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12 September 2017 – Expansión
The real estate sector is experiencing a whirlwind year. After breaking the investment record in 2016, experts now expect the pace to continue this year and for a new investment record to be registered, excluding corporate operations.
For Adolfo Ramírez-Escudero, President of CBRE, 2017 is going to be an “exceptional” year, once again. “Investment could reach €12,000 million, whereby exceeding the expectations at the beginning of the year, which would make 2017 the best year since records began, if we exclude the corporate transactions carried out by Merlin in 2015 and 2016”, he says.
The CEO of JLL, Enrique Losantos, says that investors are maintaining their interest in the Spanish market “attracted by the strong underlying economics, returns that are still higher than in certain other European markets such as Paris and prices that are much more affordable, comparatively”.
For Oriol Barrachina, the CEO of Cushman & Wakefield, although the ECB is expected to inject less money, the appetite from investors will continue into 2018, given that the growth in wealth and the performance of assets comes from economic activity and not from the issuance of money by the Central Bank”.
Meanwhile, according to Alberto Valls, Partner in Financial Advisory at Deloitte, whilst institutional stability continues and the expectation of growth and the creation of employment in the economy is sustained, Spain will continue to be an attractive country. “We are not ruling out consolidation in the sector towards larger vehicles, involving Socimis and property developers, therefore I forecast a high level of activity in terms of corporate operations in the sector in 2018 due to concentration”.
The star players
In this sense, the Partner responsible for the Real Estate sector at KPMG in Spain, Javier López Torres, says that “the trend of consolidation amongst the new real estate companies, and their debuts on the stock market, is going to continue, and there will also be new inter-relations between new players”.
In terms of the most powerful players, institutional investors with the lowest capital costs will be the stars of operations with less need for management, which are becoming increasingly fewer because most of what could be sold has already changed hands, explains the Partner in Financial Advisory at Deloitte, Javier García-Mateo. “In the face of a pipeline of operations where there is a need for a strong transformation component, the PERES (Private Equity Real Estate) will be the players that will likely lead the sale and purchase of properties”, he adds.
Meanwhile, the Socimis will have more freedom to divest their assets as most have now fulfilled the three year period since their purchase, the fundamental requirement to be able to enjoy the tax benefits afforded to these vehicles, says Alejandro Campoy, Director General of the Investments Divisions at Aguirre Newman.
Increase in rents
In terms of the behaviour of rents in the office segment, Mikel Echevarren, CEO at Irea, says that “the economic recovery and the creation of employment will lead to an increase in occupancy rates and rents in Madrid and Barcelona”.
Sources at CBRE indicate that Barcelona is already ahead of Madrid, due to the even greater scarcity of high-quality office space in the Catalan capital. Moreover, that situation is giving rise to a significant number of pre-rental operations.
“The growth forecast in rental income is clear and very robust. Our data estimates that for the period 2017-2019, office rental prices in Barcelona will grow by around 5.2% p.a. on average, and in Madrid by 4.3% for the same period”, explains Losantos (…).
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake