Investment in Spanish Real Estate to Reach €5 Bn

25/04/2014 – Expansion

Such transactions as the sale of Vodafone headquarters in Madrid, the Estel building in Barcelona or Vastned´s shopping mall portfolio are only a sampling of investment in Spanish property during the first quarter of 2014.

In total, the mentioned period saw a €988 million investment and, according to Research Director in CBRE Patricio Palomar, the number will be amplified by ongoing operations estimated at around €700 million. “The year may end up with a between €4.5 billion and €5 billion investment. To compare, in 2013 the investment volume marked €3.8 billion, after slumps in the previous years.

The increase might be explained by an improvement in rental prices which dipped down over the last years by 40% in Madrid and by 38% in Barcelona. “In the financial heart of Madrid, the prices are expected to grow by 20% in the next 4 years. Those investors who bought in 2013 can obtain up to 12% annual returns”, Palomar assures.

According to the advisor, this year vulture funds will have to bow out and give way to offices to large sovereign funds and big insurance firms, while shopping centers which were the main target of 2013 are said to maintain the popularity.

A considerable part of the €5 billion amount is predicted to be spent by Spain´s REIT companies (or Socimis by their acronym in Spanish), such as Merlin that plans purchases for joint €1 billion, Hispania or Lar (€500 million each). “These vehicles dispose of €2 billion for investment that thanks to moderate debt policy (of 50%) will be duplicated”, explains Palomar. Few days ago, Hispania acquired the Hotel Guadalmina in Marbella, while Lar ends up purchase of the Boulevar shopping center in Vitoria, the Basque Country, for €150 million.



Original article: Expansión (by Rocío Ruiz)

Translation: AURA REE