Ample scope for brown-to-green refurbishment in Iberia

GDP growth in Iberia during Q1 2023 outperformed that of the Eurozone, a trend which asset manager DWS Alternatives believes will persist for the next five years.

“We’re quite positive on the outlook for Iberia at the moment,” said the firm’s real estate research analyst Siena Golan.

She added that the positive economic story also means that the outlook for rental growth is also good, particularly for sectors like logistics. “There’s definitely an undersupply, particularly in places like Barcelona.”

 Prospects are also good for Iberia’s residential sector, although Golan warned that there is a regulatory risk at present. Strong spending patterns are among the main drivers in Spain at present, “particularly following the pandemic, when we saw excess savings being built up,” Golan said. “Now those are being spent, we see good retail sales and, goods need to get to the consumer, which is where logistics comes in.”

E-commerce growth is also boosting logistics as it is throughout Europe. “But Spain is starting from a lower base, so we really see quite strong growth in this area at the moment,” Golan added.

ESG is “absolutely paramount”, she said. “We see quite good opportunities in brown-to-green refurbishments, particularly in Madrid and Barcelona.” She also explained that as highly energy-efficient properties do not exist in Lisbon, the brown-to-green strategy could apply well throughout the Iberian markets.

“And that’s supported by the strong rental growth story that we expect in offices over the next five years or so,” Golan concluded.

Please click on the video above to watch the full interview or listen to the podcast below.