Investors are back on the Spanish real estate market
The volume of real estate investment returns to pre-pandemic levels, although the preferred assets are linked to infrastructures dedicated to the distribution of goods and housing for rent
Real estate investments have starred in big ups and downs over the last year. With the outbreak of the pandemic, many advocated the explosion of a bubble, but the reality that 2021 has brought is totally different: in the second quarter of this year, investment has grown 258% more than the previous quarter, according to data from the real estate consultancy CBRE Group. “This is not the housing crisis [of 2008].” The figures are proof of why investors are more optimistic, especially in certain sectors: logistics, residential rental or more modern and flexible work offices. What has happened so that investors are becoming interested in this real estate market?
The real estate variables that affect investment – low interest rates or the availability of square meters – remain the same as before, which makes Spain an ideal place to invest in this sector. “The price of housing in Spain is almost 40% below the years of the real estate boom and this fact is very important because it continues to attract large and small investors”
Although these data define the year 2020 as a parenthesis in terms of the volume of investments, the type of investor, what they are looking for and their country of origin, has changed a bit as a result of the effects of the pandemic. The MarketBeat Spain report from the real estate services company Cushman & Wakefield affirms that the activity of international groups is stronger than that of national investors. “The proportion of foreign capital has been two-thirds, similar to that registered between 2015 and 2019,” the document states. But what is the new favorite asset of these investors? Answer: the logistics sector.
High demand for rentals
Regarding the residential sector, the profitability offered by the rent and its high demand are the most important reasons that have led to its increase. “The profitability of housing at the moment is quite high and stands, on average, at 5%. Something that, right now, no other financial product offers. This explains that 70% of home buyers have acquired it to put it on a rental basis.
More modern, sustainable and flexible offices
The real estate reactivation of the office sector, an asset very focused on the two large Spanish cities, is closely linked to the advanced stage of the vaccination campaign, which, in turn, favors the return to these workspaces. CBRE Group’s Mid-Year Market Outlook 2021 report forecasts a market reactivation in the second half of 2021.
In addition, investors are also more focused on financing more modern, sustainable and flexible offices. Spaces that, due to the situation derived from the pandemic, are being more in demand. In fact, JLL’s Global Real Estate Perspective report stresses how essential a property owner knows how to “ensure the health and well-being of employees, along with an ever-increasing focus on ESG criteria.” These acronyms refer to environment, social and governance, that is, environmental, social and corporate governance factors that investors are increasingly taking into account.