Madrid Leads Global Growth In RE Investment

15 October 2015 – Expansión

The volume of real estate operations in the Spanish capital shot up by 164% during the 12 months to May 2015, to reach €6,347 million. As such, Madrid recorded the highest rate of growth in the world.

Between June 2014 and May 2015, real estate investment in Madrid reached the record figure of €6,347 million, up by 164% compared with the same period a year before. That places the Spanish capital at the top of the global ranking of real estate investment growth, according to a study conducted by the consulting firm Cushman & Wakefield.

“This report clearly shows that the Spanish property market is continuing (to grow) at a very good pace and that both Madrid and Barcelona continue to be in the spotlight of global real estate investors”, says Oriol Barrachina, CEO of Cushman & Wakefield España.

In total, more than €13,000 million was invested in the Spanish market in one year, thanks to purchases by large international funds, as well as by listed real estate investment companies (Socimis). In Madrid, highlights included the purchase of the building at Gran Vía, 32 for €400 million by Pontegadea, the investment vehicle owned by Amancio Ortega, and the Plenilunio shopping centre, for which the French company Klépierre paid €375 million.

Total investment

Despite the significant increase, Madrid still falls well below the major cities in the world that account for the most real estate investment in absolute terms. That ranking is led by New York, with a total investment volume of more than $74,799 million (36% more than in 2014); London, with $55,207 million (up by 13%); and Tokyo, with $37,971 million (up by 0.7%).

In fact, in terms of total investment volumes, Madrid is ranked number 27 in the world, above European cities such as Milan, Dublin, Hamburg and Oslo. “Europe continues to be a very attractive market for cash flows, but North America is the region that has grown the most, demonstrated by the strong presence of US cities in the report”, says David Hutchings, Director of Investment Strategy for EMEA at Cushman & Wakefield. In fact, 14 of the top 25 cities in the ranking are American, compared with, for example, three that are German. In terms of the origin of investments, the USA also occupies the top places in the ranking.

Barcelona, whose investment volumes grew by 46% last year, still does not feature in the top fifty cities by investment volumes. However, the authors of the report are certain that the two Spanish cities will continue to capture the attention of investors over the coming year.

Yields

The furore over real estate assets in Spain has dampened the yields of these purchases somewhat, which now amount to 4.5% in the case of offices, 4% for commercial assets and 7% for logistics properties.

By types of asset, over the last twelve months, investors have chosen to buy commercial, residential and hotel assets in New York, offices in London and industrial assets in Los Angeles. In terms of property development, cities in Asia accounted for the majority of investment. Thus, between September 2014 and June 2015, $29,390 million was spent on these kinds of projects in Shanghai, followed by $23,392 million in Beijing, and in third place, $14,244 million in Chongqing. All three cities are located in China.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

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