Investment in Spanish commercial property rose to €7.4bn in 3Q this year and the full-year total is likely to reach €9.5bn.
The volume of investment is down from the €9.3bn in the first nine months last year but direct investment of €7.4bn is above the €7.09bn of a year ago. The volume achieved is particularly noteworthy given the fact that there have been no relevant corporate deals since the beginning of the year. Abundant liquidity, low interest rates and a better national economic outlook make real estate attractive and keep downward pressure on yields.
Retail assets attracted 34% of investments this year at €2.54bn, supported by domestic consumer spending, while offices accounted for 32% at €2.4bn as investors were drawn to lower vacancy rates and an upward trend in rents for new leases. Hotel investment rose to €1bn after last year’s record performance based on improved tourism and room rates.
Half the total invested came from funds, with a significant portion from North American investors in the retail sector. Last year’s main players, the REIT/SOCIMIs, reduced their activity this year and accounted for 13% of the total invested. The large acquisitions made in the past will not come onto the market within the short term. The odd asset may be divested but none of the strategic and although currently in an asset management phase the REIT/SOCIMIs will continue to be the main buyers in the coming years. They will however be somewhat more selective due to the lack of product.