Capital markets in Iberia grow 18% in 2021

This data was calculated by Iberian Property Data, whose database identified a sample of 252 commercial real estate investment operations in Iberia throughout 2021, with a total amount traded of 14 billion euros. This result compares highly (+18%) with the 11.9 billion euros calculated in 2020, despite the decrease in the number of operations (-14%) compared with the 294 deals identified that same year.

Compared with the pre-covid period, the performance reported in 2021 was just 8% below the 15.2 billion euros traded in the Iberian market in 2019, which we note was a record year with the highest volume of investment in the last five years, when Iberian Property began monitoring the “Top Deals” series. We also mention that last year closed with 36 less deals than the 288 transactions registered in 2019.

The vast majority (84%) of the volume allocated to the Iberian market in 2019 was destined for the Spanish market, which traded 11.8 billion euros – a value 32% higher than the 8.8 billion euros registered one year before, and which led to an increase of 8 percentage points (p.p.) in its share in absolute terms throughout the last year. In contrast, contributing with 2.2 billion euros in 2021, Portugal lost ground during the period under analysis, due to a y-o-y decline of 24% in the total amount traded, making its Iberian market share drop 24% in 2020 to just 16% at the end of last year.

Looking in closer detail, the Catalonia region represented 24% of the total amount traded in the Iberian Peninsula in 2021, with approximately 3.4 billion euros, while Madrid concentrated 19% of the total, with 2.6 billion euros, and Lisbon represented just 8%, the equivalent of 1.1 billion euros. Approximately 5.8 billion euros were allocated to the rest of Spain (excluding the Madrid and Catalonia regions), representing a share of 42%, while the rest of Portugal (except Lisbon) concentrated the remaining 8%, in other words 1.1 billion euros.

In comparison with the previous year, we note the regions of Catalonia, Other Spain and Other Portugal, which saw the amounts allocated increase 147% (vs 1.4 billion euros in 2020), 43% (vs 4.1 billion euros in 2020) and 23% (vs 900 million euros in 2020), respectively. In the case of Catalonia and Other Spain, this improvement is reflected in the increase of their shares on an Iberian level, which grew 12 p.p. and 8 p.p.in absolute terms respectively, while the share of “Other Portugal” remained the same as in 2020. In contrast, the 26% decrease in the volume invested in Madrid in the last year resulted in a loss of 11 p.p. compared with the 30% share obtained in 2020, while Lisbon, with an even greater drop in the investment volume (-45%) in 2021, saw its share shrink to less than half (-9 p.p.) compared with the 17% registered one year before.

Another aspect worth noting in the performance of capital markets in Iberia in 2021 is the greater balance between the amounts allocated to different asset classes. The podium is led by Offices, which attracted almost 3.3 billion euros to the region and saw its investment grow 14% from the 2.9 billion registered the previous year, even though its relative share dropped approximately 15 p.p. during that period, going from 38% in 2020 to the current 23%.

Logistics was one of the asset classes where the volume invested grew the most last year, reaching 3.2 billion euros, in other words, 74% higher than the 1.8 billion traded the year before. This strong performance helped increase the sector’s market share from 17% to 23%, raising it from third to second position in this ranking in 2021.

Hotels come next, in third position, with a share of 20% obtained from more than 2.8 billion euros invested last year, representing a y-o-y growth of 65% compared with the 1.7 billion traded in 2020, and an increase of 9 p.p. in its relative share (vs 11%).

Emphasising the growing attractiveness of this sector among investors, last year the amount invested in Multifamily more than tripled (209%) from the 784 million euros reported in 2020, with this asset class trading more than 2.4 billion euros all across Iberia and guaranteeing it a market share of 17%, placing it in 4th position of the ranking, when in 2020 this sector’s share didn’t exceed 5%.

However, these results also reflect the loss of attractiveness of retail throughout the pandemic, with this asset class going no further than 1.8 billion invested last year, a y-o-y decline of 53% from the almost 3.8 billion invested in 2020, making its share in this market drop from 20% to 13%.

Alternative assets maintained a share of 4%, in line with the result from 2020, amounting to more than 538 million invested in Spain and Portugal throughout last year, although the investment volume identified by Iberian Property decreased around 21% compared with almost 684 million euros in 2020.

Last year was quite dynamic in terms of large portfolio transactions, which were worth 6.8 billion euros in Iberia, in other words 49% of the total. This type of deal had a greater share in the Portuguese market, where it traded almost 1.4 billion euros, approximately 60% of the investment in the country, while in Spain it did not go beyond 46%, trading close to 5.5 billion euros.

Therefore, transactions involving single deals were worth 51% of the Iberian market in 2021, totalling more than 7.2 billion euros, although, specifically in Spain, large portfolio transactions represented 54% of the investment (6.3 billion), while in Portugal they were “only” worth 40% (almost 909 million euros).

Surpassing 5.1 billion euros, capital with an Iberian “nationality” stood out for the right reasons in 2021, almost doubling (+91%) compared with the 2.7 billion euros traded by Spanish and Portuguese investors in 2020. Consequently, “domestic” investment saw its market share increase 14 p.p. during this period, growing from 23% to 37% in just one year.

Although presenting a slight decrease (-3%) from 2020 (when investors from outside the Peninsula channelled 9.2 billion euros to purchase assets in this region), in 2021 foreign investment con­tinue to dominate by a large majority, leading deals valued at 8.9 billion euros and representing 63% of capital markets. None­theless, and due to growing activity by Iberian players, this group of investors saw its share decrease substantially from the 77% obtained at the end of 2020.