CG Capital Europe: Spanish Real Estate Market in 2022
Real Estate investment in FY22 reached record figures, totalling €16.4 billion (excluding corporate deals, +29% vs FY21). Private investors have been the major players.
Investment in FY22 developed mainly during H1, despite the Russia-Ukraine war, high inflation and the supply bottlenecks.The strongest month was April, with a total volume of €2.6 billion transacted (thanks to the sale of the BBVA branch portfolio by Merlin Properties).
During H2 22, the rise in interest rates implemented by the ECB (European Central Bank), 3.00% since June 2022, slowed down real estate investment due to the increasing cost of financing. These high interest rates and high inflation resulted also in high uncertainty for investors,most of them on a wait & see mode, reducing their investmentsand leading to a yield expansion tendency. This uncertainty has continued during Q1 23, resulting in assets’ price corrections.
For H2 23, once the estimated corrections have taken place, it is expected an increase in investors’ appetite, leading to higher transaction volumes until end of the year.
After two years severely affected by the Covid-19 crisis, Retail achieved a record investment of €3.9 billion in FY22 (+290% vs FY21), leading the Spanish FY22 RE Investments, mainly due to the sale of BBVA’s branch portfolio (€2.1 billion, c.47% of the total retail investment in FY22). In addition, investment in Shopping Centres has grown +425% vs FY21 (€350 million invested), being one of the most attractive retail assets for some investors in FY22.
Living remains as a strong sector, reaching a €3.1 billion investment in FY22, representing c. 19% of the total real estate investment in Spainand +48% vs. FY21. BTR remains as the most sought-after segment, with an investment of €1.8 billion, representing 32% of the Living sector.
The Office sector has focused itsinvestment in assets in prime locations and/or with an ESG angle (renewed), due to their higher security and liquidity in the market. Investment in FY22 amounted to €2.8 billion.
Hospitality continues its positive trend shown in FY21, reaching an investment volume of €2.4 billion (c. 15% of total investment and +3% vs. FY21), driven by a strong tourism recovery. This figure represents the highest investment in the last 4 years.
The Logistic sector continues to be one of the preferred by investors, attracting €2.3 billion of investments in FY22, very close to the historical FY21. Logistic appetite is still very high among investors and expects to continue in FY23.
Student housing and Alternative Assets, with a total investment of €1.4 billion and €550 million in FY22, respectively, have been increasing significantly in the last years. The market expects an important growth of these sectors in coming years.