Living, retail, and hotels lead investment through Q3
The real estate market in Spain has seen notable growth through the third quarter of 2024, with investment volumes surpassing €8.3 billion, a 15% increase from last year’s €7.228 billion, according to Savills. This growth highlights the strength of the sector – which continues to show remarkable resilience – driven by the performance of key assets such as hotels, student housing, and shopping centers. The Spanish real estate sector thus maintains its appeal for both national and international investors seeking diversification in an environment marked by inflation fluctuations and financial market volatility.
Distribution of invested capital
Living and accommodation properties have dominated real estate investment, representing 53% of the total. Within this segment, hotels, tourist apartments, rental housing, flex and coliving spaces, student residences, and senior housing have been the main recipients of capital. Investment in student residences has seen the highest growth, reaching €730 million. This marks a 286% increase compared to 2023, largely due to Azora’s acquisition of EQT’s portfolio in Spain. It’s a market with considerable potential, as Spain actually leads Europe in investment in student residences, though it still faces a deficit of 450,000 beds, according to CBRE estimates.
In the case of senior housing, there has been a 145% increase, driven by the purchase of a portfolio of 11 residences from DomusVi. Demand for these types of assets has grown due to the aging population and the increasing need for adequate infrastructure to care for this segment of the population.
Of the remaining 47% not allocated to living and accommodation, 18% was invested in retail assets, 16% in offices, 11% in industrial and logistics assets, and 2% in other uses.
In the retail segment, investor interest in shopping centers has rebounded, reaching nearly €1.5 billion in transactions, representing a 155% increase compared to the previous year.
Investor profile
In terms of investor profile, according to Savills, investment funds continue to dominate the tertiary real estate market. However, private investors have increased their share, representing 31% of total investment in sectors such as offices, logistics, retail, hotels, and alternative assets. Additionally, real estate companies, developers, funds, and REITs have led investments in the living segment, which includes residential and rental housing projects.
Savills also forecasts an optimistic outlook for the coming months, anticipating that the real estate market will continue an upward trend for the rest of 2024, driven by available capital for investment in Southern Europe. A reduction in interest rates is expected to further stimulate transactions, attract cross-border investment, and solidify ongoing deals. Thus, the outlook for the coming months remains positive, with a potential return to pre-pandemic investment levels, according to the consultancy.