Uncertainty Clouds Investment Picture in Catalonia

Uncertainty couldn’t be a more fitting buzz-word to describe the situation in Catalonia at present.

In fact, those eleven provocative letters of the alphabet have been peppering just about every major news feed over the past two weeks in relation to the referendum for independence held earlier this month.

Despite a hefty 2m+ cohort of the region’s population calling for autonomy, the President of Catalonia, Carles Puigdemont, has yet to make his intentions clear, instead favouring persuasive, behind-the-scenes dialogue with Prime Minister Mariano Rajoy. The Spanish government has warned that Catalonia has no option but to revoke the declaration or face direct rule from Madrid.

This has left communities in Catalonia, you guessed it, uncertain. They don’t know if their votes count for anything, whether the referendum is simply another stalling tactic and more importantly - what the future holds for those break-away citizens.

While it’s still early days, real estate markets are starting to wobble, with reports of investors and companies, particularly in Barcelona, putting purchase plans on hold.

It’s an unsettling dynamic, given that key cities in Catalonia, particularly Barcelona, have bolstered a somewhat lacklustre economy of late, with a return to property liquidity over the past four years following the recessionary dip of 2008. Across Spain, Barcelona remains an influential community attracting the highest number of international buyers (19%) according to the Instituto Nacional de Estadistica.

According to a report published by TINSA, one of Spain's mortgage appraisal and valuation experts, the price of real estate in Barcelona has also grown by 21.7% over the past 12 months.

Yet despite the ‘what-if’ future, estate agents remain upbeat, reporting that any outcome for or against Catalonia’s break for freedom will at least draw a line under a political issue which has plagued the region for years. As one of Spain’s wealthiest jurisdictions however, secession will likely cost the country almost 20% of its economic output; a prospect, the country’s central administration will no doubt wish to avoid at all costs.