Spain Commercial Premises Investment Grows

 

Spain Commercial Premises Investment Grows

Spain Commercial Premises Investment Grows

Investment in commercial premises in Spain rose to 1.33 billion euros in 2014, an increase of 330 million euros from a year earlier, fuelled by attractive rental yields and the positive economic outlook.

Financial services providers like family offices and investment funds were the most active players in the market, according to a May report by property consultants Aguirre Newman.

And as Spain’s economic recovery continues, boosting private consumption, top domestic and international retailers have been jostling for positions in prime areas in capital cities like Madrid and Barcelona.

Ireland’s Primark has plumped for 15,000 square metres in Madrid’s central Gran Via 32 building for its new Spanish flagship store which is due to open its doors at the end of 2015.

Ironically, the building is owned by Spanish businessman Amancio Ortega, founder of the world’s largest fashion retailer Inditex.

Primark signed the rental contract back in 2011, since then rental prices in Madrid’s shopping “hub” streets like Gran Via, Serrano and Fuencarral have been on the rise.

Other foreign retailers, like Sweden’s H&M, have also opened online stores in Spain, a format which Aguirre Newman expects to gain increasing popularity with consumers.

 

RENTAL PRICES SET TO REMAIN BUOYANT

Between 2007 and 2013, Spanish property prices fell by nearly 40 percent as the country struggled to weather the storm of the global financial crisis.

Rental prices also declined 30-40 percent from their peak, a fact which has fuelled renewed interest from both private investors and funds.

While investment yields on rentals in Madrid have dropped somewhat over the last year, they are still higher than in other European capitals like London.

The Spanish economy’s steady return to growth, combined with a number of prime assets still trading at low valuations, will ensure that the upward trend in rental prices in key locations in Madrid and Barcelona will continue, according to Aguirre Newman.

Over the coming months, Socimis, listed real estate investment trusts, as well as new funds focusing on commercial premises will be active operators in the market, the consultancy firm said.

It is also forecasting a change in trend in the demand for premises to locations outside the main cities and key commercial areas.

 

FLAGSHIP STORES LURE FOREIGN INVESTORS

More flagship stores are likely to spring up in Madrid and Barcelona, as retailers aim to cash in on the rise in wealthy Asian and European tourists to Spain.

The extension of store opening hours and the introduction of Sunday openings have all contributed to a rise in sales of all kinds of goods.

And a shopping spree to Madrid is attractive for non-European Union visitors because they are exempt from paying the 21-percent value added tax on good purchased in Spain.

The potential for shopping tourism will guarantee continued interest from major retailers in Spain’s commercial property market.

For information on investing in Spain, contact corporate law firm Argali Abogados.

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