The data was provided by BNP Paribas Real Estate in its Informe del Mercado de Inversión en España (Spanish Investment Market Report) and showed that the direct investment in office, retail, logistic, hotels, rental housing and alternative segments, between October and December, was set at 2.639 billion euro. This number represents a 27.7% increase when compared to 2020’s third quarter and a y-o-y decrease of 31.3%, reported the consultant.
On the increased dynamics witness during the year’s last quarter, the consultant considered that it was «very positive and that it consolidates real estate as the leader of alternative investment».
On this point and despite the current situation, BNP Paribas Real Estate remarked that «factors such as the high level of capital present in the markets, a setting with minimum historical levels on all other segments, together with the attractive returns the real estate segment offers when compared to other investment alternatives, keep leading investors in their direction».
The consultant explained in a release that «the pandemic generated a severe adjustment in the economy globally, more accentuated in countries which are more exposed to it, such as Spain». He further added that «after the contraction of 2020, the effect and distribution of the vaccines, together with the application of the European Recovery Fund (NGEU) will be key for the economic reactivation expected for 2021 and 2022».
Offices, retail and logistics lead investment
The majority of investment registered during the last quarter of 2020 (2.560 million euro) was channelled towards the logistic (24%) and retail (24%) segments, due to the sale of large hyper and supermarket portfolios, followed by offices and rental housing.
For the whole of 2020, the office segment was the one that attracted more investment with 26%, thanks to the first quarter’s high numbers. Retail came second with 22%, followed by logistics with 17%.
Investment analysis during the Covid-19 period (April-December 2020) showed how retail and logistics attracted practically half of the 5.628 million euro invested during that period (24% each), followed by offices with 21%.
The logistic segment is «the most dynamic segment and one of the more resilient against the pandemic», assumed the consultant, which further explained that «the increase in demand for logistic platforms, due, mainly, to the exponential growth of e-commerce and food companies together with the revenues the segment offers, converted logistics into a very coveted segment for all types of investors». For 2021, BNP Paribas Real Estate expects a very dynamic activity in the logistic segment, due to large operations which are currently under negotiations.
Despite the decrease registered since April, offices remained in 2020 as the type of asset most in demand by investors. Although the impact on this segment was significant in terms of occupancy and demand, it is expected to be circumstantial, but companies will still need to adapt their occupancy models to the new needs.
The rental housing segment, especially the build-to-rent sub-segment, has been registering an exponential growth during the last few years, which did not slow down during the pandemic. Interest from investment funds for this type of product is very high, being attracted by its growth and demand potential as well as by the absence of a professionalised product. The investment volume registered in 2020 was around 1.33 billion euro.
The hotel segment was one of the most affected, due to the closing of borders and establishments. Regardless of that, the market’s main players see a circumstantial situation and keep their bet on this segment.
There is a visible consolidation of the alternative markets, especially senior and student residences, which, despite the implementation of sanitary measures, remain attractive.
International funds were the great protagonists
Institutional investment funds were the great protagonists of 2020, having represented around 68% of all capital invested in Spain. REITs, real estate companies and insurers also stood out, with a combined share of 38% of all investment.
In terms of nationalities, the majority of investors in 2020 were German (17%), American (15%), British (10%) and French (9%), with local investors and REITs representing 27%.
Activity in 2021 will be "very attractive"
BNP Paribas Real Estate considered that real estate investment will remain «very attractive in 2021, consolidating itself as the leader of alternative investment».
With a setting such as the current one, with the Spanish 5-year bond listed in negative territory, there will be interest from core/core+ investors, but also from investors who will want to transform and generate value for the assets, as well as investors who understand there are opportunities in all things related to tourism (in particular hotels).