Record year for Spanish commercial real estate investment

It’s funny how time changes realities. Not so long ago we were talking about how the Spanish real estate sector was in the midst of perhaps its worst crisis ever, and how no sane investor would even look at the country, much less invest in its property assets.

A few short years later and the situation is changing before our very eyes. The economy is showing recuperative growth, stability has returned to the banking system, financing has recommenced, exports are growing, unemployment dipping, the national debt slowly dropping and in luxury resort areas such as Marbella and Ibiza demand is once again reaching pre-2008 levels.

Attracted initially by excellent price opportunities, this swell of interest has now reached a critical mass of investors and end-user buyers, all keen to partake of a unique combination of scenery, amenities, climate and lifestyle. However, these markets have always been more reflective of economic trends in the countries from which most buyers come – currently mostly Northern Europeans – so the fact that 2014 also saw an impressive inflow of investment capital in Spanish commercial and office space is an even more telling indication that conditions in the country are improving.

Much more reflective of the national economy and its growth potential, the €2.7 billion worth of Spain’s commercial and office assets bought during 2014 represented a giant leap forward that also counts as a serious endorsement of and faith in the country. Not only was it a three-fold increase over 2013, but it actually represents an all-time record – higher even than pre-recession levels.

The real estate in question was naturally concentrated in Spain’s two big powerhouses of commerce, Madrid and Barcelona, but also included the likes of Valencia, Seville, Málaga and A Coruña, as well as a string of supermarkets, shopping malls and even land and resorts.

Some of the leading office real estate transactions involved the acquisition of a real estate portfolio belonging to the Catalan regional government by Zurich Re for €201 million, the purchase of the Agbar Tower in Barcelona (€150 million) and IBM’s Madrid headquarters (€130 million) by Emin Capital. It might surprise some to find that Spanish investors lead this segment, making up 36% of the total, followed by British, Swiss, Andorra-based and Mexicans.

Spaniards also bought almost a third of all commercial (retail) assets, closely followed by US investors, with France third. Much of that came in the form of the €400 million purchase by Carrefour of 63 shopping centres owned by Klépierre, while the Marineda shopping centre in A Coruña was acquired by Socimi Merlin Properties for €260 million.

Always a classic indicator of investor confidence and sentiment, if the current appetite for Spanish commercial and office space is anything to go by the crisis may well and truly be receding into the shadows before long.

If you are interested in investing in retail or offices, please contact us; many Knight Frank associates worldwide – including our Madrid office – can offer specialized services.

If you are interested in investing in retail or offices, please contact us; you can also view our selection of business premises in Marbella.

Pia Arrieta, 04 Mar 2015 - Intelligence