Almost a decade on from the financial crisis, Spain still has half a million unsold new homes. Yet investors clamoured to buy shares in a Spanish housebuilder that floated this week.

On Wednesday, shares in Neinor Homes began trading on the Madrid bourse, rising up to 8 per cent, after an oversubscribed initial public offering. Lone Star, the private equity group, is the selling shareholder. It was among the brave few who picked through the rubble of Spain’s housing market in the aftermath of the crash. It bought Neinor — then a collection of property assets assembled from various lenders — from Kutxabank in 2014.

The picture in Spain is similar to Ireland. Vast numbers of low-quality homes were built in areas of limited demand. The post-crisis malaise meant construction ground to a halt even in prosperous places. In Ireland, that meant Dublin; in Spain it means places such as Madrid, Barcelona, Málaga and Bilbao. Prices in these areas are now rising amid a shortage of new units and a strong recovery in the economy. There is little evidence a new bubble is inflating.

Valuing Neinor is tricky, given the lack of similar-sized quoted entities. Its market capitalisation of €1.3bn includes an enormous premium to book value of €719m. But the latter figure reflects the distressed nature of parts of the portfolio at the time of acquisition. This has also meant that land acquisition costs have been low, at about a quarter of sales revenue. Selling legacy assets acquired from Kutxabank has financed more land purchases. This source of funding will be exhausted by 2018. Meanwhile, land prices in Spain have been increasing quicker than house prices.

Neinor says it will hit top gear in around 2020, building 4,000 units a year at a 20 per cent operating margin and starting dividend payments. In the meantime, its new shareholders need to be confident that house prices will continue to keep pace with land and construction costs.

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