Most fervent interest in Spanish real estate for 10 years
According to BNP Paribas Retail Estate’s “At a Glance T4 2018” report, investment in Spanish property assets in 2018 rose to 11.63 billion euros, which was a gross increase of 8% compared to the year before.
In fact, the report goes further to suggest that 2018 experienced the greatest interest for investment in Spanish real estate for a decade in terms of activity from domestic and foreign investors, funds, REITs (Real Estate Investment Trusts, or “SOCIMI” – Sociedades Anónimas Cotizadas de Inversión Inmobiliaria – in Spanish), etc.; thereby confirming CBRE’s prediction I blogged about in November.
Retail sector led the charge
The high annual investment volume in 2018 was thanks in no small part to the retail sector, which represented 37% of the total amount (or 5.28 billion euros in monetary terms). This segment in particular was a real bull market in 2018; generating a whopping 23% more investment than in 2017.
Remember back in October when I wrote about how Spain was the most attractive market for investing in a second home? Well, although that is still most definitely the case, investment in Spanish property assets in the residential market last year paled in comparison to the retail sector; scoring just a 16% piece of the investment pie.
Apart from the resurgence of the retail sector, financial interest in the logistics sector was the report’s surprise package (pardon the pun!). The total investment in this market was 1.3 billion euros for the year, which works out to be an 11% share of the total volume. This total represents a 30% improvement on 2017 and is a new annual record for the Spanish market, according to BNP Paribas Real Estate.
This growth can be largely attributed to the e-commerce boom over recent years, headed up by global online retailers like Amazon, who now own 12 warehouses in Spain alone and process thousands of home delivery orders every day.
One stand-out transaction last year was the clothing giant Mango’s acquisition of a logistics platform in Barcelona for an eye-watering 150 million euros, making it the largest investment of its kind in four years.
Important economic indicator
The moral of the tale is that this type of record-breaking investment in Spanish property assets can only be good for the Spanish economy. It is another indicator of the extent to which the country has recovered since 2008 and demonstrates that, as well as being one of the most attractive places to live in the world, Spain is also a commercial hub, an important distributing location for the rest of Europe and a preferred relocation destination for big businesses.
Do you see evidence of an economically healthier Spain? What would you invest in if you were a massive hedge fund? I'd love to hear some of your ideas and comments, especially if you've enjoyed reading this blog!