Investment In Offices Soars By 85% In H1 2015 To €1,300M

21 July 2015 – Expansión

Real estate investment in office buildings soared by 85% during the first half of the year to reach €1,300 million and whereby record “one of the best results in the last twenty years”, according to data from Aguirre Newman.

Madrid accounted for three quarters (75%) of the total investment, which was mostly concentrated in the business district of the capital.

Aguirre Newman attributes this remarkable increase in real estate investment (which does not include Merlin’s purchase of Testa), to the “consolidation of the growth of the economy”, the “return” of financing and the prospects of recovery in office rental prices in Spain, which are currently offering higher returns that investing in the stock market.

The firm considers that this “strong investment activity” will continue during the second half of the year, given the operations that are currently in the pipeline, such as the sale of Torre Espacio, one of the four skyscrapers in the Cuatro Torres business district, which the Villar Mir Group is looking to sell, but continue to occupy as the tenant (…).

Socimis and institutional investors led the real estate purchases during the first half of the year – they accounted for almost two thirds (65%) of the total acquisitions made.

On the sales side, financial institutions, insurance companies and institutional investors were the main sellers of property.

The interest shown by investors in office buildings has stemmed from the recovery that the sector is experiencing. During the first half of the year, the rent paid for those kinds of buildings increased by 23.7% in Madrid and 49% in Barcelona.

During H1 2015, in the capital, lease contracts were signed for offices with a total surface area of 262,790 m2 and in Barcelona, the figure was 177,499 m2.

Therefore, the average price of rents continued to rise, to reach €25.35/m2/month in Madrid, where prime rents are now €31/m2/month; meanwhile the average rent in Barcelona is €15.96/m2/month.

Aguirre Newman is confident that the increases in demand for office space and in office rental prices will continue for the next few months.

Original story: Expansión

Translation: Carmel Drake