Valuation of assets will set the market in 2018

Valuation of assets will set the market in 2018


RICS and Iberian Property have prepared their Global Commercial Property Monitor report for the fourth quarter of 2017. The report includes the perspectives for the Spanish real estate market for 2018, among which the most moderate forecasts of the last three years for the rent sector and, in the case of investment, a generalized growth in the value of assets.

The report highlights that the increase in demand and the drop in supply in the Spanish market generated a decrease in the value of incentive packages throughout 2017, which means that forecasts for 2018 have undergone a revision to the low, being the most moderate of the last three years.

The data registered in the last quarter of 2017 indicates that the Occupier Sentiment Index went from +37 to +39 (difference between surveyed who believe that this variable has improved or worsened regarding the previous period), in line with the moment of strength that the real estate sector is experiencing. The demand kept growing during this period at a similar pace in the three main sectors (offices, industrial and retail).

Regarding the availability of square meters to lease, it has lowered, although at a less pronounced pace than in the previous quarter. The surveyed perceived a notable reduction in the supply in the office sector, while availability dropped slightly in the industrial sector and remained stable in retail.

In terms of investment, the balance of 2017 predicts an increase in the value of assets in all sub-markets throughout 2018, with the prime segments of offices and retail being called upon to experience the highest levels of growth.

In the last quarter of last year, the Investment Sentiment Index fell back to +27 from the +33 of the third. Although the indicator lowered throughout 2017, it continues to show the good moment that the dynamics of investment in the Spanish market are living. In fact, about 81% of the surveyed estimated that the market goes through an early or intermediate phase of rebound.

Investment consultations continued to increase during this period, although at a more moderate pace. The growth of demand was quite similar in the three market areas. Meanwhile, the interest of foreign investors also continued to grow, but at the less pronounced pace since 2014.

At the same time, the availability of assets for investment was relatively stable in line with the latest results.



At the international level, most of the analyzed markets kept a positive sentiment during the last 3 months of 2017. Precisely, the Occupier Sentiment Index was positive in 28 of the 34 countries observed, while 27 they projected an equally favorable Investment Sentiment Index.

Simon Rubinsohn, Chief Economist of RICS, explains: "The eurozone is going through one of its best moments after the financial crisis. In fact, the European markets registered the best data in both indicators during the last quarter of 2017, and maintain good predictions for 2018. At the same time, European cities showed a lack of quality assets in sectors such as offices (in its lowest level since 2008), and that is having an impact on the underpinning of prices in the most expensive markets, and could partly explain the optimism with respect to the predictions of a possible change of direction in the monetary policy of the ECB over the of 2018. "

In the specific case of the UK, some participants in the survey admitted having received inquiries from British businesses interested in spaces available outside their country. Meanwhile, about a quarter of respondents living in London acknowledged having received inquiries from companies seeking to relocate (or at least part of their business) in other countries.

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