After several years of falling prices and declines in the number of transactions, the 2016 data reveal signs of recovery in the real estate sector. In this regard, the two large cities, Barcelona and Madrid, show an increase of approximately 9% in selling prices. In addition, demand and rent levels are growing noticeably in the large cities.
This recovery of the real estate sector has led to a select group of investors focussing their interest again on the purchase of buildings to be used for renting and to obtain in this way an attractive profitability. This is so in the case of housing as well as in the case of offices and commercial establishments, as Jerónimo Martín, Corporate Director of Alting Real Estate Group, explains.
The increase in the investment values in real estate is due, among other factors, to the high financial risk of the stock market and the low profitability that is currently obtained in bank deposits and bonds. Facts closely related to the current policy of the European Central Bank, which maintains since the past month of March, the price of money at 0.00%.
According to recent reports, 1 out of every 4 transactions in Spain is done by investors with the aim of obtaining a higher profit for their equity. Currently, Barcelona leads the buying/selling by investors at 40%, followed by Valencia with 37% and Madrid with 32%. Jerónimo Martín notes, however, that the Yield is nowadays higher in the case where the building is destined for tertiary use instead of residential.
Furthermore, we must highlight the profile of the investor. In this case, we are speaking of selective investors, who seek good locations and who to a great extent do not need external financing for the purchase, but rather who carry out the transactions in cash.
Martín also reveals that from the middle of 2015 new groups of investment funds and risk capital have appeared in the market. They have provided capital to new mixed investment groups managed by businessmen and local agents that have appreciated the opportunity in view of the scant investment of recent years and the growth of demand for houses, offices and retail establishments.
In the first half of 2016, Alting’s investment department has closed the sale of two real estate assets in the city of Barcelona, the HOTEL TWO BY AXEL, located on the street Calabria, 90-92 to Family Offices of this city and the offices located on the street Consell de Cent, 425-427 to an investment group.
At Alting all the new investments that are incorporated to its asset portfolio are carefully selected. Selected projects, with an adequate profitability, creating value in each of its acquisitions, as a fundamental value of its philosophy during more than 39 years, as its Corporate Director affirms.
