29 / 116
2017 / iberian.propery // 29
ISSUE: TOP IBERIAN cities //dossier
Yes, for 3 reasons: a) the attractive risk/
return ratio, b) positive macroeconomic
fundamentals, and c) market liquidity.
I would recommend investing, given the
potential increase in rents and take-up. The
Spanish economy, particularly in the Madrid
region, is growing significantly, and this is ex-
pected to continue over upcoming years. The
Madrid propertymarket offers good prospects
for improvement in a growth scenario that has
proven its resilience in one of themost severe
economic crises in Spain’s history.
Madrid captures a large part of the volume
invested in Spain, approximately 50%. The
principal reason is the upward trend in rents.
At the same time, the economy’s strength
maintains interest in acquiring real estate
assets in the capital high, alongwith the low
risk that these will remain vacant.
Through an evolution in rents, although
we should analyse each asset class and
submarket separately since they do not
all offer the same potential. Since there
has been significant yield compression,
this is the time for investors and specialised
managers who know the market, since that
knowledge is crucial to obtain the expected
rental growth and therefore an attractive
return on investments.
We believe the market will appreciate, par-
ticularly through rental growth and, in some
zones, through yield compression.
Yields are still contracting, andwill continue
to do so, albeit more lightly, in 2018. Overall,
rents are on the rise and may increase be-
tween 5% and 10% in the next three years,
possibly reaching the maximum levels seen
in 2006 – 2008.
There is also impact from the large amount
of money available from national and for-
eign REITs, as well from all types of funds.
Fortunately, investment remains robust
and, in the medium term, we need only
consider the possibility of destabilising el-
ements that arise from nationalist tensions
within Spain, or events that can occur in the
international sphere, both of which seem
unlikely at the moment.
The lack of available product and, in some
cases, high expectations in terms of price.
Over recent years, investors have focused
their acquisitions on prime assets located
in Madrid and Barcelona, especially in the
offices and retail segments. This has re-
sulted in a lack of product and an overall
rise in prices.
In turn, this increases competition among
investors and makes it harder to invest.
Javier Hortelano
Catella Asset
Management
Managing Director
Luis Espadas
Savills Spain
Head of Capital
Markets
Thierry Bougeard
BNP Paribas
Real Estate
Spain
Director General
Advisory