Savills has returned to Spain to make its first major retail deal since the financial crisis, as overseas investment in the country’s commercial property stays strong.
Savills Investment Management acquired a medium-sized park near the city of San Sebastián (Spain) for 16 million euros this month – its first operation in the Spanish retail market since the great financial crisis.
The asset, acquired from a local developer, covers 10,300 square meters and has supermarket giant Mercadona as its main tenant, together with the specialist DIY chain Brico Depot.
Michael Reinmuth, director of Savills IM in Spain, comments: “This is the first acquisition of the fund in Spain and is a prime asset in San Sebastian in the Basque Country. It is new construction and is already delivering above expectations, thus providing the fund with a solid and defensive distribution and opportunities to increase its value in the future.”
The deal arrives after a year of strong demand in Spain’s commercial real estate.
According to research by Savills, international investors continue to underpin the commercial property market. For the third consecutive year, international investors accounted for around 60 per cent of total investment in the market in 2016. Almost €8.2 billion was invested in commercial property across the whole of last year, similar to the figure achieved in 2015.
Delayed completions of deals, as well as a lack of product on the market, were the main reasons for the slowdown in the market, with the total volume transacted just 2 per cent down year-on-year.
Nevertheless, this has not been the case in every sector of the commercial real estate market – investment in the industrial/logistics market and the hotel market rose considerably y-o-y, notes Savills.
Alternative emerging property sectors, such as the student accommodation market, are also gaining ground, and are attracting the interest of specialist student market investors from other European countries.
Spain’s commercial property investment hits eight-year high
22nd March 2016
Photo: SoniaCurcialeiro
Investment in Spanish commercial property hit an eight-year high in 2015, reveals Knight Frank’s latest market snapshot. A total of €8.8 billion was invested in the country’s commercial real estate last year, the highest figure since 2008.
Offices and retail remain the most popular segments for investors, with investment in shopping centres and the high street reaching €4.6 billion, accounting for over half (52 per cent) of investment. Offices accounted for €3.3 billion (38 per cent), while logistics has also risen exponentially, due to higher yields.
Investment funds and SOCIMIs (Spanish REITs) have been the most active in the last 12 months, accounting for the majority of all investment (55 per cent), but private investors and family offices are also entering the market: private investment jumped from 4 per cent in 2014 to almost 14 per cent in 2015.
France, the USA and the UK are the main international players in the sector, although The Philippines accounted for one major sole asset investment: Torre Espacio, in Madrid, for 558 million euros.
Spain top target for commercial property
28th September 2015
Spain is the top target for commercial property investors in Europe, according to Knight Frank.
The agent’s latest poll shows that investors favour Spain over all other countries, with prime CBD office rents up 20 per cent in the past year yet still 40 per cent below the 2008 peak.
“Footfall and sales have been increasing in dominant shopping centres for six consecutive quarters,” says Humphrey White, head of Capital Markets at Knight Frank Spain.
Germany is hot on Spain’s heels, though, with 25.4 per cent stating the country was their preferred target – a ranking bolstered by the investment activity recorded in the market, with €30 billion invested during the first of 2015, up 35 per cent from the same period a year before.
Foreign investors’ share of the market keeps growing, accounting for almost 60 per cent of all sales in the first half of the year.
“We saw the usual trend towards the big five markets of Berlin, Frankfurt, Munich, Hamburg and Düsseldorf, with 78 per cent of total office transactions recorded in these cities,” says Joachim von Radecke, head of German Desk at Knight Frank in London.
The UK, meanwhile, continues to attract commercial investors, thanks to the country’s recovering economy. It won 17.4 per centof votes,
“The UK is well ahead of the rest of Europe in terms of the property cycle and has already seen significant yield compression,” adds Chris Bell, managing director of Europe at Knight Frank.
“However, it is encouraging that rental growth is beginning to re-emerge more widely across Europe, helped by the strengthening of occupier demand and the steadily falling availability of good quality space exacerbated by the lack of development over the preceding recessionary years.”
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