No question: the Spanish economy is also suffering from the Corona pandemic. After a 5-year steady upswing, the past year was marked by a strong recession. However, a concerted effort by the government, trade unions and the business community succeeded in setting the economic framework that will lead to robust growth in 2021 and especially 2022.
Expectations are extremely high not only for the industrial sector, but also for the dominant tourism sector, where signs point to a sustainable recovery. Provided that the implementation of the vaccination measures - not only in Spain, but in the classic European destination countries - continues to be as dynamic in the coming months.
Looking back, of course, but even more so looking forward, this has implications for the Spanish property markets. Compared to the outstanding Q1 2020, the transaction turnover in the quarterly comparison with Q1 2021 has fallen by around 40% to €1.8 billion.
Nevertheless, this market phase also opens up a clear investment opportunity for investors:
- The current spread between direct real estate cap rate and government bonds yields is above the historical average – signalling strong relative value for real estate investors.
- Office prime yields have been remain stable throughout the pandemic standing at 3,5%, indicating ongoing high demand for core properties & solvent tenants. 2021 we except an slightly increase.
- The logistic sector experienced the strongest yield compression in 2020, driven by further growth of e-commerce / last mile logistics down to 4,5%. In 2021 the prime yield is expected to compress even more.
These are just a few aspects from our current market report. This year, we are on the home stretch of the fundamental fight against the pandemic. It is all the more important to point out that the fundamentals for Spain are very positive for 2021, even more so for 2022, and the economy is growing well above the European average.