The third edition of The District congress will be held in Barcelona from September 25 to 27 at Fira de Barcelona’s Gran Via exhibition center in L’Hospitalet de Llobregat.
The event is expected to bring together 12,000 attendees and 400 speakers and aspires to be, in the words of its president, Juan Velayos, “the real estate event of reference in Europe”.
Real estate investment in Spain reached a record investment volume of €17,600M in 2022, which fell to €11,200M in 2023 due to the rise in interest rates and uncertainties caused by the conflicts in Ukraine and Israel. In the first half of 2023, investment has reached €5,500M and is expected to close at €12,500M.
More than a third of these investors are investment funds, closely followed by institutional funds. By origin, more than a third of these investors are domestic, followed by US, French, German, British capital, and in the last year, Saudi Arabia, UAE and Singapore. The District is targeting all of them.
The Congress analyzes the market situation, its opportunities, challenges and future. And one of the relevant aspects for this investor is legal certainty.
Stable regulation and legal certainty have a direct and significant impact on real estate investment. These two variables play a key role in investors’ decision-making and can influence the attractiveness of a real estate market, both locally and internationally. There are several reasons for this, and we highlight the following:
(a) A clear and well-defined regulatory framework reduces uncertainty and risk for investors. It allows the investor to make long-term business predictions and fosters confidence in the market.
b) They guarantee the protection of property rights and fair and efficient conflict resolution mechanisms.
c) They generate stability and, consequently, confidence in the investor who does not perceive a high risk due to the possibility of a sudden change in the rules of the game.
d) Tax regulations that implement fiscal incentives (tax reductions, benefits for investments in certain areas) to attract real estate investments, if they are clear and stable, can significantly increase the attractiveness of a market.
e) Regulations on land use, zoning and urban planning determine what type of projects can be invested in certain areas (residential, commercial, office, industrial). If these regulations are clear and urban planning processes are efficient, investment opportunities will be more accessible and less risky. On the contrary, restrictive or unclear regulations can generate uncertainty, which discourages investors, especially in large-scale development projects.
f) Regulations that intervene in the market, such as rent control, expropriations for non-compliance with the social function of property, or those that protect tenants or protect squatting, reduce the attractiveness for real estate investors, as they can limit the profitability potential of a property.
g) The ability to enforce contracts quickly and effectively, without lengthy court proceedings, is a key factor in assessing risk. Stable regulation and legal certainty contribute to an investor’s perception of low risk.
Regulation and legal certainty significantly influence real estate investment. A clear, predictable and fair regulatory environment, together with protection of property rights and an efficient bureaucracy, generates confidence and attracts investment. Conversely, regulatory instability, political risks and lack of legal certainty discourage investment by increasing risks and reducing the likelihood of satisfactory returns.
