Spanish real estate is increasing investment: an overview of the situation
Spanish real estate is gradually recovering from the crisis during the pandemic. Analysts predict an increase in investment in the segment this year. In their view, they will grow by 32% to 11.5 billion euros, which will bring the local market back to pre-crisis figures.
A good jump for the development of the real estate segment in Spain has been a vaccination program. Thanks to it the world was optimistic, and business activity has increased.
In 2020 the volume of investment in Spanish properties decreased by 52% to 8.7 billion euros. The hotel sector suffered the most, where investments fell by 62%. In second place on the decline of capital inflows were office space – here investments fell by 49%. While in many countries, the pandemic and the relevance of Internet commerce has given an excellent boost to the logistics sector, in Spain, it sank by 26%. Retail showed a drop of 23%.
The country has seen a reduction in investment by investors in almost all segments. The least activity in this period showed institutional investors and funds in the real estate market. They reduced their investments by 79%. As for cross-border inflows of capital, here the decline was observed at 43%, private investment sank by 38%. As for the different types of assets, investments in Core and Core+ increased by 6% and 8%, and in value-added assets by 14%.
The pandemic has not only caused a decline in capital inflows. It also caused a number of changes in the very processes of the market in Spain. For example, the decline in demand for office space has led to uncertainty in the sector and the freezing of a number of projects. The retail sector has changed the behavior and needs of customers. The increased popularity of online shopping has shifted the focus from shopping centers and the opening of physical stores. Sellers now pay more and more attention to the design of the Internet page of their business than to the lease of a showroom. Against this background, the demand for logistics real estate is growing, although not at the same rate as in other countries. In addition, there are a number of problems in this sector, which hinders its development. First of all, it concerns the quality of objects and their conformity with the needs of Internet commerce.
Experts note that value-added assets, which include data centers, are quickly recovering. In addition, there is growing interest in the purchase of apartments for rent. Spaniards are also buying houses for their own residence, which contributes to low interest rates and favorable mortgage lending terms.