E&V: Inv’t In Tertiary RE Sector Will Exceed €12,000M In 2017

21 June 2017 – Eje Prime

The services sector is soaring in Spain. Investment in the country’s tertiary sector is going to set a new record in 2017, whereby exceeding the €11,900 million recorded in 2015, according to the first study of the sector performed by Engel & Völkers. Specifically, Barcelona has become the primary investment destination, accounting for 20 of the 35 operations undertaken and outperforming Madrid for the first time.

The German real estate firm bases this forecast on the sustained growth seen over the last two years, which has been supported by Spanish investors, who now account for 40% of total investment volumes (foreign investors account for 60%). In the first quarter of 2017 alone, non-residential real estate transactions worth €3,520 million were closed, of which more than half were located in Madrid and Barcelona.

Specifically, Barcelona now accounts for 57% of the operations undertaken, compared to 20% in 2014. The prices of real estate assets in the Catalan capital is still between 30% and 40% lower than the prices seen in other European cities, which makes it an ideal place for real estate investment, according to Alberto Sarrias, CEO of Engel & Völkers Sales for Spain, Portugal and Andorra.

By sector, the retail and office segments continue to lead the way in terms of investment. Whilst the former saw investment worth €1,495 million, investment in offices amounted to €900 million, a figure that doubles that recorded during the first quarter of 2016. The hotel sector came next in the ranking, with €783 million and then the logistics segment. In terms of prices, office space in Madrid and Barcelona is expected to continue its upwards trend, increasing by between 5% and 10% per year, which means that yields could reach 15% for investors, according to the report.

In terms of the type of property, retail premises and buildings that need renovating in the prime areas of large cities are the most sought-after by investors in general, although there are some variations depending on buyers’ profiles. Whilst the investment funds prefer office buildings and shopping centres that need renovating, private investors opt for commercial premises and small buildings.

Original story: Eje Prime

Translation: Carmel Drake