Price adjustment in real estate investments and drought are one step closer to ending. Following the monetary policy change implemented by the European Central Bank (ECB), especially starting from September 2022, a ‘brick’ adaptation process has begun. investment volumes have decreased significantly. Funds, the main players in this market, wanted to know how far interest rates could go and how much profitability they should demand from properties.
With rates above 4 percent, the market is already starting to discount ECB will stop increases. As consultancy firm Colliers highlights in its latest report, this has a direct impact on ‘yields’, the returns that investors demand from assets, which tend to stabilize. This stability directly translates into greater certainty for investors who will begin to reactivate their purchasing plans.
Alfonso Favieresproperty manager Black Rock He said the following on the first day of The District, the real estate fair that brought together 10,000 executives from the sector in Spain in Barcelona: The investment “will start operating again from the first quarter of 2024” and “the third quarter will be a good time to invest.”
The manager of the world’s largest fund manager assured: There will be investment opportunities in Spain for two reasons: repayments that certain funds must make It conveys to its participants a phenomenon that will affect our country less than others. refinancingA period in which “finding capital will become difficult” due to the decrease in the value of assets and high interest rates.
Adolfo Ramírez-EscuderoCEO of consulting firm CBREHe was also positive about next year: “In terms of investment volume, 2024 will be better than 2023. We have covered almost two-thirds of the decline in price and valuation. I think The next nine or twelve months will be an excellent time to invest“.
The manager of the consultancy firm emphasized the following in his speech at the fair: HE Spanish real estate market don’t live in a bubble: “There is no oversupply or leverage.” This argument was supported by Michael PeredaPresident Lar Group, director of Socimi, which specializes in Lar España shopping malls. However, this manager emphasized that: “We are starting to see the first opportunistic purchases”.
Despite this, the increase in interest rates and therefore the expected returns forcing real estate to compete with other financial assets in terms of returns So far it hasn’t offered any returns like bonds or infrastructure. “We are entering a new phase where there will be more competition for capital, but also more opportunities to transform and create value through real estate,” Ramírez-Escudero said.
Problems for offices
The assets that managers highlighted most were everything related to them. housing and logistics. “I’m very optimistic about this.” student dormitories In Spain because the country has become a mature destination for international students. I’m the same on all ‘flexible living’ formulas: residential rental (BTR and PRS), co-living, senior livingetc,” Favieres noted.
David MartinezThe CEO of developer Aedas Homes noted the “healthy” state of the new construction housing market: “We have very high demand. 240,000 homes are produced every year and only 80,000 homes are under construction.” The supply is so limited that we do not expect a price drop“. One of Martínez’s complaints was the difficulty of accessing the land. Said HejalCEO of Kronos Homes, who demands “more flexibility” from public administrations. David VillaThe CEO of listed Catalan Renta Corporación stated that “rehabilitation of properties can complement this land shortage”.
Ramírez-Escudero also believes that “investors will allocate their funds to sectors that have demand, for example, everything related to trade.” sitting room (housing and derivatives), logistics and education assets”. Offices, which are not very positive in the segment, guarantee that there is an “old stock” that requires constant investment to maintain the value of the assets and tenants. In this direction, Javier FausThe founder of Catalan manager Meridia Capital said: “The situation in the office is dramaticEspecially those outside the city center will suffer greatly.
Miguel Pereda stated: shopping malls behave resilientlyAlthough there has been speculation over the last four or five years about the problems that the rise of electronic commerce may cause. “It has been shown that we can live with this” e-commerce“Since the entrance and sales to our centers are above 2019, the occupancy of assets is higher,” he said.
High rates, resilient inflation
Javier Faus assured the roundtable that “inflation continues to resist falling”, but his predictions do not include a recession or an opportunistic market. Eduard MendiluceCEO alder grove And To waitBlackstone’s early ‘servants’, along with Banco Santander, were also concerned about a hypothetical stagflation in the economy due to the effects on their company’s investments. Despite this negative point, he noted that real estate is a “resilient sector”, with “55% of buyers purchasing homes without a mortgage” and demand is high.