Investment Recovers to New Highs Two Years After Referendum on Catalonian Independence

21 October 2019 – The Barcelona Meeting Point (BMP), the largest real estate fair in Catalonia, opened its doors just two days after Spain’s highest court convicted many of the leaders involved in Catalonia’s referendum on independence on October 1, 2017. Even as major riots shut down the airport and filled the city with the smell of burning plastic, investors appeared unruffled. The region’s real estate market has come back strong after having taken a nosedive in the two quarters during and after the bid for independence.

The last edition of the BMP, two years ago, was held just fifteen days after the referendum, and the difference from today was stark. Attendees referred to the fair as something of a funeral rite as the referendum led to plummeting investment. Hundreds of companies at the time decided to move their headquarters away from Barcelona. That uncertainty caused two quarters of sharp reductions in real estate investment in Catalonia. The market, however, has come back roaring.

Investment in the office real estate sector fell by half in the two quarters after the referendum in 2017, shocking many investors at the time. But by the summer of 2018, Blackstone finalised one of the most important transactions in the office market. The giant US fund acquired the historic headquarters of Grupo Planeta from the Lara family for 210 million euros. During the same period, Solvia sold three hospitals in Barcelona, ​​Bilbao and San Sebastián to Carmen Godia for 200 million euros.

Total investments between January and September of this year reached €4.5 billion, near to the levels of the last two years and above the tally in 2008, which set the record high for the previous real estate cycle of €4.4 billion. It remains to be seen whether the rioting after the Supreme Court’s ruling will depress investments once again, but most investors appear to be sanguine.

Original Story: El Confidencial – Elena Sanz

Adaptation/Translation: Richard D. K. Turner

Barcelona’s Office Market Surges Two Years After Push for Catalonian Independence

4 September 2019

Barcelona’s office real estate market continues to break new ground as a record 256,000 m2 of office space were allocated in the first six months of the year, 30% more than the year before. The Catalan capital is considered one of the world’s best cities to work in, as evidenced by the fact that 48% of the allocations went to foreign firms.

The volume of investments also set a new record, reaching more than 600 million euros in the semester, a ten-year high. The increasing inflow of foreign investment capital is boosting the market, leading to the development of new buildings and a flurry of portfolio sales as firms sell off non-strategic assets to focus on their core activities. Two years after a referendum on Catalonian independence led thousands of companies to flee the region, new companies and investors are pouring in.

Tech companies have accounted for 27% of the allocated surface area, while co-working firms had another 22%. In the first six months of the year, co-working firms have snapped up 56,080 m2 of offices, more than the total for 2018.

The fervour in the market is leading to tightening supply, and the office vacancy rate has fallen to just 6.8%. That fall has led office rents in Barcelona to increase steadily for the last six years, and rents went up by 3% in the first semester of this year, largely powered by the prime and new business districts.

Original Story: El Confidencial

Adaptation/Translation: Richard D. K. Turner

 

STR & Magma HC: Hotel Investment Continues to Rise in Spain

2 August 2018 – Hosteltur

The Spanish hotel industry has increased its interest in investment due to the strong growth in yields in several markets, and despite the fact that the political scenario in Cataluña has slowed down the performance of the country as a whole. That is according to analysts from STR and Magma HC, who explain that the investment boost has been largely driven by the strength of international demand, even during the financial crisis.

“The increase in holiday tourism, as well as in ‘bleisure’ (business with leisure tourism) has opened the market to numerous development opportunities, with several operators currently working on improving their products and services to satisfy the growing demand”, says Albert Grau, founding partner at Magma HC. Thus, in his words, the Spanish hotel sector “is continuing to boom, despite the challenges ahead”.

In this sense, it is worth remembering that, between March 2015 and March 2018, Spain registered 37 consecutive months of RevPAR (revenue per available room) growth. In recent months, by contrast, there have been marginal decreases, above all due to the slow down in Barcelona, which is home to the largest number of rooms in the country. Even so, according to data from STR, in most of the key domestic markets, including in Madrid, hotel yields are continuing their strong upwards trend.

“Vacation markets, primarily Gran Canaria, have experienced YoY decreases because tourist demand has returned to rival destinations such as Turkey and Egypt”, says Javier Serrano, manager at STR for Spain.

Barcelona

STR’s study shows that, in general, hotels in the Catalan capital have managed to keep their tariffs more or less stable, although there have been more notable decreases in recent times. Following the independence referendum last October, the occupancy rate of establishments in Barcelona fell considerably. During the first half of 2018, they fell by 5.2% with respect to the same period a year earlier, whilst the ADR (average daily rate) fell by 1.4% compared to 2017.

“Although it is still too early to make any kind of prediction about what will happen in the market in the end, it is likely that Barcelona will recover quickly once the situation stabilises”, says Serrano. “Hotels in Barcelona”, he adds “saw constant monthly RevPAR growth rates in the double digits in 2016 and 2017, when the market was still benefitting from strong international demand and demand diverted from destinations such as Turkey and the north of Africa. The recent instability in Barcelona slowed down those previous growth rates, with decreases in occupancy rates driven by the decrease in domestic and international demand, mainly from the USA. Nevertheless, if the market manages to keep tariffs stable, we should see growth to the extent that consumer confidence returns to Barcelona”.

Madrid

Madrid, with the highest RevPAR growth rate in all of Spain in 2017, has benefitted over the last three years from demand due to leisure and corporate business. As well as being one of the main weekend destinations for Europeans, it has also seen an increase in interest from several Asian countries and the USA, especially when it comes to group reservations (…).

The Director-General of STR, Robin Rossman, believes that “there is enormous potential for Madrid’s hotels to continue pushing up rates”. In his opinion, “to the extent that demand continues to grow and the hotel supply market continues to evolve with the arrival of more high-end properties, we can expect to see increases in the ADR”.

Overall, the analysts at STR expect that corporate demand in Madrid will continue to increase thanks to the celebration of international events and the relocation of the headquarters of several companies from Barcelona to the Spanish capital. As such, they forecast ADR growth of close to 3% in Madrid by the end of 2018.

Original story: Hosteltur

Translation: Carmel Drake