The second day of the Spain Real Estate Summit, held in Madrid, has demonstrated the growing interest of international capital in Spain as a real estate transformation hub. Experts from leading institutions discussed the development of sectors such as life sciences, self-storage, data centres and affordable housing, highlighting the Spanish market's capacity to respond to the major energy, social and technological challenges that will mark the future of real estate.
Life sciences and self-storage: two alternative assets in the focus of institutional capital
The parallel session ‘Diversifying Portfolios: The Power of Life Sciences and Self-Storage’, analysed the rise of two segments that are increasingly present in institutional portfolios: science-related real estate and the self-storage business. Moderated by Alistair Meadows, Head of Life Sciences & Alternatives at Capital Markets EMEA, and Izeldi Loots, Head of Self Storage Capital Markets EMEA at JLL, the session featured presentations from James Sheppard (KADANS Science Partner), David Finkel (Talus Real Estate) and Craig Mason (Pithos).
James Sheppard, international director of business strategy at KADANS Science Partner, focused his speech on the strategic role that European universities, including Spanish universities, are taking on as catalysts for innovation: ‘One of the biggest structural transformations in Europe is the ability of universities to generate real economic impact. We are talking about their potential to attract public and private investment, develop products, create companies and generate qualified employment. Science and innovation have become drivers of economic development.
Carlos Krohmer, director of corporate development at Colonial, spoke from the audience to share his vision of the evolution of the sector: ‘Years ago anyone could develop a real estate asset, but in the last two decades, and especially after the pandemic, the market has become much more professional and specialised’. He also stressed that demand continues to be concentrated in urban environments, where ‘people want to live, work and enjoy themselves’. In his opinion, responding to this reality means developing products in strategic locations, integrating services and innovations to attract talent and meet the new demands of sectors such as science and technology.
Krohmer also highlighted the current situation in Europe in terms of investment in science: ‘Countries are allocating unprecedented resources to this sector, which will attract more international capital. At Colonial we are committed to urban transformation and to accompanying our clients. And the scientific sector was a piece that we did not yet have in our portfolio’.
David Finkel, CEO of Talus Real Estate, linked the growth of self-storage to major social transformations: ‘We are more mobile, people are moving more frequently and houses are not only more expensive, but also smaller. All this generates a growing need for storage’. He also pointed out that many homes built before the 1990s in Spain, especially in Madrid, do not have storage rooms, which boosts business. ‘In addition, we have a significant portfolio of 3PL logistics customers in Madrid, because there is not enough space for the last mile.
Craig Mason, investment director at Pithos, an operator with 62 self-storage centres in the UK, Switzerland, France and Spain, explained that although it is a logistically simple model, it is very complex from an operational point of view: ‘One of the most common mistakes we have seen is when investors think they can also take care of the operation. Development and management are different disciplines, and you need specialised operational expertise’.
In this vein, Mason argued that digitalisation is key to the competitiveness of the business: ‘Today everything is done on mobile. Buying, booking, contracting... why not also renting storage space? He said the sector is undergoing a two-fold transformation: on the one hand, the entry of institutional capital; on the other, the technological simplification of processes as a way to scale. Finkel agreed: ‘Our first lease of 2025 closed at 4am on New Year's Day. In this new scenario, there is no time or place to hire. In addition, 60% of those scanning our QRs in Spain do so in languages other than Spanish’.
Back in the life sciences segment, Sheppard remarked that ‘the way science is done has changed profoundly in the last few decades, and that impacts directly on real estate: both in the type of facilities needed and their location. We want to be in the best buildings in the best locations.
Krohmer reinforced this idea: ‘Leading urban transformation also means generating the spaces that our clients need, which means adding services, facilities and added value. And to do that, we need to be able to relate well with all the city's stakeholders.
Sheppard concluded with a warning: ‘When we talk to local and regional authorities, it is often taken for granted that scientific innovation will be everywhere. But it won't. This sector will not take hold or work in all locations. Only a few regions will establish themselves as true hubs.
