Real estate investment in Spain has experienced a 6% growth in the third quarter, reaching a volume of 2,280 million euros, according to data provided by CBRE, the international real estate consultancy and services firm. However, the cumulative volume from January to September reached 7,513 million euros, which represents a drop of 49% compared to the same period in 2022. It is worth mentioning that 2022 was a record year in terms of real estate investment, with a total of €14.7 billion.
CBRE's projections point to a reactivation of the real estate sector in 2024, linked to the evolution of interest rates. The investment volume for the whole of 2023 is estimated to be approximately EUR 10.3 billion, representing a 42% decrease compared to 2022. However, these figures are in line with the averages of recent years and are in line with the downwardly adjusted expectations set at the beginning of the year.
Paloma Relinque, Director of Capital Markets at CBRE Spain, points out that "The rise in interest rates by Central Banks, coupled with the existing uncertainty, has influenced real estate market conditions. A stabilisation of rates is expected and, with it, a reactivation of the debt and refinancing market".
Madrid accounted for 52% of the volume transacted in the quarter, followed by Valencia (9%), Malaga (7%) and Barcelona (7%).
In terms of investors, 48% of the investment was made by sovereign, real estate and institutional funds, while 35% of the capital came from Spain, followed by the United Arab Emirates with 28% and France with 12%.
With respect to prime yields, these maintained an upward trend in cities such as Madrid and Barcelona, in line with the main European capitals. The outlook anticipates a gradual stabilisation towards 2024, presenting investment opportunities.
In the third quarter of 2023, 65 transactions were carried out, 56 of which related to individual assets and nine to portfolios, the latter representing 51% of the total volume.
Living and Hotel, leading players in real estate investment
During the first nine months of the year, the Living sector has been at the forefront of investment, accounting for 32% of the total, equivalent to 2,386 million euros.
Looking specifically at the third quarter, the hotel sector has reaffirmed itself as the main investment target, becoming the sector with the highest capital raising, with 35% of the total and an amount of 790 million euros. This figure has been considerably impacted by the acquisition of a portfolio of 17 hotels by ADIA, which paid more than 600 million euros to Equity Inmuebles.
Following closely behind the hotel sector, the Living Sector ranked second, capturing 33% of investments, representing 758 million euros. This sector has been characterised by medium-sized BTR transactions and experienced a doubling of its investment compared to the previous quarter.
The Industrial & Logistics sector contributed 10% of the investment, totalling 217 million. Meanwhile, the Retail sector contributed 198 million, Offices with 194 million and Healthcare with 120 million. It is worth noting that, following European trends, investors are showing interest in emerging sectors such as Datacenters, Lifescience and Agribusiness, which promise to offer superior returns in the current market context.
For Paloma Relinque, "In 2024, opportunities will appear across the board in all sectors: those of higher quality and, above all, 'green', will attract the greatest appetite for investment. Some of the major trends we are experiencing, such as an ageing population, increased mobility and digitalisation, are accelerating changes in some sectors. In this line, we observe that the Living and Hotels sectors have shown a greater capacity to attract investors. We also believe that the volume allocated to operational segments, such as hospitals, retirement homes and educational centres, will grow considerably".
Relinque adds: "In all sectors there is a huge polarisation between the different types of assets, which is reflected in higher rents and occupancies in those that meet the standards demanded by occupiers in these four areas.
