This was one of the conclusions from its latest study European Research: European Themes 2021, where the best European real estate investment options for 2021 were analysed in terms of the different profiles: core, value add and vulture.
Core profile: retail, logistics and offices are the options
The report highlighted convenience retail and last mile logistic assets located in densely populated areas with growing ecommerce penetration remain attractive for core and core plus investors in Spain.
This profile will maintain the interest for prime offices located in key locations. «Core and core+ offices represented 80% of all office trade in Madrid and Barcelona and 72% of all investment was from cross-border capital. The trend will continue in 2021», pointed Carlos Ruiz-Garma, director of Capital Markets Southern Europe at Savills.
Value add profile: focus on the lack of offer
The report also advanced that opportunities for value-add investors in Spain are in the low-offer logistic markets and in segments which generate short-term revenues, such as coworking and student residences and also multifamily, given the growing demand for rental.
On this point, Carlos Ruiz-Garma mentioned that «the Spanish real estate market is of great interest within the European real estate market, where the lack of rental housing makes it particularly interesting for the development of housing rental projects. The big cities and corresponding metropolitan areas have been the focus of investment from institutional funds which saw much potential for an impressive long-term growth in this market», he added.
Vulture profile: focus on change of use
For vulture investors the focus might be on changing the use of assets, such as, for example, converting offices located in secondary areas into housing assets.
On the other hand, it is expected an increase in demand for hotel assets in difficult situations, at discounted prices, on prime most tourist destinations.
A segment that has proven itself a «good investment opportunity» in Spain is also the Healthcare and Senior Housing segment, given the aging of our country’s population. Carlos Ruiz-Garma believes that «both types of assets will be the focus of highly specialised international investors who are already entering our market».
Activity should focus mainly on core and core plus product
Despite the presence of several types of investors, the consultant predicted that this year activity will be focused on core and core plus segments. Marcus Lemli, General director at Savills Germany and director of Capital Markets Europa at Savills, revealed that «most investment is expected to be focused on core and core plus, at until at least the end of the year, but also to see a new wave of capital invested on opportunities generated by any sign of distress. However, the «middle term», which is the second value add, has been somewhat stagnant.
«During the next few months we should start convincing owners to be more realistic about their assets. As prices become more transparent, this should encourage more product to be taken out of the market, unblocking liquidity», he added.