27 June 2017 – Expansión
Investment in the real estate sector is registering record-breaking figures in the Spanish market once again. With three days left until the end of the first half of the year, the sale of buildings and land during the first six months of 2017 amounted to €5,991 million, according to the real estate consultancy firm JLL. “There is a lot of money ready to invest in Spain and when products come onto the market, the interest is unleashed. Investors still think that Spain has a lot of potential and that rents are going to rise, accompanied by the forecast economic growth in the country”, explained Borja Ortega, Director of Capital Markets at JLL.
The real estate investment of almost €6,000 million represents an increase of 70% compared to the figure recorded during the first six months of 2016 (€3,548 million), of which €3,000 million corresponded to non-residential asset purchases.
By type of property, offices and commercial assets account for most of the operations. “There is complete faith in Spain, with a clear commitment to both Madrid and Barcelona, and investors continue to seek out good spaces, which they will be able to lease easily”, said Ortega.
In the case of offices, the volume invested during the first six months of 2017 amounted to more than €1,200 million, up by 55% compared to the first half of last year. However, the forecast for 2017 as a whole is that office investment will reach €2,400 million, in line with 2016. During the first few months of 2017, several major operations were completed, such as the sale of Torre Agbar in Barcelona – which was acquired by the Socimi Merlin for €142 million – and the purchase of the Isla Chamartín complex in Madrid, which the fund Lone Star sold for €103 million. “In the case of Barcelona, the cumulative investment volume recorded since the start of the year amounts to €510.65 million, which means that it is almost equal to the total amount invested during the whole of 2016, when €521.50 million was spent in the city – this demonstrates the strong investor appetite that has characterised this first half of 2017”, said sources at the consultancy firm.
Towards a record year
Like in 2016, commercial assets (in particular, shopping centres) have knocked offices off of the top of the ranking as the asset that accounts for most investment. In this way, so far in 2017, investors have spent more than €2,400 million on commercial assets. Their purchases include the shopping centre that has starred in two operations in the last six months: Xanadú. This establishment, which is located in the Madrilenian town of Arroyomolinos, was acquired at the beginning of the year by the British group Intu Properties, which paid the fund Ivanhoe Cambridge €530 million. Three months later, Intu sold 50% of the centre to the manager TH Real Estate for €264 million.
The strong performance of the Spanish real estate sector during the first half of the year means that it is lining itself up for a record year. “Whilst last year, investment amounted to around €9,500 million, this year, I am sure that it will rise by 15%, to reach figures close to the records of 2007″, said Ortega.
In this sense, it is expected that several new operations will close before the end of the year, such as the sale of the Socimi Hispania’s office portfolio, worth €550 million; and of logistics land to be developed and the batch of Rea residences, by the manager Azora. “Now, the core funds are going to play a greater role, taking advantage of the exit of other more opportunistic and value-added investors, which are going to start selling off products that they purchased in recent years”, said the director at JLL.
Original story: Expansión (by Rocío Ruiz)
Translation: Carmel Drake