2020 was going to be a good year for real estate investment. All the indicators pointed in that direction, which was consolidated by the positive months of January and February. But then the virus arrived. And investment in real estate assetsLike the economy as a whole, it suffered a tremendous shock that took it to its lowest level in recent years.
The interest, however, is still there, underlying it, so different analysts assure that in the autumn there will be a resurgence of investments, both foreign and domestic. Although the economic sluggishness shown this summer continues. Segments such as residential rental and logistics have weathered the onslaught of the virus and remain attractive. Meanwhile, the devaluation of the hotel sector has left portfolios that previously seemed inaccessible within a stone’s throw.
The Spanish manager Azora has set up a private equity fund with 680 million euros to invest in this last segment, especially in holiday properties. The intention is to achieve a direct investment capacity of 1,500 million euros. As the president of the Cehat hotel association, Jorge Marichal, warned, the crisis in the sector has not gone unnoticed by the funds.
The director of markets for CBRE Spain, Mikel Marco-Gardoqui, explains that “there may be investment opportunities with a greater discount” in the sectors most affected by the crisis, such as hotels and retail. Some options that also transcend Madrid and Barcelona, traditionally the main poles of attraction. “He Basque Country, Malaga, Seville and Valencia they maintain the institutional interest ”, explains the executive.
The CEO of Colliers Spain, Mikel Echavarren, acknowledges for his part that ‘opportunities’ have been created in the tourism sector, but he also believes that these operations “will probably take time to close.” On the other hand, the executive highlights the strength of segments such as residential rental, logistics and offices and believes that it is in these markets where more operations can be closed at the end of the year.
The rent continues to gain ground to the detriment of a sale weakened by the uncertainty of the mortgage market. And logistics assets have been boosted (even more) by the growth that electronic commerce has had during the confinement in Spain, close to 50% according to the calculations of the employer UNO.
That is why takeover drums are beginning to be heard in the real estate sector, even with the limitation that the Government has imposed on investment in strategic sectors.
Merlin Properties is an example of this. The Socimi has plunged more than 42% in the stock market since the highs of the end of February, which has aroused the interest of the Canadian fund Brookfield, as advanced by “Expansión”. According to industry sources, this is by no means the only one interested in a company that has a portfolio valued at more than € 12.7 billion and that brings together, above all, offices, shopping centers and premises and logistics. The discount produced in the company’s market value has served to pave the way for investment funds. A situation that has also been repeated in other Socimis.
Industry sources warn that large funds are positioning themselves to launch an offensive on the Spanish property market after the summer. In CBRE they predict that in the second half of the year an investment of close to 3,400 million will be registered, which would allow the end of 2020 on the 8.5 billion.
Fear of regrowth
Figures that, however, will not be able to hide the hole that originated in real estate investment during the second quarter, when the “virtual market stoppage” occurred, according to Marco-Gardoqui. The 8,500 million real estate investment planned by CBRE for the year as a whole represents 30% less compared to the results of 2019. A discount that is in line with what is expected in other European countries.
All this, of course, if there is not a new economic confinement such as that experienced in spring. “The spectrum of investment opportunities is wide, the biggest problem being not the lack of opportunities but the greater prudence of investors in advancing in processes before being able to test. Know how the market will behave in the face of new waves of the pandemic ”, explains Echavarren.