The rise of SOCIMIs is continuing thanks, among other things, to their reduced tax rates.
If you want to invest in the real estate sector, we will tell you the reasons why you may be interested in doing so through a SOCIMI.
Listed Public Limited Companies for Investment in the Real Estate Market (SOCIMIs) are experiencing rapid growth in Spain. This growth has
occurred both in number, in french email list volume of assets and in market capitalisation. Between 2013 and 2019, the number of SOCIMIs has increased from 2 to 90. Their market capitalisation, on the other hand, has grown from 0.1 billion euros to 27 billion euros.
According to the details of the 2021 State Budget, the tax benefit of SOCIMIs is estimated to grow by 2.1 percent in 2021, reaching 108 million euros.
This sector is characterised by its high concentration. A few large SOCIMIs coexist with a large group of smaller companies.
In terms of market capitalisation, at the end of 2019 the five largest SOCIMIs accounted for 65% of the total market value of these companies. They also held around 65% of the real estate assets in the sector.
1) What is a SOCIMI?
SOCIMI is the abbreviation for Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario (Societies Public Limited Companies for Investment in the Real Estate Market ). These companies are specialized in real estate investment and management . They have been regulated in Spain since 2009 (Law 11/2009, of October 26).
The purpose of these collective investment instruments is the direct or indirect holding of real estate assets for rent .
SOCIMIs are similar to Real Estate Investment Trusts (REITs). REITs emerged in the United States in the 1960s and have experienced significant international expansion since then.
2) Why are they growing so much in Spain?
First, due to the SOCIMI reform approved at the end of 2012. This reform provided these companies with tax advantages for their investors.
Second, due to the gradual improvement of the macro-financial and real estate environment of the Spanish economy.
And thirdly, because of its advantages over direct investment in real estate for retail investors. In this way, they diversify their risks by investing in portfolios with different properties.
3) For what purpose were they introduced?
Boosting the rental market . According to the Bank of Spain, REITs may be one of the possible solutions to the rental problems in Spain . This is because REITs are increasing the weight of their residential business, especially in large metropolitan areas. If this trend is consolidated, it could favour an increase in the supply of rental housing in the coming years, which would contribute to moderating price growth.
Reactivate collective real estate investment , which had been falling continuously since the crisis began in 2008. REITs are seeking to replace real estate investment companies and funds. With the bursting of the real estate bubble, these began a process of progressive loss of investors and assets that led to their virtual disappearance as investment instruments.
Facilitate citizens' access to real estate , increase competi