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Knight Frank: UHNWIs Invest In Spanish RE Again

30 March 2017 – El Mundo

The large fortunes are looking towards Spain once more as a destination for their real estate investments. Political stability, rising prices and high returns mean that it is now ranked as the sixth most attractive country for ultra-rich people or UHNWIs (ultra-high-net-worth individuals), in other words, those whose wealth exceeds $30 million (around €27.7 million), excluding their habitual residence.

It is the first time that Spain has reached the ranking’s top ten. The list has been compiled for the last ten years by the real estate consultancy Knight Frank as part of its “Wealth Report 2017”. The United Kingdom, the United States and Germany lead the classification, which is prepared on the basis of a survey of the individuals themselves.

According to the data, real estate investment in Spain amounted to €8,300 million in 2016, of which more than €1,200 million – almost 15% compared to 12% the previous year – came from private investors.

Legal certainty and the stability that economic growth has shown in recent quarters have been decisive in attracting new UHNWIs, according to Carlos Zamora, Director of the company’s Business Space.

The residential sector is still the market of choice, accounting for 36% of all private investment. (…).

The PIRI index

The price of luxury homes rose by 3% in the Spanish capital last year, in other words, by half as much as in Barcelona (where prices increased by 6.6%). An increase in the supply of new luxury properties contained the price rises in Madrid and, by contrast, generated upwards pressure in the Catalan capital.

Both cities form part of the PIRI index, which is presented in the report and which monitors house prices in the 100 largest luxury home markets in the world. Other locations in Spain include Ibiza, Marbella and Mallorca; the indexis led by Shanghai, Beijing and Guangzhou with y.o.y growth rates of more than 26%. Monaco is still the most expensive city per square metre in the world. By way of example, the consultancy firm points out that with $1 million, an investor can buy 17 m2 in Monaco, 20 m2 in Hong Kong, 55 m2 in Paris and 134 m2 in Madrid.

Another trend that has been detected is that investors have become more demanding, which has led to the sophistication of supply: luxury is still luxury, but now that also includes characteristics and services that set them apart from their peers.

Segments

Residential is the segment that sparks the most interest amongst investors, although, in recent years, the tertiary sector has gradually been gaining prominence too, including offices, retail, logistics assets and hotels.

In this context, flagship stores are also in demand, in emerging and established shopping areas alike, with a dual purpose: to be located in areas that facilitate their operation and to reinforce their brand images. The recent opening of the Mango megastore on Calle Serrano in Madrid and the inauguration on Paseo de Gràcia in Barcelona of the largest H&M store in Spain are both examples of this. (…).

Original story: El Mundo (by María Hernánez)

Translation: Carmel Drake