The provisional data from consultant CBRE registered a total of 42 operations during this period, of which 23 were concluded during the last 6 months of the pandemic. More than half of the capital allocated to this segment – around 63.3% - was invested in Madrid and almost 24% was directed towards the Barcelona office market, revealed the consultant. The data thus revealed that only 12.7% of investment was directed towards other Spanish cities, reflecting the players’ interest in the larger Spanish urban centres.
«Both Madrid and Barcelona have only a few purchasing processes on the market, but still enough to realise that great interest in well-located buildings remains intact, with price levels having not been adjusted when compared to the pre-Covid period. Thus, prime yields remain stable at around 3.25% within the CBDs», revealed Lola Martínez Brioso, director of Research at CBRE España.
According to the consultant, investors’ interest for secondary locations remains, provided that «the asset is located within a consolidated area, has high quality or was built recently and, above all, offers security in terms of long-term returns».
Investors’ appetite remains
These numbers show that despite the uncertainty of the current situation, investors keep interested in investing in the office market, in particular on the Spanish office market. This appetite from players, already detected by the consultant, leads it to predict that until the end of the year, the Spanish office segment should surpass 2 billion euro.
«Within the context of very low-interest rates which has been present all over the world over the last few years and which will continue to do so for a few years more, capital’s search for investment opportunities remains high», assumed Lola Martínez Brioso, director of Research at CBRE España, who further explained that that is the reason why «investors’ appetite for the office market remains alive, although the most sought after products, core and core+ assets, remain lacking».
«Six months after Covid-19 hit us, the prevailing uncertainty led investors to become more cautious. Processes take a long a time, which, added to the mobility restrictions, make asset visitations difficult for international funds, which, in 2019 represented 75% and in 2020 68% of all office investment in Spain. If the standard conclusion period was on average around four months before Covid-19, now it is around five to six months», added Martínez Brioso
The value-add segment, in search of assets to reposition, was very active before the pandemic and is now dormant. The risk inherent to this type of transactions and the difficulty in projecting the market’s evolution over the next months, make it so, that for now, interest has switched towards other safer options. Financing, on the other hand, has become more selective for transactions involving this type of assets.
