offices Market News: Spanish Real Estate Intelligence

The office real estate business will suffer from the impact of the coronavirus, as less space will be leased and rents will fall, however, the experts are optimistic about investment since there is liquidity in the market. Lower employment, and the greater use of so-called agile workplaces, will mean less need for office space and more empty properties. However, the office sector has the potential to attract significant investment as an alternative to the stock market and other real estate segments. That is the short and medium-term view of the office market, which experienced an exceptional 2019, when investment amounted to €3.7 billion, accounting for more than a third of all real estate investment. Last year also saw the highest volume of office space leased since 2017, although a 15% reduction in leasing was already forecast before the coronavirus hit, due to the cooling off of the economy, according to estimates from CBRE.

In light of the crisis caused by the coronavirus, the Socimi is postponing part of its capex program until next year: €60 million, which represents 40% of the total investment of €150 million that it had planned to spend on the refurbishment and development of buildings in 2020. The real estate company has acknowledged that “the coronavirus crisis is impacting our portfolio of projects and so specific delays on some of them are expected,” in a statement sent to the National Securities Market Commission (CNMV). One third of the amount deferred corresponds to investments in the office and housing project that the company is working on in the Méndez Álvaro area of ​​Madrid. According to the listed real estate company, the impact of the coronavirus crisis on Colonial’s real estate activity, as well as on the economy in general, continues to be “uncertain and difficult to predict.” For this reason, the company has acknowledged that it has reviewed its investment criteria and policies “in accordance with a more prudent context”. However, it stresses that the company’s asset portfolio, as well as its current liquidity and solvency, allow it to “face and manage the situation in an optimal way”. Regarding its financial position, the firm explains that it has available credit lines and cash amounting to €2,000 million and net liquidity that covers “the maturities due over the next two years by more than four times.”