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Many people think that to invest in the real estate market it's necessary to allocate a large amount of capital. Learn what a SOCIMI is in Spain and discover new opportunities for real estate investment in Spain with less capital.
Here we will tell you how SOCIMIs work and what advantages they offer for retail investors. It is a commercial company that has been in the market for several years and offers various opportunities within the real estate sector. If you are not clear on what the real estate market is, it's time for you to start educating yourself.
Through this type of company, it is possible to carry out various operations dedicated to the buying and selling of properties. Likewise, SOCIMIs allow investment in the rental or refurbishment of properties.
This applies not only to residential properties like apartments or houses, but also to commercial premises and even offices. Stay until the end of the post and discover everything about this investment tool.
Initially, the term SOCIMI is an acronym that stands for the following: "Listed Real Estate Investment Companies".
Now, we can define a SOCIMI in Spain as a public limited commercial company. Its capital must be at least five million euros.
Part of the security of this instrument is due to the fact that the listings are regulated on the stock market. Otherwise, a company cannot be included in this category.
It's important to consider that SOCIMIs are used for real estate investment. This involves being able to invest in the purchase of buildings, commercial premises, garages, industrial warehouses, and of course, residential properties.
I recommend the following article: Everything about investing in apartments.
SOCIMIs (Listed Real Estate Investment Companies) are the Spanish equivalent of REITs (Real Estate Investment Trusts) in the United States. These entities were created with the aim of fostering the real estate market and attracting both national and foreign investment in the sector. Here is a description of how SOCIMIs were created and evolved in Spain:
While there's a lot of information behind them, investing in SOCIMIs is actually quite easy. You just need to invest in shares listed on the stock exchange.
Of course, it's crucial to verify that the company adheres to the SOCIMI regime, which is a system solely focused on real estate investment.
These types of commercial companies are based on an existing regime; the regulations are supported by the Capital Companies Act. Furthermore, it is an instrument registered in the Commercial Registry.
For them to operate, they must comply with a series of requirements that we will mention a little later. And within this modality, a key aspect is allocating the majority of funds to real estate investment.
Some confuse SOCIMI in Spain with the REIT operational model, which is incorrect. While it does share several similarities with that model, it is a Spanish adaptation.
If you're wondering, "Is it safe to invest in SOCIMIs in Spain?" you should know that it is, at least in terms of legislation. This is because this commercial company is protected by Law 11/2009.
And to consolidate these types of investment vehicles, they must be governed by the principles of the Capital Companies Act. Before deciding to invest in such an instrument, it's advisable to verify that it is registered in the Commercial Registry.
Legally, this company is based on real estate market investment in Spain. Furthermore, transactions involving various types of properties are permitted, including hotels, warehouses, offices, buildings, etc.
Within this tax context, the security of investing in this company is highlighted. This is because it is governed by specific criteria and requirements that even include the stipulated distribution of dividends.
Beyond the legal context, it's also important that you try to avoid making mistakes when investing
As we have announced, SOCIMIs are regulated according to Law 11/2009 of October 26. At least, that was initially the case, as it was later modified and became covered by Law 16/2012 of December 27.
All of this is important because these regulations primarily aim to improve the establishment of requirements for companies to join this corporate structure, making it a safe process aligned with the initial objectives.
The requirements for establishing a SOCIMI in Spain are divided into mandatory requirements and optional requirements.
In this regard, let's take a look at the mandatory requirements:
· First, you must notify the local office of the State Tax Agency about the development of the SOCIMI. You should do this in advance.
· Furthermore, the SOCIMI's shares must be listed on a fully regulated market.
· A clear dividend distribution policy must also be defined, as outlined in Law 11/2009.
· All actions must have a regulatory framework.
In the following table, you can see how dividend distribution must be structured within the legal framework:
Benefits from participation in other SOCIMIs 100%
Benefits from property sales 50%
Benefits as a leasing concept 80%
Perhaps you still have some doubts about whether it's worth investing in SOCIMIs in Spain.
Well, one of the biggest attractions is that they have a taxation of 0% regarding Corporate Income Tax. This applies when they have a leasing activity exceeding 36 months.
On the other hand, the bonus is 95% regarding Documented Legal Acts Tax. The benefits are especially present for participants with more seniority and scope of activity.
Dividend distribution is subject to a 19% levy on Corporate Income Tax for all partners whose participation in the SOCIMI is at least 5%.
But how is taxation distributed regarding the benefits acquired by shareholders? You can see this information in the following table.
