Boosting the private equity finance economy

Alternative financing is undeniably at its best in Spain: providing access to capital to higher quality entrepreneurs, to more solid companies with a higher turnover, and increasingly accessing and working in different sectors of the economy, transcending real estate.

A large part of the operations have to do, in fact, with credit for residential developments, due to the great liquidity and constant demand for them in our country, and due to the strong presence of the foreign end buyer, which greatly paves the way for entrepreneurs in the marketing of their projects.

Projects of between EUR 2 million and EUR 10 million, in which there is an initial injection of liquidity for the work to be completed with own resources or an exit through traditional banks, are of particular relevance as they are very manageable.

It is true that the real estate market has suffered ups and downs in recent years: on the one hand, the price of construction materials; on the other, the reactivation of works that had come to a virtual standstill during the covid era... and even the collateral effects of the war in Ukraine. However, developers have been able to move forward, largely thanks to the added agility and efficiency of alternative financing processes.

In other neighbouring countries, alternative financing accounts for between 40 and 60% of total real estate financing. In Spain, around €10,000 million in developer credit is granted each year.

DEXTER's Senior Risk Analyst, Rubén Miñarro, assures that "experience shows that foreign buyers are keeping the residential sector very much alive; and the trend is clear: as capital continues to arrive from outside Spain to buy homes, developers - with the help of private capital - will be encouraged to continue building. It's a pretty clear picture, at least in the short term," concludes Miñarro.