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C&W: RE Inv’t Amounts To €5,500M During YTD Sept 16

30 November 2016 – Expansión

Change in the trend / Investment fell by 25% during the first nine months of the year, excluding Merlin’s purchase of Metrovacesa’s assets.

During the first nine months of 2016, real estate investment in Spain (excluding the purchase of residential and corporate assets) amounted to €5,500 million, down by 25% compared to the same period last year, but in line with the first three quarters of 2014.

If we include Merlin’s integration of Metrovacesa’s assets, this figure increases by €1,000 million, explain sources at the consultancy firm Cushman & Wakefield (C&W) in their latest report.

By type of buyer, international funds lead the investor ranking, accounting for 57% of all investment, however, Spanish firms, led by the Socimis and in some cases privately owned firms such as Pontegadea, are starting to bring domestic capital into line with overseas capital as we head into the final month of the year. In 2015, domestic buyers accounted for 57% of all operations.

The decrease in investment volumes in 2016 is explained by a reduction in purchases during the first six months of the year, given that, during the third quarter, several large operations have been signed, including the acquisition of the Diagonal Mar shopping centre in Barcelona, by Deutsche Bank’s real estate fund, which paid €495 million for the property; and Torre Foster, which was acquired by Amancio Ortega’s real estate company (Pontegadea) for €490 million.

Excluding these operations, the average volume per acquisition has decreased this year, from €55 million to €40 million, say sources at Cushman & Wakefield (C&W). The average over the last decade stands at €50 million.

Shopping centres

By type of asset, the large shopping establishments (centres, retail parks and flagship stores) have been the stars of the investment market so far in 2016, accounting for 44% of the total, according to the report. In this way, in addition to Diagonal Mar, the following establishments have changed hands: the ABC Serrano in Madrid and the Gran Vía in Vigo. “Investment in retail in Spain is much more oriented towards foreign capital, above all, in the case of shopping centres”, say sources at the consultancy firm.

Meanwhile, offices have accounted for 25% of the total investment volume, compared with 30% on average over the last ten years.

Purchases of logistics assets are recovering well, thanks to the high returns that they now offer compared to other types of properties, whose returns have started to decrease due to high demand. One of the most important operations of the year saw the fund CBRE Global Investors purchase 16 logistics centres from Metrovacesa.

By location, Madrid maintained its position as the leading destination for real estate investment in Spain, accounting for 30% of the total.

After a strong third quarter, the forecast for the end of the year is positive, but lower than the figure recorded in 2015. “We estimate a total spend of around €8,000 million for the full year (excluding Metrovacesa’s office portfolio, worth €1,000 million), compared with €8,600 million last year”, say C&W.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake