RE Investment Returns To Pre-Crisis Levels: €10,200m In 2014

20 February 2015 – El Economista

Spain became the second largest real estate market in terms of investment in 2014, behind Sweden. Specifically, investment in real estate in Spain amounted to €10,200 million during the year, a record surpassed only in 2007, just before the start of the crsis.

CBRE explains that the transactions closed during the last quarter of the year boosted this strong result. Between September and December 2014 alone, real estate investment in Spain amounted to €3,396 million, i.e. 50% more than in the same period in 2013.

These figures are in line with the trend across Europe, where investment in real estate assets increased by 32% in 2014, to €218,000 million. In the last quarter alone, investment reached €78,000 million, the highest quarterly investment recorded since 2006.

Spain was ranked as the sixth country in terms of inwards investment during the last quarter, above countries such as Norway, Denmark and Italy.

What about in terms of debt?

In terms of real estate debt, the total stock across the European continent increased by almost €23,000 million in 2014, to €978,000 million, primary due to the entry of new credit. According to CBRE, the amount of new debt issued rose by 47% in 2014 with respect to 2013, although in absolute terms this figure was less than half of the volume of debt issued in 2007.

The consultancy explains that this increase in new debt was due to the growth in the size of the real estate investment market. And the total value of investment transactions in Europe increased by 32% last year, to reach €218,000 million.

Moreover, the number of investors with an appetite for risk increased, especially in Spain; these investors tend to make more use of leverage, both to increase their purchasing power and improve their returns.

Real estate loan portfolios

In terms of the sale of non-performing real estate loan portfolios, CBRE says that the transaction volume amounted to €49,200 million in Europe in 2014, more than twice the figure recorded in the previous year.

This growth was particularly significant in Spain, where a rise of 103% was recorded, up from €3,200 million in 2013 to €6,500 million in 2014.

Looking ahead to 2015, CBRE expects the sale of real estate loan portfolios to continue and to expand into new markets, although it does also expect the pace of sale of these portfolios to decline.

“This is because of the time that the market needs to overcome a number of structural obstacles that currently stand in the way of a liquid market for loan sales in Europe”, it adds.

Original story: El Economista

Translation: Carmel Drake