30 November 2017 – Expansión
After the odyssey experienced during the years of the crisis, with the drastic fall in the volume of investment, the tertiary real estate sector in Spain is now going through a stage of consolidation. As such, for the third year in a row, the volume of transactions involving non-residential assets is going to exceed the €10 billion threshold again in 2017.
According to the conclusions of a seminar organised by Aguirre Newman and KWM, which included presentations from some of the main players in the sector, this positive trend will continue for the next few years, despite certain risks in the environment, such as the political uncertainty, the inevitable rise in interest rates in Europe, the ageing population and the salaries that continue to stagnate.
At the meeting, which was attended by the main executives and directors of listed companies such as Merlin, Neinor, Aedas and Colonial, amongst others, as well as by property developers and investors such as Grupo Inmobiliario Roca, Morgan Stanley Investment Management, Grupo Ibosa, ASG Iberia and Stoneweg. Together, they discussed the evolution of the sector and the challenges for 2018, amongst other topics.
“The tertiary investment market is going through a growth consolidation phase after the deep recession that we suffered between 2008 and 2013. According to our estimates, the volume of investment in tertiary assets will exceed €10 billion for the third year in a row in 2017”, explained Susana Rodríguez, Director General of the Consultancy division at Aguirre Newman.
According to data from the consultancy firm corresponding to the first three quarters of this year, hotel assets have been one of the stars of the real estate sector, with investment of €1.9 billion during the 9 months to September, up by 29% YoY. The high street segment also experienced significant growth, of 37%, with an investment volume of €605 million. Whilst, investment in the logistics segment amounted to €665 million, up by 26% YoY. By contrast, investment in offices during the first three quarters decreased by 23% to €1.9 billion and investment in shopping centres decreased by 3% to €3 billion.
In terms of the threat of a rise in interest rates in Europe, the experts agree that there will be at least one or two years of stability and that when the time comes for the rate hike, it will be managed in a moderate way: “They do not consider that it will affect the valuation of assets, given that we are in a phase of growing rents”.
Another one of the challenges facing the sector is caused by the political uncertainty generated in Cataluña following 1 October. The speakers agreed that, for another year, the country risk is going to be one of the issues that concerns investors.
Rodríguez said that the figures in the Catalan market are “very positive” at the end of the third quarter. Specifically, the leasing of offices in Barcelona rose by 8% to 265,470 m2 and the average prime rent rose by 9% to €18.25/m2/month.
“It is undeniable that, since October, we have felt a slowdown in the volume of real estate operations. Both business people and investors alike are postponing decision-making whilst they wait to see how the political tensions and uncertainties that are affecting the market today are resolved”, she added.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake