Despite the general nervousness in Europe resulting from the continuing Greek debt crisis and its implications for other peripheral euro zone economies, particularly in southern Europe, transaction activity has picked up substantially in Spain. Both the principal office markets in Madrid and Barcelona and the retail sector across the wider country have seen recent deals that confirm the burgeoning interest of international real estate investors in the Spanish market.
In a Spotlight on Retail report on the Spanish retail market, Knight Frank recently suggested that €3 billion of retail assets in the country will change hands over the next 18 months. Smaller, non-prime shopping centres in secondary cities will be the most sought-after properties. Rising footfall and sales volumes are positive for the retail market, the report says. “While 2014 and what we have seen so far of 2015 has been all about large, prime shopping centre deals, the upcoming months will see more smaller core-plus and value-add investment opportunities in secondary cities.”
You know that a country has turned a corner when the big players move in. Intu Properties Plc and Canada Pension Plan Investment Board recently formed a joint venture to jointly own the Puerto Venecia shopping centre in Zaragoza. Intu acquired Puerto Venecia earlier this year for €451 million, stating at the time that it would seek a JV partner. Intu and CPPIB already have a joint interest in the Parque Principado shopping centre in Oviedo.
In Madrid, M&G Real Estate has acquired a 35,000-square-metre office property in the CBD from NZ Patrimonio SLU for €175 million. Located on calle Rios Rosas, the property will be refurbished and then occupied by WPP on a long-term lease. The acquisition was made on behalf of M&G Real Estate’s core European property strategy, confirmation of Spain’s regained place in real estate investment.
According to Simon Ellis, fund manager at M&G Real Estate, “this deal takes the strategy into a new jurisdiction, providing further diversification for our investors and increasing the number of countries in the portfolio to eight. Investor appetite remains strong for core assets of this nature.”
Also in Madrid CBD, Spain-REIT Axiare Patrimonio SOCIMI recently acquired a six-storey office building on the corner of calle Velázquez and calle Padilla from SAREB for €51 million. The 10,780-square-metre property is 92 percent let.
There is traffic the other way. Deka Immobilien GmbH recently sold a portfolio comprising two office properties in Spain to Spain-REIT Hispania Real SOCIMI SAU for €55 million. The properties were the 11,000-square-metre Foster Wheeler building in Las Rozas and the 11,000-square-metre Cristalia building in Madrid. Deka says the present high demand for investment properties in Spain informed its decision to sell the two buildings.