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Office investment reaches €4.314M in 2019
22 January 2020 | Observatorio Inmobiliario

The Spanish office investment market closed 2019 with 4.314 million euro invested, a record for the last decade, around 55% more in terms of assets traded than 2018, according to data from international consultant Savills Aguirre Newman.

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By autonomous communities, Madrid registered 86 assets traded compared to 59 in 2018 and Barcelona registered 48 compared to 17 in 2018. Madrid reached 2.354 million euro in transactions, 17% more yoy, and Barcelona 1.780 million, almost three times as much as during 2018.

Barcelona’s activity recovery and product rotation were the main market boosters, after two years of uncertainty in the city’s market and the general lack of product, stated Savills Aguirre Newman.

The remaining operations totalling 143 million euro, took place in Valencia, Bilbao or Malaga, with an 18% increase yoy in other Spanish cities.

It is important to highlight the superiority of foreign investment in a segment dominated by domestic investors until 2017. The mid-term prediction from Savills Aguirre Newman is for the volume of foreign investment to remain at the same level, with new players entering the market.

In this sense, domestic investment last year in Madrid was only 25%, whereas in Barcelona it represented 47% of all investment.

Foreign investment already represents 74% of all investment, with European investors dominating in both markets and with a notable increase of American investors in Madrid, with 28 operations in 2019 when compared to 7 in 2018 and 159% more in terms of volume by going from 292 million euro to 756 million euro at the end of 2019.

«The main novelty is the entry of new capital from Asian countries which are attracted by the better interest rates when compared to the United States. We expect more core plus operations, that is, operations with more mature buildings in consolidated office areas not necessarily at the city centres», explained the Head of Offices at Savills Aguirre Newman, Hipólito Sánchez.

In terms of risk exposure in terms of the office segment, Savills Aguirre Newman points out that, as is usual in the traditionally conservative segment, more than half of the investment in Madrid in 2019 corresponds to core and core plus products and in Barcelona it represents 85%.

Nevertheless, value add activity is growing in both cities, with 69% more in terms of volume invested in Madrid and around 175% more in Barcelona, since rents are expected to increase, quality product will remain lacking in the market and the investors will keep looking to generate yields.

The number of mega-operations, over 100 million euro, registered last year also increased significantly, with 16 operations registered including porfolios and individual assets, when compared to 6 during 2018.