August 8, 2020

The Government of Sánchez and Iglesias with separatists already frightens investors




Investors and big fortunes watch with concern the entry of Podemos in the Government of Pedro Sánchez, to the point that foreign funds can paralyze new purchases. From operations that have slowed before the uncertainty created by the new political horizon in Spain to assets and companies that look across the border. In memory are the failed budgets of 2019, whose master lines the Executive intends to approve by 2020, and which included a tax increase of more than 3,800 million euros to large companies.

The real estate sector is at the epicenter of this uncertainty. The failed accounts that the PSOE and United We agreed a year ago already collected a 15% tax on the undistributed profits of the Public Limited Investment Companies in the Real Estate Market (Socimis). The initiative, which attacks one of the most used investment vehicles in recent years in the real estate sector, would especially harm small businesses, since large companies, such as Merlin, Lar or Colonial, usually distribute most of their Benefits. Industry sources explain that these firms live with a «Tense calm» the political ups and downs, and warn that some groups are studying moving their business to France Y Portugal If the regulation hardens.

As EY senior advisor and Iberian Property member Miguel Ferre recalls, the Portuguese country, also governed by socialists and communists, has recently approved a rule that promotes the creation of socimis (called SIGI). «This may cause companies to move to Portugal, where the regime is identical to that of Spain Now, to operate from there in our market. All this with an agreed tax increase that is anecdotal, but that can scare off investment, ”said the former Secretary of State for Finance from 2012 to 2016.

But not only the socimis are in the focus of United We Can. The purple formation has insisted on the need to put caps on rental prices, prohibit evictions without an occupational alternative and force large owners to transfer their vacant property to the State. The party led by Pablo Iglesias already tried to impose these controls in spring, when the Government I was looking for your support to carry out the rent reform. Finally, these claims did not go forward, in part because the investment funds warned Calviño that this would deteriorate the external image of Spain.

Now that both formations have reached an investiture agreement, uncertainty has returned to the brick. Especially since the companies and investment funds that have opted for the Spanish market are aware that Podemos maintains its interest in directing the Ministry of Housing.

«There are million-dollar operations, such as the purchase of certain portfolios of real estate from the bank, which have slowed after the announcement of the agreement between the PSOE and Podemos », they explain from an outstanding international investment fund.

In addition, the sector warns that if a cap is imposed on rental prices, housing would be withdrawn from the market, which would further stress prices in a context of a slowdown in the sale. Mortgage reform and political instability have made a dent in housing transactions, which fell sharply during the summer and fell 12% in September, according to the INE.

«Uncertainty has a direct effect on investment, business confidence levels in Spain are already very low. What he does is stop and detract investment and activity operations, ”says the general secretary of the Businessmen's Circle, Alfredo Bonet, who prefers a“ centrist ”government to one «Extremist» with Podemos and independence supporters. In the first half of the year, productive foreign investment amounted to 10,302 million euros, 63% less, although in 2018 there was the purchase of 50% of Abertis by the Italian Atlantia. Even so, it is the lowest data since 2016.

Beyond the brick, foreign investment looks sideways at the VTC (driver's license for vehicles with which Uber and Cabify operate), a sector in which they have also disbursed large sums in recent years. We could propose, in your program for the November 10 elections, that it was mandatory to reserve this service two hours in advance, which in practice would mean the death of the sector.

Great fortunes

The great fortunes are also preparing the ground before the new Government and look to Portugal. The Portuguese country has the NHR program for non-habitual residents, with tax exemptions or very low payment of these. Therefore, as the prosecutor Esaú Alarcón, a lawyer in Gibernau Asesores, points out, consultations to advisors interested in the Portuguese regime are increasing "especially in Galician offices for a couple of years", since the pact between PSOE and Podemos has been announcing the fiscal rise to high assets since then.

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