International funds and retail shoot up the investment by 84% in the third quarter. (Ejeprime, 4 October 2018)
The real estate business in the country has attracted 3,750 million euros between July and September, motivated by the growing interest of foreign investors and the rise of the commercial segment.
The Spanish real estate continues capturing capital on a large scale. Only in the third quarter, direct investment in real estate assets in Spain was 3,750 million euros, 84% more than in the same period of 2017, according to the latest data published by BNP Paribas Real Estate.
Money continues to flow into the sector, especially thanks to the commitment of international funds for Spanish brick. The operations carried out by these firms represented 65% of the total during the third quarter of the year. Specifically, foreign investment was led by the United States, Germany and the United Kingdom.
The investment funds ousted the socimis as the main buyers of real estate assets in Spain between July and September. In fact, this trend continues from 2015, the only year in which these investment companies monopolized most of the business opportunities in the sector.
The operations carried out by international funds represented 65% of the total between July and September
According to David Alonso, head of research at BNP Paribas Real Estate, a large part of the investment funds and developers are opting for “speculative operations through the purchase of land to develop product between twelve and twenty-four months”. This highlights the short-term confidence of buyers for Spanish real estate.
Although direct investment in assets is on the rise, the accumulated investment volume in 2018 reached 7,760 million euros at the end of September, 4.2% less than in the same period of 2017. The consultant relates this fall to the fact that many operations do not materialize due to the lack of stock for sale and the “high pretensions” of some owners.
Retail: the king of investment
The retail sector accounted for 31% of the investment made in the Spanish real estate between July and September. The capital disbursed in commercial assets amounted to 1,140 million euros in those three months. Likewise, this sector maintains profitability at levels of 3% in high street, between 5% and 5.25% in the case of prime shopping centers, and of 5.75% in prime retail parks.
It is expected that the retail reaches 4,000 million euros of investment volume in 2018
The largest operation of the quarter was the purchase by the South African Vukile fund of four shopping centers of Unibail Rodamco for 490 million euros. It also highlights the sale, by El Corte Inglés, of two stores located on Princesa Street in Madrid and Gran Vía de Bilbao, for an approximate amount of one hundred million euros.
The growth rates of retail in Spain augur a good end of the year for the sector. It is expected that, taking into account the operations currently underway, an investment volume in the commercial segment of more than 4,000 million euros will be reached in 2018, 15% more than in 2017.
Residential, logistics and offices, on the right track
The residential market also displays great interest among investors, especially among international funds that bet on the acquisition of assets from the balance sheets of financial institutions and servicers. Between July and September, the volume of investment in housing exceeded the barrier of 980 million euros.
The investors disbursed in the third quarter of the year 770 million euros in offices
In relation to the office segment, in the third quarter of the year, investors have disbursed a total of 770 million euros in this type of assets. Profitability in this segment remains at 3.25% in Madrid and 3.5% in Barcelona. In fact, it has been in these large cities where the most relevant operations of this period have taken place: the purchase by Blackstone of the Planeta building in the Catalan capital for 210 million euros, and the sale of five buildings in the business park Avalon in the background Barings.
Another market that has also rebounded in the last three months has been the logistics. The investment volume recorded between July and September has reached 475 million euros. The excess of capital and the shortage of product generated an investment pressure that was translated, according to the consultant, into an adjustment of prime yields, standing at 5.75% at the end of the ninth month of the year.
Among the most important operations in the Spanish logistics of the last three months, are the purchase by Blackstone of the four ships of Lar for 120 million euros, and the premiere of Tritax in Spain with the acquisition of the logistics center of Mango for 150 million euros.