Commercial Real Estate Market in Spain - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

Market Overview

Spain's economy currently looks positive with a forecasted GDP of nearly 2%, in the coming years. 

• Spain is one of the larger Western European countries, with a population of nearly 46 million. Furthermore, the population is expected to grow around 1.2% in the upcoming years, which is likely to increase the demand for commercial floorspaces in the country. The institutional market of Spain is majorly dominated by investments in the office and retail markets, which make up 40% and 44%, respectively, of the Spanish IPD index. 
• The Spanish office real estate market remained stable throughout 2018. The large market players are eyeing cities, like Barcelona, for office spaces, which is one of the best cities for start-ups, innovations, and technologies in Europe.
• The hospitality real estate market also saw significant growth in Spain, due to increasing tourist arrivals. More than 81 million foreign tourists visited the country in 2018, with cities like Catalonia accounting for nearly 23% of these tourist arrivals. In 2018, international and local investors invested around EUR 4.8 billion in the existing hotel infrastructure, new facilities, and building sites. 

Scope of the Report

  This report aims to provide a detailed analysis of the Spanish commercial real estate market. It focuses on the market dynamics, technological trends, insights, and government initiatives taken in the commercial real estate sector. Also, it analyzes the key players present in the market and the competitive landscape in the Spanish commercial real estate market.

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Key Market Trends

High Demand for Office Spaces Across Key Cities in Spain

The Spanish office real estate market remained stable throughout 2018. One of the key events that occurred was the purchase of a Barcelona-based Diagonal de Barcelona complex for EUR 250 million by Blackstone. The deal was important because not only did it demonstrate investor confidence in the Catalan capital, but it also turned out to be the largest single-asset transaction in Spain

The offices witnessed an increased demand across key cities in Spain, such as Madrid and Barcelona. In 2018, the office take-up reached around 5,41,000 sqm in Madrid, with most of the take-up by service and tech companies. In Barcelona, international companies saw an increased take-up in the office space, in 2018.

Due to the rising demand for office spaces in the country, the vacancy rates for the office market reduced significantly, especially in cities, like Madrid and Barcelona. The average vacancy rates of office space in Europe stood at 7%, as of 2019, with Madrid and Barcelona’s vacancy rates reducing to 9.5% and 6.1%, respectively. The vacant space is expected to continue reducing in both cities, with high levels of take-up forecasted for the coming two years, which may increase the demand for the office market in the country. 

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