Spanish Global Overview Q1 2023
The real estate sector in Spain registered an investment volume of over €2.5 billion throughout the first three months of 2023. Madrid and Barcelona led the investment with more than 60% of the market volume. Due to current macroeconomic dynamics, the share of activity among private investors and family offices increased over 10% from the previous year.
Living was the main protagonist, with a total investment of more than €800 million, increasing c. 120% compared to the last quarter of 2022. Within Living, Multifamily accounted for 90% of the investment, totaling close to €720 million. Over half of transactions took place in secondary locations in the country. In Madrid and Barcelona, Multifamily yields stood at 3.75% and 4% respectively. Whilst Student Accommodation registered a total investment of €30 million, Healthcare and Senior Living received €35 million.
Offices registered an investment of around €530 million. In Madrid, the strong demand has been reflected into a take-up of c. 110,000 sq.m. and a transactional activity of c. €400 million was observed, representing an increase of 15% with respect to Q1 2022. In the case of Barcelona, the market has seen lower activity, with the investment volume reaching c. €130 million euros. Prime yields stood at 4.10% in Madrid and 4.15% in Barcelona.
Within Hospitality, average RevPAR in the country reached €78, a YoY increase of c. 43%. On the other hand, ADR stood at c.€120, up by 16% in comparison to pre-pandemic levels. A total of 12 hotels (c.1,800 rooms) have been transacted, amounting an investment volume of over €400 million. In this respect, the destinations that outperformed during this period were The Canary Islands, Barcelona and Madrid. Prime yields remained constant standing at 4.75% in Madrid and Barcelona and 5.75% in the Islands. The upper-scale and luxury hotels continue to be the preference for investors, with 5 stars hotels accounting for over 70% of all transactions.
Logistics registered an investment of €270 million. In Madrid, the investment volume reached c. €170m, representing over a third of the total investment in the country. Barcelona closed Q1 with an investment of c. €80m, a considerable increase compared to figures from the same period in 2022. Prime yields have risen slightly this quarter to 4.70% in both Madrid and Barcelona, with forecasts for a slim increase over the course of the year.
Lastly, the Retail sector received a total investment of c. €200 million. The prevailing uncertain macroeconomic panorama has impacted prime yields in the High Street which have risen to 3.75%. In the strongest commercial street locations, availability rates continue to fall, with Barcelona and Madrid registering vacancy rates of 5.2% and 3.5% respectively, a level not seen since early 2020 in the Spanish capital.