Deutsche Bank: Property in Spain to outperform

DEUTSCHE BANK: SPAIN PROPERTY TO OUTPERFORM

DEUTSCHE BANK: SPAIN PROPERTY TO OUTPERFORM

Spain’s real estate market will be one of the most active and buoyant in Europe in the next five years and a top bet for foreign investors looking for the best yields, according to Deutsche Bank.

Spain is expected to be one of the best performing European markets,” the German bank’s Asset and Wealth Management division said in a report published last month.

It also flagged the overall investment potential of southern Europe, a region where asset prices across the board were decimated during the global crisis, however Spain appears to be leading the recovery.

For business investors looking for investment opportunities, Deutsche Bank recommends targeting acquisitions in the residential, office and commercial sectors in the main cities of Madrid and Barcelona. Valencia and Bilbao are other cities which investors should now have on their radar.

SPAIN PROPERTY MARKET: GAINING MOMENTUM

Deutsche Bank’s upbeat outlook for Spain’s real estate sector is in line with other positive reports over previous months.

Many property assets were considered “toxic” after a decade-long sector bubble burst in 2007, depressing prices by up to 40 percent at the height of the downturn.

The sector recovery began in early 2014 and is gaining momentum as Spain’s economy is growing faster than its eurozone peers and job creation is improving.

Socimis, listed real estate investment trusts, are currently active operators in the market, as well as new funds focusing on commercial premises.

Consultancy firm CRBE expects real estate investment to rise up to 12-14 billion euros in 2015, with the number of property transactions outpacing pre-crisis levels.

Apart from recommending buy opportunities in Madrid and Barcelona, Deutsche Bank also says the timing is right to acquire rental assets in these cities. They offer the best return on investments ahead of Frankfurt, Munich, Milan and the La Defense district of Paris.

SCARCITY OF SUPPLY DRIVES MOMENTUM

One of the key factors driving the property sector momentum in Madrid and Barcelona is the scarcity of supply in prime areas. And this trend is expected to continue over the coming five years.

The same cannot be said of Spain’s coastal areas where the residential offer is much larger, boosted by the number of homes gradually being off-loaded by the country’s bad bank Sareb and other domestic lenders. This means that recovery in prices could take longer to reach the coast. But there are clear signs of demand from both private and business investors in northern Europe, particularly from Belgium and the UK.

For information on investment and legal services in Spain, please contact corporate law firm Argali Abogados.

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