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Spain
Spain has the fourth largest invested stock
in Europe. Activity is focussed on the two
main cities of Barcelona and Madrid. Spain’s
commercial real estate market has suffered
greatly due to the protracted economic crisis
and the high levels of debt secured against both
commercial and residential assets. Investment
volumes have significantly rebounded in 2014
thanks to a strong comeback of foreign investors.
The recent transfer of underperforming loans into
the bad bank, SAREB, is helping to support renewed
activity as the economy begins to show signs of
recovery. Private companies and individuals play a
large part in the real estate market. Unlisted funds
are also active investors. Listed companies have been
less active since the onset of the crisis as many have
struggled with high gearing.
With the onset of the crisis and the strained Spanish
economy, many domestic investors ceased their
investment activities and foreign investors became
increasingly important in the market. Their share of
the market has averaged 60% over the last three
years, double the level before the crisis. Spain is
currently attracting investors from around the globe,
with the majority of foreign investment focussed
on prime office and retail assets in Madrid and
Barcelona.
In 2012 the government amended the current laws
regarding SOCIMIs (Spanish REIT equivalent), to
make them more competitive and congruent with
other countries’ regimes.
Debt funding remains a significant barrier for the
property market as many banks continue to try and
clean-up their balance sheets and reduce their overall
exposure to the sector. Institutional lending is limited.
Market sizing
Spain
Europe
Invested stock
(Total stock)
EUR 262bn
(EUR 499bn)
EUR 3,335bn
(EUR 8,201bn)
Liquidity ratio
(10y average)
3.2%
(1.7%)
5.6%
(4.6%)
2014 volumes
(10y average)
EUR 8.4bn
(EUR 5.6bn)
EUR 187bn
(EUR 142bn)
Market pricing –Madrid (Q4 2014)
Office
Retail
Industrial
Current Yield
5.60% 5.40%
8.00%
Min/Max (10y)
4.00-6.25% 5.00-6.50% 6.00-8.25%
Yield definition
Net initial yield
Source: DTZ Research
Investment activity by source of capital, 2014
Investment activity by asset type, 2014
Source: DTZ Research
Source: DTZ Research
Domestic
Non-European
European
Office
Mixed Use
Retail
Industrial
Other
26%
59%
11%
4%
40%
28%
32%
104 Investors Guide to Europe 2015