Institutional investors seek out Spanish office space

on Apr 15, 2015
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The Spanish property market has seen renewed interest from investors over recent months, a sign that the country’s economy is continuing to recover after the financial crises. A new survey published by property valuation firm Tinsa shows that Spain’s commercial property market is experiencing increased optimism from institutional investors. As a result, Tinsa expects that the amount of capital invested in Spanish property this year will equal, if not exceed that of last year.

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Office space continues to be the main focus for investors looking towards Spain’s commercial property market, with buyers honing in on the cities of Madrid and Barcelona. However, as demand increases, supply of office space within these two cities is becoming severely limited, driving prices up, leading many potential buyers to look elsewhere.
According to real estate firm Jones Lang LaSalle (JLL), investment in office space in Madrid and Barcelona reached €580 million in the first quarter of this year, double the amount reported in the same period of 2014. Of this, 487 million euros were invested in offices in Madrid alone, an increase of 238 percent on figures from the first quarter of 2014.
Despite Spain’s gradual economic recovery, institutional investors from abroad still view the residential property market in Spain with a degree of scepticism in terms of investment potential, due largely to uncertain capital gains forecasts and thin profit margins.
However, recent reports have suggested that smaller foreign investors are starting to take advantage of the weakened euro by investing in Spain’s housing market. British and Swiss buyers are particularly well positioned to purchase property in Spain as the exchange rates of both the pound and the Swiss franc are currently very favourable against the euro. Consequently, Spanish banks have predicted that things will continue to improve for the residential property market throughout 2015.

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