‘Spain offers opportunities in all sectors’

Spain offers good opportunities in all real estate sectors and in secondary as well as primary markets, Reno Cardiff, International Partner, Cushman & Wakefield, told the Iberian Investment Briefing, organised by Iberian Property and Real Asset Media, which was held at the Spanish Embassy in London recently.

Why Spain? Keynote: Reno Cardiff, International Partner, Cushman & Wakefield

‘Spain has become one of the main FDI destinations worldwide,’ he said. ‘A lot less is being built so growth is sustainable now’.

The office sector is experiencing sustained demand, Cardiff said, and there is a focus on quality space. In Madrid vacancy rates are 4% in the centre and 7% in the CBD, while Barcelona is outperforming thanks to the tech boom in the city. Vacancy rates are 2% in the CBD and city centre and 3% in the new business area. 

‘We see rents going up in the prime markets this year, but we also see rental growth in secondary markets,’ he said. ‘Total returns are 15%, which is really positive’.

The hospitality sector is another obvious destination for investment, as tourism continues to grow. ‘Tourist visits are 1.8 times Spain’s entire population,’ said Cardiff. ‘The equivalent of Germany’s entire population goes to Spain every year’. 

Retail, which is suffering elsewhere, is doing well. ‘Spain is not over-developed in terms of shopping centres and is well below the European average,’ he said. ‘Some areas don’t have strong high street locations so shopping centres are the answer’. 

Sales increased by 3% last year, which is ‘what investors want to hear’. Another positive factor for them is that ‘the market is very transparent’, Cardiff said. 

The share of online sales is only 1.8% in Spain, half the European average and well below the UK’s 18%, which means that there is a lot of catching up to do. Internet shopping is increasing at 20% a year and this is fuelling demand for logistics assets. In and around Madrid, net take-up of space has increased by 90% and vacancy rates have halved in the last 6 years.

Alternative sectors are also attracting investors and represent around 20% of total volume. The ‘absolute star’ at the moment is student housing, he said, as ‘demand is increasing and current provision is only 6%, so student housing will experience huge growth in Spain’. 

Spain not only has 1.5 mln domestic students, but also a fast-growing foreign student population. International students are now over 120,000, up from 80,000 in 2015, while around 45,000 Erasmus students come to the country every year for a shorter stay. 

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