Real estate investment is close to €14,000M at the end of 2017

Real estate investment is close to €14,000M at the end of 2017


"This strong growth is the best reflection of the attraction of Spain as an investment destination and the strength of its real estate market. It has also contributed the fact that this year there have been more diverse investment operations, highlighting investors' commitment to alternative assets or the purchase of land, which are connected to traditional office, retail or hotel operations”, explains Borja Ortega, director of Capital Markets of JLL.


Retail and hotels, at the top of the investment

By segments, JLL data points to the retail market as the one with the highest volume of investment in 2017, reaching €3,909 million, 31% more than 2016, which represents a historic figure thanks to the 35 closed operations during the year. The prime rents in this segment continue to maintain their upward trend and are already at €270/ m²/ month in Madrid and €280/ m²/ month in Catalonia, while the prime returns are compressed both on the street as in parks and centers commercial.

Just behind is investment in hotels, which increased by 75% compared to 2016. The total volume of the year was €3,875 million, of which €590 million were invested in Madrid and €593 million went to Catalonia. The most important operation took place at the end of the year, with the purchase by Blackstone of a total of 14 assets for €630 million, among which was, for example, the Ritz Carlton Abama.

The investment in offices is in third place by volume, since it reached €2,210 million, but nevertheless it is the only business segment that suffered a fall regarding to the previous year, when the investment in this class decreased by 20% of assets. This drop is mainly motivated by data from Madrid, since investment in the capital fell by 38% compared to the previous year -1,374 million-, while in Barcelona the investment volume stood at €835 million, which is equivalent to an increase of 60%. However, Borja Ortega clarifies that "this drop is not due to a decline in investor interest, but rather to a lack of product and that in the two previous years reached record figures.”


Strong boost in residential, logistics and alternative investments

Also stand out the data of the residential investment -purchase of buildings and land-, as it triggered in 2017 to €2,082 million, representing an increase of 160% compared to 802 million in 2016. Significant are the data of Catalonia, where residential investment increased by 145% to €444 million. A sweet moment for the residential because, as Ortega explains, "the market is currently experiencing the greatest transfer of properties with Banks that sell or transfer loans or residential assets to venture capital funds or development platforms.”

Regarding the logistics sector, it was one of the business segments that performed best, as the volume of investment in these assets stood at record figures at the end of the year with €1,353 million, which is equivalent to an increase of 65%, regarding the previous year.  Prime rents reached €5 and €6.75/ m²/ month in Madrid and Barcelona, respectively, maintaining their upward trend.

Finally, JLL highlights the role of alternative assets, mainly the one carried out by student residences, whose investment triggered to €561 million, multiplying the investment of 2016 by ten. The figure is mainly due to the sale of two large portfolios transacted in 2017 (RIO and Erasmus).

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