As for dividend distribution, they are taxed under personal income tax (IRPF) according to real estate capital gains. Tax between 19% and 25%
Taxation on the sale of shares in a SOCIMI is subject to personal income tax (IRPF) as a capital gain or loss. Tax between 19% and 25%
If you're interested in learning how to calculate the tax on the sale of a home, click on the link.
Information regarding SOCIMIs in Spain is shared very clearly. This clarity helps increase interest, both in their creation and in investing in them.
SOCIMIs have their shares listed on the Spanish market or, more generally, on the European market. This means they are not 100% limited to Spain.
It is necessary to consolidate a formidable group of investors; a SOCIMI must have a minimum of 50 investors. Therefore, they are very well-established groups or commercial companies.
Another interesting characteristic of a SOCIMI is that it has a fixed minimum capital. Officially, it must have an investment of 5 million euros. It's not just about the capital; it must also own property as part of its assets.
If you don't have that capital, I recommend you look into savings methods
Do you want to invest in real estate but aren't sure which option to choose? Many people are torn between real estate crowdfunding and SOCIMIs. Below, we show you the main differences.
One of the main differences between investing in a Spanish REIT (SOCIMI) or crowdfunding is volatility. REITs have a higher level of volatility, so if you have a good risk appetite, it might be your best option.
In terms of liquidity, shares in a REIT (SOCIMI) can be highly liquid and easy to acquire, and you'll find a wide variety of shares available.
In the case of real estate crowdfunding, liquidity tends to be somewhat lower. This is because it often involves emerging or even developing projects.
Investing in a Spanish REIT (SOCIMI) involves having slightly less control over the investment, as it depends on the strategies pursued by shareholders.
In the case of real estate crowdfunding, control is intermediate because you can choose the type of investment according to your expectations.
· They maintain a certain stability, as they have investment contracts for up to five years.
· A return of 20% on rental income can be achieved from leasing operations.
· It's possible to benefit from a significant dividend yield, and liquidity levels are high.
· Costs can be somewhat high due to formation and management expenses.
· It offers a more limited savings system due to dividend distribution.
· There are also some limitations in buying and selling demand, due to the inherent difficulty.
There is significant activity among SOCIMIs in Spain, with just over 80 such companies investing in the real estate sector. They are divided into large, medium, and micro SOCIMIs.
Among the most lucrative SOCIMIs are Meril Properties, which is listed on the IBEX 35, as well as Inmobiliaria Colonial.
Among large SOCIMIs, we find some that are listed on the market, even exceeding 1 billion euros. These include Merín Properties, Colonial, General de Galerias Comerciales, and GMP Property.
The medium-sized SOCIMIs are characterized by having a capitalization between 200 million and 999 million Euros. Currently, only 11 fall into this group, including Testa Residencial, Castellana Properties, and others.
If you wish to enter this type of investment, it's important to focus on acquiring shares in companies within the SOCIMI sector.
This will allow you to then participate in the distribution of dividends, which could be lucrative provided the company's growth and profits materialize.
In fact, investing in SOCIMIs in Spain is not that different from buying shares on the stock market.
You should go to the platform to access the Continuous Market to acquire shares of the company you have selected.
Do you want to invest in SOCIMIs but have little experience? It's a good idea to proceed with an intermediary or invest through a broker that is intuitive and practical.
If you're considering investing in these types of companies, it's a good idea to check current trends. Does the future outlook for SOCIMIs look promising? We'll find out for you!
Indeed, investing in SOCIMIs is a good idea because they have shown impressive growth in recent years, since their inception.
The real estate sector sees significant stock trading volume daily, making it a strong performer in the stock market.
An estimated asset portfolio valued at over 50 million euros, which has been distributed among various real estate groups.
It's important to note that after the economic crisis caused by the pandemic, there were some setbacks associated with SOCIMIs, such as the low number of companies that have entered the system in recent years.
The 2021-2022 report predicted a sustainable future for SOCIMIs in Spain, with clear growth in properties aligned with current sustainability trends.
Without a doubt, you should study the profitability when investing in a SOCIMI in Spain. Ideally, you should aim for a return of at least 3% to 7.5% annually.
Don't forget that at Domoblock we offer investment returns of up to 10%. Additionally, we offer investment opportunities starting from just 200 euros.
Take advantage of Real Estate and multiply your earnings with us. We are your reliable and profitable broker with extensive expertise in real estate tokenization.
Absolutely! But you should consider factors such as volatility, limited control over your investment, and stock mobility.
As long as you verify the profitability and security of your operation, you should be able to see significant benefits.
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Calera, 3
Funded
100%
598.506,15 €
Target
598.506,15 €
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