Mason concluded by stressing the importance of correctly interpreting the cultural nuances between markets: ‘In the case of self-storage, users do not prioritise the same criteria as investors. The way they compare prices or value locations doesn't always match our logic as operators.
Alternative investment: from retail to logistics, via offices and hospitality
At the close of the session on alternative assets, several experts gave an overview of how demographic, technological and economic megatrends are impacting the evolution of real estate beyond the traditional segments.
Paul Santos, Head of Retail Iberia at CBRE, highlighted the good momentum of the retail sector in Europe: ‘Retail is back on the investment radar. Concerns about e-commerce are behind us, and shopping centres have regained attractiveness as an investment class in the last two years, especially in 2024’. In his view, the real challenge for high street retail is securing locations on the best streets, while retail parks have established themselves as key assets in investors' strategies. Santos anticipated a stabilisation of yields over the next 12-24 months, driven by the ECB's interest rate move: ‘We do not foresee a significant drop in investment volume in the short term.
From a sector perspective, Alistair Meadows (Capital Markets EMEA) and Izeldi Loots (JLL) insisted on the importance of non-real estate factors that are fuelling interest in segments such as self-storage and science-related assets. These include an ageing population, increasing wealth, the development of the knowledge economy and technological progress. ‘Demographics is a key driver for self-storage, and digitalisation has completely transformed its operations,’ they said. They also stressed that success in these sectors requires scalability and partnerships: ‘Investors need size, but also local operational knowledge to consolidate their positioning.
In the office sector, Marta Costa, director of commercial coordination at Sonae Sierra - Offices, observed a change in trend: ‘After a period of downsizing, many large companies have started to expand their space again. In some cases, they have even had to convert other areas of the building, such as car parks, to adapt’. He stressed that demand is not looking to reproduce the office spaces of the past, but rather more contemporary and functional environments: ‘Many existing properties no longer meet the requirements of today's market, which means that the supply has to be rethought.
In the logistics sector, Juan Antonio Irala Guzmán, Director of Corporate, Legal and Transactions at Panattoni Iberia, warned about the shortage of land for development: ‘This is one of the main bottlenecks in Spain. Without land ready for development, it is difficult to predict when or if we will be able to start up new projects. He explained that this situation makes developers key players, as they have the opportunity to generate value by putting suitable land on the market.
For his part, Alexandre Lima, director of Iberian Property, addressed the evolution of hospitality, beyond the traditional concept of accommodation: ‘The sector is more professionalised than ever, generating new complementary lines of business, such as event centres or sports venues, which increase its profitability’. Lima also highlighted the growing interest of institutional capital in the hotel segment, traditionally more linked to family offices and private funds: ‘Investing in hotels requires courage: it often involves closing the asset, making heavy investments in CAPEX and assuming periods without income. But increasingly, what is valued is not only the building, but also the experience offered. In this sense, he pointed out that service has become a differentiating element that transforms the perception of the final product.
Affordable housing, regulation and profitability: the challenge of responding to social urgency through investment
The session ‘Who Are We Responding to the Social Challenge of Housing’, moderated by Antonio Gil Machado, partner of the Iberinmo Group, debated the structural challenges of access to housing and the different strategies with which institutional investors are responding to this problem from the market.
Veronica Gallo Álvarez, director of investment management at Redevco, explained that the company began its incursion into the residential sector five or six years ago, taking advantage of its previous experience in the retail sector and with the intention of contributing to more liveable and balanced cities. ‘Residential space should be part of the urban fabric, but there is a real shortage of affordable housing for young people. Our commitment is to create sustainable value, both for the company and for society, by investing in coliving, student residences and accommodation for young professionals, always close to transport, commerce and service nodes’.
Netherlands-based Redevco aims to develop a portfolio of 10,000 residential units in Europe, of which it already has 5,000 in the development or pre-development phase. According to Gallo, the plan started in the markets they know best, the highly regulated Netherlands, and envisages a further 4,000 units in the medium to long term. Spain is among the strategic countries for this growth, but with an exclusive focus on Build to Rent and coliving: ‘Our strategy also includes the acquisition of existing projects,’ he added.
