Spain Commercial Real Estate Market Size

Spain Commercial Real Estate Market Analysis

The size of Spain commercial real estate market is USD 17.6 billion in the current year and is anticipated to register a CAGR of over 5% during the forecast period. The logistics sector has been performing well in the country. Thus, there is a huge demand for logistics real estate driving the market. Furthermore, the hospitality sector's growth is propelling the market.

• Spain has some of the best infrastructure in the world. A good infrastructure is required for real estate to increase value and produce higher capital gains. Spain's transportation system is a prime example: world-class airports, vast high-speed rail and metro networks, and miles of roads and highways. The COVID-19 pandemic has promoted e-commerce as a consumer habit, with a total logistics investment volume of EUR 1,400 million (USD 1487 Million) in H1 2021 (led by the sale of the Montepino Portfolio), indicating a 250% year-over-year rise. The economy was already in the 'New Normality' at the end of the first half of 2020. Still, a substantial drop in production and employment is projected as a result of the government's pandemic containment measures. Logistics has continued to be one of the most active real estate sectors, with record levels of activity.
• The hospitality industry was one of the hardest hit by the pandemic in 2020 and the first part of 2021, with a significant drop in liquidity. This circumstance, combined with new asset-light trends, has prompted hotel owners to contemplate selling part of their assets to raise cash and alter their business model. The total amount invested in Hospitality in H1 2021 was EUR 995 million (USD 1056.83 Million), surpassing the total amount invested in FY 2020 and becoming one of the strongest half-year results in the last 15 years. When compared to other countries, Spain has a very favourable return on investment for real estate. There are options with positive profit margins available due to the increasing demand for rentals, the importance of tourism, and the growth of the real estate industry.
• Consumer attitude and footfall grew steadily as the sanitary condition improved thanks to breakthroughs in mass vaccination and a desire to socialize and pent-up demand. On the retailer side, previous trepidation over the pandemic's unclear landscape has translated into increased rental demand for strategic sites at more inexpensive rentals. Retail investors have primarily focused on premium core assets with long-term contracts, with supermarkets being the most in demand. By the end of 2021, Spain returned to pre-pandemic levels of investment. In terms of investment deals in Spain, the year ended with a total of EUR 12.1 billion (USD 12.85 Billion), up 57% from the previous year's figure. In particular, the logistics distribution and office sectors have seen an increase in investment.
• Spain is on the mend, which is great news for one of the countries hardest hit by the pandemic. As a result, annual investment in Spanish real estate is one of the most appealing sources of capital. In Commercial Real Estate, the Q3 2022 logistics transaction value was EUR 610 million (USD 647.91 Million). Between January and September 2022, investment reached a new high of around EUR 2 billion (USD 2.12 billion), a 90% increase over the previous year. Investment funds accounted for 70% of these transactions, with foreign capital accounting for 97%. Many businesses have reopened due to the country's economic recovery, particularly in the restaurant industry and general commerce, resulting in a surge in demand for retail space. Furthermore, many company employees are returning to work in office buildings, which has increased demand for office space.