Spanish Retail Market Q3 2023
Despite the Spanish economy growing higher than expected, high-interest rates and adverse external situations are hindering economic growth in the second half of the year, affecting all investment markets.
Revenues in the retail sector have increased. This was due to a rise in prices, but not to an increase in terms of volume, as the pace of sales has slowed down due to the factors mentioned above.
During the first three quarters of the year, investment in the retail sector in Spain amounted to around €530 million, representing 14% of the same period in 2022. This figure is mainly attributed by the absence of portfolio transactions, such as the sale of 662 units by Merlin Properties to BBVA for approximately €2 billion in the second quarter of 2022.
The accumulated investment in retail parks until September 2023 reached €300 million, representing more than half of the total investment in the retail sector in Spain and surpassing the average of the previous three years. In the third quarter, the most significant transaction was the acquisition by AEW Europe of 2 units from Lar Spain for circa €130 million.
After the years following the pandemic, the influx of both national and international visitors has reached previous levels, maintaining investment in prime locations. However, investors, due to economic uncertainty, are mainly seeking properties in the key points of major cities where they can have greater visibility to the general public. Investment in the High Street sector amounted to €74 million in the first nine months of the year.
As a consequence of high-interest rates, there has been an increase in prime yields, which is expected to continue until 2024. During the third quarter of the year, prime yields for shopping centers ranged between 6.5% and 7.5%, with prime yields for retail parks and retail premises at 7% and 4%, respectively.