Investment in the Spanish Real Estate Market
From January to September 2013, investment in non-residential property in Spain reached 2,000 million Euros compared to the 1,622 million Euros invested during the entire 2012 fiscal year according to a BNP Paribas Real Estate study.
Focusing on the economic recovery expectations for 2014, foreign investors wish to take advantage of the favourable conditions by making investments in the Spanish market – primarily in Madrid and Barcelona.
When analyzing the non-residential real estate demand through market segmentation, most of the purchases relate to commercial assets. Second, they are associated with offices, with an average transaction value between 20 and 40 million Euros. The percentage of hotels purchased has also increased; for example, the Hotel W in Barcelona sold for 200 million Euros to the Qatari Diar fund.
The investment in residential property has also risen. The release of property previously held by the banks and the Spanish Asset Management Company of Bank Restructuring (“SAREB”) has had a significant impact on the price drop, which in some places has reached 45%.
The recovery of investments in Spain must remain under close surveillance, paying special attention to profitability. For offices, the average profitability is 6.2% in Madrid and 6.4% in Barcelona. For commercial assets, the average profitability is 5.5% in both cities. Furthermore, in the logistics segment, profitability reaches 8% as a starting point.
The outlook on the Spanish real estate market for 2014 is very positive, and all types of strategies are accepted – either opportunistic or essential ones. Although there are still some difficulties such as access to credit, there are many opportunities, too – especially since the “Law to Support Entrepreneurs and Internationalization” passed. Thanks to this Law, the Spanish Government promotes and supports foreign investors who can now enter and reside in Spain with greater ease.
According to a report from the United Nations Conference on Trade and Development (“UNCTAD”), published in the World Investment Report 2013, Spain has become the fourth country in Europe to attract more foreign investment and the 14th country in the world with the best investment options.
Monika Bertram & Hèléne Dagousset
Mariscal Abogados, Spanish lawyers in Madrid, Spain
