Aguirre Newman: Office Inv’t Down As Socimis Less Active

14 July 2016 – Expansión

A smaller supply of assets and less investor pressure, as well the political uncertainty in the absence of a stable Government and the fears of a possible slowdown in economic growth around the world have caused investment in offices in Madrid and Barcelona to dip during the first half of the year.

Specifically, the volume of investment in offices in Madrid amounted to €700 million during H1 2016, which represented a 35% decrease compared to the same period last year (€1,076 million). Meanwhile, in Barcelona, investment decreased by 15% to €270 million, according to a report prepared by Aguirre Newman.

The study highlights that the Socimis, which accounted for between 40% and 45% of total investment volumes in 2014 and 2015, cut back their investment activity significantly during the first half of the year, to account for just 3% of the total. By contrast, one of the most active players during H1 was Colonial.

The Director General of the Investment division at Aguirre Newman, Alejandro Campoy, explains that the Socimis – which have been very active over the last two years – have focused more on managing their acquired assets during the last few months. Nevertheless, he expects them to resume their investment activity during the second half of the year and to account for 15% of total investment.

According to the consultancy firm, the political uncertainty, which should be resolved within the next few weeks, combined with the positive performance of the Spanish economy will benefit investment activity, especially from overseas institutional investors. In this way, it forecasts that investment in offices will amount to between €3,000 million and €3,500 million by the end of the year, albeit below the record reached in 2015, which was boosted by Merlin’s purchase of Testa.

The report reflects that low yields on fixed income, which are actually negative in certain cases, and the high degree of volatility surrounding equities, accentuated by Brexit, means that the appeal of the real estate sector will continue to increase as an alternative for channelling savings.

In terms of the behaviour of rental prices in Madrid and Barcelona, they are continuing the good trend started last year across all of the areas analysed and are expected to continue to rise over the coming months.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake