinor Homes – also Spanish – with a value of €1.3 billion.

By floating such a large share of the company on the stock exchange once more, Metrovacesa is sending a strong signal to investors: a signal that says “Spain’s residential property market is a sure thing once more”.

This move is significant because the group was one of the hardest hit during the 2008 financial crash. Just a year after the firm snapped up London’s Canary Wharf in 2007, the economic downturn bit hard on Metrovacesa. The average 40% plunge in property values in Spain that followed decimated the company’s bottom line before it was taken over by its creditors Banco Popular, BBVA and Santander in 2008.

Almost a decade on, however, and the company is purring once again. Having taken its cue from Neinor Homes and Aedas Homes last year, Metrovacesa’s floatation will seek to build upon the growing demand for Spanish property that has been witnessed for the past 36 months.

Rising prices in not only Madrid, Barcelona and the Costa del Sol but also in less fashionable areas has helped to convince the Metrovacesa board that growth is not only robust, but also sustainable, and linked to improved economic fortunes in Spain. The nation’s GDP will rise again in 2018 by an estimated 2.6%, having enjoyed consistent growth since 2015.

In addition to these favourable conditions, Metrovacesa is also strongly placed because it boasts ownership of more developable land than its rivals. And while construction permits still need to be secured, the company believes it can deliver some 5,000 new properties a year from 2019, which would further help cement its place at the top of the market.