Richard Powers, Managing Partner and COO for Europe at Brookfield, offered a more structural perspective on the market: ‘I don't share the idea that the younger generation no longer wants to own property. What has changed is the time priority: during their youth, renting is a more viable option’. According to Powers, Europe is going through ‘the worst housing crisis since the Second World War’, and the development of new supply is the only sustainable way forward. ‘Housing is a safe asset class, with stable long-term returns. Many investors are willing to accept lower returns if social impact is guaranteed. At Brookfield, that is our position,’ he said. However, he said that in order to attract more capital, further market liberalisation and greater flexibility in rent adjustment is needed: ‘That would improve competitiveness and the ability to attract investment.
The Redevco director also explained that, although Spain is not a particularly regulated rental market, her experience in other countries shows that strict regulation, properly applied, can bring security to the investor. ‘When the rules are clear from the outset, you can design projects that meet all the requirements. That, in the long run, protects the investment,’ he said. He also pointed out that Redevco operates with different sources of capital, which allows it to adapt its strategies to different regulatory contexts.
Finally, Richard (Powers) added that Brookfield has invested in a variety of living models in Europe, from student housing to rental residential and coliving, with a particular focus on the UK and Germany, where most of its residential capital is concentrated. ‘We do not expect to significantly expand our exposure to other European countries, at least for now.
Data centres, digitalisation and AI: the Iberian Peninsula positions itself as a strategic global hub
During the ‘Tech Power - Digital Infrastructure’ session, the speakers agreed that the Iberian Peninsula is no longer just one option among many for the deployment of data centres: it is a priority destination for international capital. The day began with the intervention of Theresa Bobis, Director for Southern Europe at DE-CIX, who stated: ‘Data is the new oil because it is essential to generate quality information. And the Iberian Peninsula is not an alternative: it is an imperative for investors looking for data centre locations, because it combines advanced infrastructures, energy resources and optimal technical conditions for the development of the sector’.
The round table was moderated by Francisco Porras, head of the data centre business unit at Merlin Properties, who pointed out: ‘Data centres are no longer an abstract utility: today they are real artificial intelligence factories. Those who still see them as cost centres have not understood where the world is going.
From Google, Paul Henry, regional director for Europe, the Middle East and Africa for Data Center Infrastructure, explained the criteria by which the company evaluates its investments. ‘One of the most relevant factors is the cost per kilowatt per hour. In this, Spain has a significant advantage over other European locations. Added to this is the high availability of resources to generate solar energy, which, although secondary, is still a competitive factor. The third element is the cost of development - including construction costs - which in the current inflationary context places Spain in a favourable position. In addition, we see a growing technological and innovation maturity in the market.
Ismael Clemente, CEO of Merlin Properties, raised a structural reflection on the demand for digital capacity: ‘Data centres do not consume energy by themselves. We do, as a society. This infrastructure is nothing more than a reflection of our current needs’. Even so, he highlighted the energy opportunity that the region represents: ‘The Iberian Peninsula has the capacity to generate between 600 and 700 terawatt hours per year. Only 10% of that energy would be needed to supply data centres. Today we have just 180 kilowatts of installed capacity, which shows the room for growth in this market.
Henry insisted on the importance of governments providing certainty: ‘Digitalisation is growing at an exponential rate, and its infrastructures must advance just as fast. But this requires a coherent strategy from central government to regional and local administrations. Institutional coordination is key to building trust and attracting investment.
The Google director also pointed to the paradigm shift in the network: ‘The new internet, driven by artificial intelligence and language models, depends less and less on physical proximity to the local network and more on the global connectivity offered by strategically distributed data centres’.
Clemente concluded his speech by pointing out two challenges. First, scalability: ‘We don't yet know how much storage capacity we will need in the future, but we know it will be more and more. And that will require more energy, more cooling infrastructure and more operational efficiency. Second, training: ‘Today we have a very high quality human capital, with excellent electrical and mechanical engineers in Spain and Portugal. But we need to be vigilant: the quality of education is in decline, and that is a problem not only in southern Europe.
A full report of the whole Spain Real Estate Summit will soon be available!