Key City Performance: Valencia
Valencia is one of the most important cities in Spain in terms of GDP and population. The city presents a compelling case for real estate investment. Its strong economic indicators, low vacancy rates, and thriving sectors such as tourism, logistics, and hospitality make it an attractive location for investors. The city’s strategic position, robust infrastructure, and the growing demand in various real estate asset classes contribute to its potential for profitable returns on investment.
The city ranks as the third most populated in Spain, following Madrid and Barcelona, with a total of 792,492 inhabitants in 2022. Additionally, it boasts a GDP per capita above the Spanish average, surpassing €31,000 compared to the national average of €27,870. When examining the distribution of GDP by economic sectors, the dominant sector in Valencia is tourism, accounting for a significant 69.7%. This is in line with Spain’s overall profile as a country with a strong presence of the tertiary sector. The secondary sector follows, representing 22.6% (16.5% for industrial and 6.1% for construction).
Valencia’s appeal for real estate investment stems from its low vacancy rates across various sectors. Firstly, Offices in the city are experiencing a marked demand-supply imbalance, with a take-up of 41,600 sq.m. in 2022 and an average price of €10.5/sq.m., reaching up to €17/sq.m./month. Notably, the vacancy rate in 2022 was just 5%, which is almost half that of other major cities in Iberia such as Madrid, Barcelona, Lisbon, and Porto. This factor anticipates an increase in investment within this sector.
The Logistics sector holds significant importance in Valencia due to its location, hosting one of Spain’s and Europe’s most crucial ports. The port of Valencia annually handles approximately 80,000,000 tons of goods and around 5.5 million containers. This highlights the significance of the Logistics sector in the city. In Q1 2023, the take-up for Logistic assets reached 113,815 sq.m., and the projected pipeline for 2023 – 2024 is 234,190 sq.m. for new GLA (Gross Leasable Area). The vacancy rate in Q1 2023 was just 1.48%, largely driven by the solid growth of e-commerce in the area.
Valencia’s hospitality sector also exhibits positive trends. In Q1 2023, the city recorded a total of 1,737,168 overnight stays, nearly matching the figures from Q1 2019 (a slight decrease of only -1.07%). The average occupancy rate in Q1 was 70%, surpassing that of Barcelona (67%). ADRs (Average Daily Rate) in Q1 2023 saw a significant increase from €80.8 in Q1 2022 to €99.1, primarily driven by the high demand experienced by Valencia’s hotels.
In the residential sector, an outstanding aspect is that approximately 20% of investments in Q1 2023 were made by foreigners seeking the so-called Golden Visa. Notably, one of the most noteworthy transactions in this sector was the purchase by Savills from Neinor Homes of two 20-storey buildings comprising a total of 209 homes for a total of €66 million.