A year of immense volatility has just ended for investors, represented mainly in equities and asset prices. A more cautious and longer-term perspective has allowed real estate to mitigate the high volatility experienced in 2020.
In this context, direct investment volume made in office assets, retail, logistics, hotels, residential rental and alternative between the months of January and March has stood at 1,845 million euros. This figure represents an adjustment of 32.9% with respect to the fourth quarter of 2020 and a 45.1% less than the same 2020 interval, a pre-covid period and not comparable to the current market situation. These data are derived from Spanish Investment Market Report submitted by BNP Paribas Real Estate at the close of the first quarter of 2021.
Excluding the volume recorded in the residential rental market, the amount drops to 1.105 million euros in Commercial Real Estate (CRE) until April 1.
The residential sector leads investment at the beginning of the year
After a year of the arrival of COVID-19, we already have a more precise vision of the response of the different sectors to the current scenario in which we find ourselves. At this point, the real estate consultancy has estimated which types of assets are showing more resilience and which are being more penalized.
The residential rental market has been the main protagonist of the investment market during the first quarter of the year, with a 38% of the capital invested until the 1st of April (705 million euros).
The increase in demand on the part of the users motivated by the difficulties of access to the buying and selling market or labour mobility, the absence of standardized product, together with cost optimisation and attractive returns are pushing investors into this segment, either by purchasing buildings or portfolios of finished rental housing (PRS) or through turnkey leasehold promotions (BTR).
In second position is the office sector, accounting for 20% of the investment registered in the first quarter of the year, with a volume of 362 million euros. This represents an adjustment of 10% over the previous quarter.
In general, investors demand office buildings located in well-established markets, where commercial risk is currently more moderate, or assets with long-term contracts.
Logistics is undoubtedly one of the sectors that is focusing much of investors' attention. The increase in demand for logistics platforms continues at record levels, much of them directly or indirectly linked to e-commerce and food. The volume of operations signed in the first quarter stands at 250 million euros, representing an increase of 34%.
The report also stands out the high number of processes for sale, some of them of considerable volumes, with closings planned for the next few months. This fact will generate that 2021 will once again mark a logistical investment record in Spain. In this sense, the barrier of 2,000 million euros invested could be surpassed.
Interest in the hotel sector increases
Although it is true that it has been one of the sectors that has suffered the most from the pandemic, investors’ interest in the hotel sector in Spain is still very high. The fact that the market offers more opportunities, derived from the sales needs of owners with liquidity needs, is generating a very high interest to investors. The investment volume registered in the first quarter reached 231 million euros.
If the retail sector is analyzed, it can be concluded that investment during the first quarter has not been very high.
Various operations have been signed for an approximate volume of 180 million euros. Mainly, the two types of assets most in demand have been supermarkets, with volumes per transaction below 10 million euros, and commercial premises in exclusive locations.