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December 14, 2015

Changes in the real estate market of Spain

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The stabilization time of the Spanish real estate market has changed the type of foreign investor, who buys a house or an apartment in Spain. If during the worst of the financial crisis, only investors’ adventurers dared to close the transaction of sale in Spain, we can now talk about more diversified and conservative profile of the buyer. Thus, the specialists of international business-consulting firm CBRE consider: "We have reached a time when the real estate market in Spain attracts not only the investor-opportunist, but also the buyer of a consolidated market."

The international company recalls that in 2013, when nobody believed in Spain, the vulture funds have reached the Spanish market to buy assets at low prices for their resale later to get the most possible benefit. Now, however, the most common strategy is to look to the long term and not to take risk of the immediate effect in order to increase the security of a real estate portfolio in the future. A typical strategy, for example, of many pension funds.

But, what was the main reason for this change of events? The answer is simple: profitability, which currently offer offices, industrial buildings and warehouses in Spain, is much less, than in previous years, which considerably reduced their attractiveness for opportunistic funds and investors.

"Two years ago higher revenues were definitely to be gained from logistics assets, namely the purchase of commercial real estate in Spain meant a profit of 10%, which is almost impossible to find in the market today. At the present moment, commercial real estate (warehouses, shops, etc.) offer their owners about 6.5% of profit in the case of a premium class product, while in the segment of high-quality assets this figure is about 4% or less,"- say the experts of this international company.

The reasons for the return to long-term investments are such as the recovery of the Spanish economy, the improving of domestic consumption and the fact that construction activity is out of the critical situation, they are also the initiators of growth demand. Pressure from buyers is even such that, in fact, the amount of the investment at the end of this year will surpass all records of previous years.

"The domestic market is very active and has become one of the main scenarios of international sales. There are many cash in circulation that will allow the investments to establish a new record this year as their volume will exceed 13,000 million euros, in 25% more compared to the 2014 and three times more than the data in 2013. So far, more than 70% of the investment is coming from abroad, with the American, French and British investors at the top of the list, "- say the experts of the company CBRE.

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