Greenfield projects mean that non-resident investors, bringing in all the capital from abroad, build the facilities “from scratch” to implement them
Spain was the fourth-largest recipient of greenfield projects in the world during the first half of 2020, according to FDI Markets, the database of the British newspaper Financial Times, which compiles Invest in Spain.
In these six months, 313 foreign capital greenfield projects have been carried out in Spain. Although this figure is 42% less than last year, the overall fall has been even greater. Fourth place also represents an improvement on the previous two years: in 2019, our country was in fifth place, and in 2018 it was in seventh place.
In terms of greenfield projects with innovative activities and high technological content – R&D, the establishment of corporate headquarters, ICT, and internet infrastructures – Spain was the sixth-largest recipient, after the United States, the United Kingdom, Germany, Ireland, and India.
The effects of COVID19 on foreign investment
The pandemic caused by the COVID19 has had a more negative impact globally than expected in terms of Foreign Direct Investment (FDI), according to the United Nations Conference on Trade and Development (UNCTAD).
And in line with this, the data provided by the Foreign Investment Registry show that FDI received by Spain in the first quarter of 2020 has amounted to just over 2,646 million euros, approximately 60% less than that recorded in the first quarter of 2019.
However, a certain recovery can already be seen: in the second quarter of 2020, the 4,642 million euros received represents an increase of 8% over the same period last year, which, in half-yearly data, softens the fall to 38% compared to 2019.
In recent years, as Invest in Spain points out, Spain has proved extremely attractive to international investors, not only because of the volume of FDI but also because of the quality of the projects received. Seven of the ten years in which Spain has received the most FDI in its history have been in the last decade.
What is a greenfield project
A greenfield project is a type of FDI in which a non-resident investor, bringing in all the necessary capital from abroad, builds the facilities “from scratch” to get it up and running. It means building on unused land where there is no need to remodel or demolish an existing structure, construction, or previous building.
This type of FDI is the riskiest for the investor, but the most beneficial for the host economy as it promotes the development and stimulates employment from the construction of the buildings to the start of the business, as well as contributing to the training of employees, who become multipliers of the know-how obtained.