When breaking the information into segments, Savills Investment Management predicts that investors will keep showing a great interest in the Spanish office segment in 2020, which means the returns could keep contracting despite having already reached an all-time low.
«The increase in personal contracting within the office segments of Barcelona and Madrid in 2020 will support the growth in revenues since some important developments incorporating high quality terrains are expected for that year» commented Savills Investment Management.
Concerning retail, the report points out a moderate increase in revenues within the main commercial streets in the big cities such as Barcelona and Madrid. Revenues will increase slightly in prime shopping centres and prominent locations.
Within the logistic segment, Savills predicts there is margin for the revenue contraction to intensify in 2020 due to the lack of high-quality products and the intense competitiveness.
Analysis director for Europe at Savills IM, Andreas Trumpp, assured that «regardless of the strategies used by investors, our advice is that they join forces with asset management companies with field experience, as well as with the necessary local know how to detect and assure the best opportunities in what will be complicated markets».
In terms of the rest of Europe, Savills IM points out it prefers long-term rentals for 2020, rather than opportunistic and added value strategies, which are dependent on economic prospects and the strength of employment.
In the current late stage of the investment cycle, prospects for the European renting markets have weakened. Several analysts expect economic growth to remain at low levels during the next 12-18 months due to the global weak demand and the persistence of several geopolitical risks. Nevertheless, Savills IM’s prospects for 2020 in terms of offices, retail and logistics are for more opportunities, even though investors should be careful about asset assignation and structural changes amongst others.