By Mikel Marco-Gardoqui, executive managing director CBRE Spain
2017 has hit the ground running, with both letting and investment activity upbeat, with four key trends set to undoubtedly shape the real estate market this year.
Firstly, there will be a growing number of corporate transactions. As we have already seen with Testa and Metrovacesa, it seems that the race to achieve the biggest property portfolio possible is well and truly on. Becoming a powerhouse in the market and owning as many sqm as possible are key, as being a dominant player in the real estate market affords clear advantages.
Investing in opportunistic deals will be another key trend that will shape this year’s performance. Opportunistic investors have clearly veered towards the residential market, where they can achieve the investment returns they are looking for thanks to land projects, major reconversion projects and residential developments given the activity being seen among private investors.
The real estate market will also start to see a rising number of value-add strategies in play. Broadly speaking, investors have adjusted the level of returns they are looking for and started to target the most obvious niche market in Spain; i.e. simply improving existing stock and repositioning assets that were neglected during the economic crisis. Appealing spaces are always a sure fire way to attract investors, whatever their profile. People are now looking for an appealing city and buildings that meet 21st century demands.
Core investors have returned to the market in force and with an insatiable investor appetite and all locations are on their radar
Lastly, core assets will also play a leading role in this year’s market. Core investors have returned to the market in force and with an insatiable investor appetite and all locations are on their radar; from Paseo de la Castellana or Plaza Colón in Madrid, to Paseo de Gracia in Barcelona and Plaza Nueva in Seville. In these uncertain times, in which the market is highly liquid and returns on cash holdings are not in the least attractive, investors are under pressure to place their equity in order to generate value, prime is more prime than ever.
These four key trends will shape the real estate market in 2017, largely driven by the following factors: following several years of moderate growth, rents will rise sharply; the real estate sector will remain firmly on investors’ radars given the lack of investment alternatives on the stock market and financial markets; and lastly, the fact that Spain will be considered to be a solid European market, thanks to its economic growth, deficit control and job creation.
In short, 2017 is set to be a key year for the spanish real estate market; a year of consolidation, in which it will gain international recognition, and will register strong and sustainable growth.
More information: ESPECIAL MIPIM 2017