Is it the end of the recession for the office rental market? The latest data indicates the answer is yes, at least in prime areas. According to real estate advisor Knight Frank, the prices of offices in the heart of Madrid (inside the M-30 ring-road) have upsurged by 20% over the past 12 months.
Apart from this, Idealista.com claims there are only 2% of vacant offices left in the downtown Madrid, that is even less than in London.
The data proves the tendency also supported by BNP Paribas Real Estate, saying that in the first quarter of 2014 prices jumped up for the first time in 5 years, by 4%, and although the rise screeched in the second quarter, it meant a 30% increase compared with the Q1 2013 figures.
BNP estimated the maximum price would post 25.5 €/square meter/month, which, according to Knight Frank, will go up to 30 €/sqm/month. Moreover, the latter reckons the market came back to the 2005 level. “The situation is highly lucrative for landlords who saw their properties bringing better and better yields”.
The Hottest Market
The rebound coincides with the revived interest in the Spanish property market showed by investors, even called “the paradise” in terms of returns.
In fact, as per the information of CBRE, investment in office buildings tripled in the first quarter of the year and hit €1.15 billion. The company assures this year will be “exceptionally attractive” in the office market, both in Madrid and Barcelona. Also, Spanish investors are expected to increase their activity.
The Bottom Reached
Market Analysis director at CBRE, Patricio Palomar, explained “the macro-economic circumstances in Spain are more and more favourable, enhanced by high liquidity of foreign funds, slump in profitability of other products like national sovereign debt and the opportunity to enter the sector with a minimum input”.
In spite of the optimistic data, CBRE says the square meter volume to let is “far behing the pre-crisis levels”, however there are signs of improvement and more vivid activity.
Original article: El Economista
Translation: AURA REE