The revaluation of real estate assets in the Logistics, Living, Retail, and Offices segments maintains its upward trend, and they closed the first half of 2022 with a positive variation in terms their valuation, as shown by the data related to the first half of the CBRE Index report, developed by CBRE’s Valuation & Advisory Services department.
According to the CBRE Index, which shows the assets valuation from listed companies assessed by CBRE, Logistics stands out among the traditional real estate segments, with a 4.55% valuation increase as does the Living segment, with a 1.02% increase during the first half of 2022. In terms of the Office segment, there was a 0.84% increase during the same period. On the other hand, Retail assets increase their valuation by 0.53%.
The Logistic segment broke records once again
The logistic segment continues breaking records in terms of investment levels, and closed the first quarter of the year with 894.6 million euros, an investment 402% higher than that achieved during the same period of the previous year. During this period, two operations that accounted for 64% of the total volume stood out: the purchase of assets from the Tiger portfolio by GIC and the purchase of the Gemstone portfolio by EQT Exeter.
As for prime rents, the last data recorded during the first quarter of 2022 in the downtown area was € 5.85/sqm/month, 6.40% above that of the previous year. These rents have improved, given the scarcity of product with these logistical characteristics and the current growing demand. In addition, the substantial increase in construction costs and land prices will put pressure on future projects’ rents.
«Despite the positive figures in terms of rents and investment, we have not seen compressions in prime returns as the pressure caused by inflation and the cost of financing has begun to become noticed. Looking ahead to the rest of 2022, we will see a slight increase in returns and we expect investors to be more cautious when buying these logistics assets», said Fernando Fuente, Senior Director Valuation & Advisory Services at CBRE Spain.
Back to the office
The first quarter of 2022 closed with a total of 219.000 sqm of office spaces contracted. Of this figure, 128.000 sqm correspond to Madrid and 91.000 sqm to Barcelona, which represents increases of 41% and 25% respectively, when compared to the same period of the previous year. «We have observed a sustained reactivation of demand, so the second quarter of 2022 is expected to have a similar behaviour and the forecasts for the remainder of the year are positive», explained CBRE Spain’s Senior Director Valuation & Advisory Services.
In Madrid vacancy reached, during the first quarter, between 12.4% and 12.2% and in Barcelona between 10.5% and 10.4%. In this sector, buildings with sustainability certifications stand with vacancy rates well below the average, at 2.2% in Madrid and 2.4% in Barcelona.
The Office segment’s investment volume was, at the end of the first quarter, 580 million euro, of which 58% was concentrated in the city of Madrid (337 million euro) and 26% in Barcelona, followed by Malaga and Bilbao. At the end of the first quarter of 2022, Madrid had already received 57% of all the investment made in the previous year in office assets (596 million euro). Barcelona stabilised at pre-pandemic figures, following a 2021 historical record of 1.680 billion euro.
The Living sector leads real estate investment
During the first quarter of 2022, the Living sector continued the consolidation obtained in 2021, concentrating 84% of the total real estate investment with 959 million euros (738 million in Build To Rent and 220 million in the Private Rented Sector). In this segment, the largest BTR operation in Spain to date (BeCorp-600 million euro) stood out. According to CBRE, and in terms the second half of 2022, the forecast remains positive from the point of view of investment volume and interests within the rental segment.
Currently, prime returns remain at levels from the end of 2021 at 3.00% and 3.25% for Madrid and Barcelona, respectively. Finally, prime rents also maintained the increase obtained at the end of 2021 at €28/sqm/month in Barcelona and €26/sqm/month in Madrid.
Progressive recovery of shopping centres
The shopping centres managed by CBRE reached in the middle of the year with inflows 17.6% below those of 2019 and annual sales 5.5% below the same year, although a bullish rebound was seen in sales during the last couple of months (+0.3% in sales in May, +2.7% in April).
Leases are being reactivated for these retail spaces, particularly for expansions and consolidation of tenants already present. «Although interest rates have slowed investor interest in this segment, there is still strong demand for locals, especially on the High -Street. The decrease in vacancy has stabilized the levels of demand and supply, returning some bargaining power to the owner. They seem to have accepted that the income levels of 2019 are not going to return for the time being, and they are willing to accept more flexible contracts, with variable income or more incentives and strong escalations that end up being set up a lot later at pre-pandemic levels», explained Fernando Fuente.