Spanish office market hit decade-high investment haul in 2019

Twice as many assets were transacted in 2019 compared to 2018; 86 compared to 59 in Madrid and 48 compared to 17 in Barcelona. The recovery in the latter, coupled with product rotation has been the main driver of the market following on from two years of uncertainty and general lack of product in the area.

The remainder of capital transacted can be attributed to transactions in regional cities such as Valencia, Bilbao and Malaga which, combined, represent an increase in 18% over the last year.

Hipólito Sánchez, Head of Offices at Savills Aguirre Newman, whose department also set a record with a share of 42 assets transacted, representing almost 40% of the volume transacted in offices in Spain, explains that “it has been a spectacular year in our sector and at a frenetic pace. As long as the solid fundamentals of the low supply and high demand market continue, together with low interest rates and high liquidity, we will continue to see excellent performance in the office sector”.

In terms of origin of capital, domestic investment into Madrid was down 25% compared to last year, while it was up 47% in Barcelona. International investment now accounts for 73% of the total with European investors such as Allianz, KanAm and Commerz active in the sector. 

Sánchez continues: “The main novelty is the entry of new Asian capital that has been driven by the attractive interest rates compared to the USA. We expect to see more operations of the core plus type, that is to say, operations of mature buildings but with some travel in consolidated office areas, not necessarily in the city centre.”

The number of mega-transactions, those above €100 million, recorded last year also increased significantly, with 16 recorded between portfolios and individual assets, compared to six in 2019. Of note in 2019, although not considered an investment operation, was the repurchase of Banco del Santander’s City for around €3 billion. 

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