World Economy

$14b Invested in Spanish Property Market

$14b Invested in Spanish Property Market$14b Invested in Spanish Property Market

Investment in Spanish commercial property had been growing continuously since 2013 and in 2015 reached a historic peak.

According to CBRE, world’s leading commercial property and real estate services adviser, total investment reached €13 billion ($14.27 billion), which is 25% higher compared with 2014 and about 28% higher compared with the pre-crisis 2007, Yahoo reported.

The investment growth is due to the recovery of the Spanish market and, consequently, the price growth potential, as well as low interest rates.

According to CBRE’s Knight Frank, foreign investment accounted for 53% of all investment. The essential percentage of foreign capital (28% of all the investments) proceeds from the European countries followed by North America (12%), Asia (11%) and South America (2%).

Office space is the most popular property type, accounting for 43% of the investments, over €5 billion, which is close to the 2007 record.

The main office space markets are Barcelona and Madrid. However, the vacancy rates remain high yet: in Madrid 15.9% of offices are vacant and in Barcelona 14%.

According to UK’s Savills Estate Agents, in Q1 2016 the office space market has slowed, and the segment has attracted €385 million of investment (excluding major transactions), which is 50% less compared with the same period of 2015.

 Malls Top the List

In 2015, according to CBRE, the Spanish retail property segment received €3.6 billion of investments with €2.65 billion accounting for shopping malls and complexes, an all-time high volume. In 2014, about €2.4 billion was invested. In the period of 2008–2013, not more than €1 billion was invested annually.

The growth of investment in the retail property segment is reinforced by an improvement in economic performance. In 2015 the private sector expenses grew by 3.6%, the unemployment rate shrank from 24% to 22%, the consumer confidence index increased, as well as the number of tourists increased.

According to forecasts, in 2016 the investments in shopping malls and complexes will decline but still achieve a significant amount of €1.5 billion. Q1 2016 has already demonstrated that the year will be fruitful: according to the data from Savills, between January and March slightly more than €500 million was invested in Spanish shopping malls.

Meanwhile, investments in Spanish warehousing property in 2015 ran at €740 million, which is also a historic record. This segment is expected to receive approximately the same volume of investment in 2016, largely thanks to the growth in online retailing.