Spanish Commercial Real Estate Market: Top Target For Investors According to Poll

Posted by Staff Reporter ( on Sep 28, 2015 07:00 PM EDT
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Marina d'Or Resort Bankruptcymore big
OROPESA DEL MAR, SPAIN - MAY 19: A general view of Marina d'Or resort on May 19, 2014 in Oropesa del Mar, Spain. The real estate developer Marina d'Or declared last week debts of 681 million Euros, 546 million Euros of which are owed to banks. Owner of Marina d'Or Jesus, had planned to build the biggest holiday resort in Europe with 35,000 houses, 3 golf courses and even a miniature of the Eiffel Tower. Marina d'Or was set up three decades ago by the Barcelona-born Jesus Ger, who started-out selling domestic appliances on the coast of Castellon Province. Ger switched to real estate and developed Marina d'Or on virgin coastline, marketing it as a 'Holiday City'. Marina d'Or is one of the biggest high-density projects on the Spanish coast, and many of the homes and shops in the complex now stand empty. (Photo : David Ramos / Stringer)

The signs of recovery for the Spanish commercial real estate market is apparent as commercial real estate investors reportedly now views Spain as the top investment target in Europe for next year.

According to Property Wire, the head of Capital Markets at Knight Frank Spain has said, "The fundamental rationale behind investing in Spain is even stronger than this time last year. Prime CBD office rents have risen by 20% over the past 12 months, but remain nearly 40% below the 2008 peak, and both footfall and sales have been increasing in dominant shopping centres for six consecutive quarters."

According to Property Wire, Germany is said to be second according to the result of a poll of investors carried out by international real estate firm Knight Frank. The poll shows that 25.4% chose Germany, with €30 billion invested in real estate property during the first six months of 2015, as their preferred target. If compared to the first semester of 2014, this is rather an increase of 35%. Joachim von Radecke, head of German Desk at Knight Frank in London, attributes this increase to the "rising flow of foreign capital into the country and the 50% increase of domestic investor activity." Speaking of this trend he said, "Foreign investors' share of the German market continues to grow, and now accounted for almost 60% of all transactions in the first half of 2015. We saw the usual trend towards the big five markets of Berlin, Frankfurt, Munich, Hamburg and Düsseldorf, with 78% of total office transactions recorded in these cities."

Furthermore, the UK is not falling behind in the polls. According to Property Wire, the UK market has 17.4% of the votes. And according to Chris Bell, managing director of Europe at Knight Frank, "The UK is well ahead of the rest of Europe in terms of the property cycle and has already seen significant yield compression. However, it is encouraging that rental growth is beginning to re-emerge more widely across Europe, helped by the strengthening of occupier demand and the steadily falling availability of good quality space exacerbated by the lack of development over the preceding recessionary years."

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