Real Estate Investment in Spain increased by 112% in 2013
According to a recent study by BNP Paribas Real Estate, all of the real estate investment market segments in Spain saw recovery last year, with the annual volume in 2013 reaching 3,800 million euros, more than double the figure recorded in 2012 (112% annual growth), and represented the greatest level of real estate investment in Spain since 2010, mainly due to the influx of foreign funds.
Three main sources accounted for this increase: the demand for distressed assets arising from repossessions or unresolved debt; sales of residential portfolios held by banks, official organisations and the Sareb; and investors’ perception that asset prices have reached their minimum levels.
The study showed that the composition of demand is now international, following years of dominance of the investment landscape by private investors. Most active amongst the European investors are those from the United Kingdom, France and Germany, while activity by North American investors was notable for residential portfolios, and Latin American investors sought prime assets in Madrid and Barcelona. New investors from India and the Middle East also made acquisitions in Spain.
Furthermore, BNP Paribas Real Estate said that the retail market, especially the shopping centre segment, had been the key sector in the upturn of real estate investment in Spain, accounting for a 43% share of the volume of investment in the past year.
Sales of residential portfolios, mainly from government agencies and the Sareb, have also had a strong impact on real estate investment in 2013, contributing 22% of the total, with more than 800 million euros, while investment in offices, mainly focused on prime assets in Madrid and Barcelona, came to 667 million euros.
In the general context, the study notes that the Spanish economy has entered a path of moderate recovery, investment in fixed capital has once again started to grow, employment has been generated in some sectors and an improvement in consumption is expected, though slight, by the end of 2014. BNP Paribas Real Estate indicated that the findings of the study suggests there is a clear change in sentiment in the market, and forecasts that property investment in Spain will be consolidated in 2014.