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Málaga Vies to Compete with Madrid & Barcelona in the Office Sector

11 April 2018 – La Opinión de Málaga

The yields for investors (in Málaga) range between 5% and 7.5%, and exceed these reference areas, although the experts agree that more tertiary development is needed. The real estate sector highlights the recovery of its activity and rules out signs of a bubble in the housing sector.

The real estate market in Málaga is on the rise and is in the spotlight of all investors both in the residential sphere as well as in the tertiary and office segments, according to comments made by several experts yesterday at a forum organised by Málaga’s Association of Construction Companies and Property Developers (ACP). They also ruled out that that there is currently a risk of a bubble since the rate of growth is being sustained. In the office sector and from the point of view of investors, Málaga capital, specifically, is positioning itself as a great alternative to the saturated markets of Madrid and Barcelona, which are showing signs of “depletion” with the lowest yields for 20 years (3.2% in the prime areas and 6.25% in the more peripheral districts), according to explanations provided by the Director of Investments at Savills Aguirre Newman, Pablo Méndez. By contrast, yields in Málaga range between 5% and 7.5%, with potential for returns that exceed by 1.5 points the markets that have traditionally monopolised investors’ interest.

“The office market has to look for new destinations to house its money and, after Madrid and Barcelona, Málaga is in an enviable position. We need to take advantage of that. There is office demand that is not being met in Málaga, which means that a great investment opportunity is opening up”, said Méndez. A recent study by his consultancy firm revealed that Málaga capital, with an office stock spanning 600,000 m2, has reached leasing and occupancy levels not seen since before the crisis, with percentages of 90% in the prime areas, the financial district and the area around Vialia, established as the Business Centre.

Rents amount to €12/m2/month on average, with maximum values of €18/m2/month for buildings on the most sought-after streets. This trend will continue in 2018, with the forecast that rental transactions could reach record volumes, boosted by sectors such as real estate, services and technology, which means that properties that have been available for almost a decade may have new tenants.

In light of this scenario of a “shortage” of sites, Méndez warns that the city needs new tertiary developments and office buildings given that the spaces that currently have most availability, on the Andalucía Technology Park (PTA), do not meet the expectations of companies who prefer a more urban environment for their workers. Areas such as Martiricos and La Térmica, in his opinion, represent development enclaves that could be used to alleviate this situation.

“Right now, the decisions as to whether to change headquarters are taken by considering the human resources team, the communications, the flexibility of hours, the services in the vicinity. There has been a substantial change in terms of the demand from tenants. The way of working has changed. Companies want to be more central and in their own environments”, he said (…).

Original story: La Opinión de Málaga (by José Vicente Rodríguez)

Translation: Carmel Drake