How the most attractive segment of the market in Spain will develop
Analysts at DWS have studied real estate trends in Spain. According to the results, the most attractive segment of the market is housing. Its profits in major cities until 2025 will only increase. Second place in the rate of development is logistics real estate.
First of all, the prospect of housing is growing in Madrid and Barcelona. Here, the profitability rate in 5 years may reach 9%, making this segment an excellent option for investment. Profitability of logistics objects will be about 8%, and office and retail real estate will show the result of 6%.
The rental housing market remains stable and sustainable, despite the economic situation in Spain. The population in Madrid is projected to increase by 5% in 10 years, and in Barcelona by 2%. At the same time, real household incomes will show a growth of about 2% annually. Such figures suggest that demand for housing will be maintained at a high level. In general, Spain has all the prospects that the rents of houses and apartments are regularly growing. First and foremost this applies to Madrid, where the rates are not regulated at the legislative level.
In terms of attractiveness of objects, the leader here is Madrid, with logistical real estate is more interesting in Barcelona. However, it is worth understanding that the Spanish market depends on the profitability of logistics facilities in Portugal, the capital of Lisbon. Here, the yield will be at 10%.
Analysts have noted increased interest in the suburbs of the two largest Spanish markets. In first place is Getafe, a suburb of Madrid, and in second place is Badalona, near Barcelona. These communities have affordable rents, which contributes to an increase in the number of people living there. Mostly people who move here are those who have rented apartments in Barcelona and Madrid. There are excellent communications with the cities, and quality housing can be rented for less money.
According to analysis from DWS, the real estate market in Spain, as well as the rest of Europe, is showing a strong recovery after a slowdown in 2020. Because of this, we should expect that by 2025, the profitability of properties will increase significantly compared to the current situation.
During this period, rents will increase by about 3.1% per year. This will be facilitated by a shortage of supply, which will be observed not only in major cities in Spain, but also in Berlin, London and Munich.
Rising rents are observed in all European countries, which contributes to the policy of banks that are in no hurry to issue loans for the purchase of housing, as there is a high risk of non-payment on the mortgage.