According to the latest research by Savills, total turnover in Spain's retail investment market was approximately €850 million in 2013, representing a three-fold increase compared with the €320 million transacted in 2012.
According to the latest research by Savills, total turnover in Spain's retail investment market was approximately €850 million in 2013, representing a three-fold increase compared with the €320 million transacted in 2012. The international real estate advisor attributes this rise partly to increased activity from international funds and suggests that many institutional investors believe that this is the right time to invest in the Spanish market, primarily in Madrid and Barcelona. The firm notes that American, French, British and German funds, as well as capital from Latin America moved into Spain during 2013. Savills forecasts investment in this sector to reach €500m in the first half of 2014.
Luis Espadas, head of capital markets at Savills Spain, says: "With the economic outlook improving the retail investment market in Spain will continue to be as active as it was in 2013, perhaps busier, as more and more product comes on the market and international buyers look for opportunities. Prime shopping centres continue to be most in demand, particularly for foreign investors who dominate investment into this asset type. Shopping centre deals accounted for 51% of the retail investment volume in 2013, but supply remains scarce. Consequently specialist investors are also looking to consolidated centres in secondary cities as a good alternative."
Savills notes that a number of international retailers have opened new stores in Spain over the past 12 months with others currently looking to enter the market. Brands including Brooks Brothers, 7 For All Mankind, Stella McCartney, Coach, Fifth & Pacific and Moncler have all opened stores on the main high streets of Madrid and Barcelona in 2013.
Gema de la Fuente, head of research Savills Spain, says: "Various international operators have or are currently preparing to enter the Spanish market due to the improved mid-term economic outlook. Some have been waiting for years for the right moment, others have pre-tested the market via online stores."
In terms of supply, the firm records the current level of available retail space in Spain at 14.78 million sq m with 160,000 sq m of new space delivered in 2013. Going forward Savills expects approximately 300,000 sq m of new space to come on the market over the next 24 months, depending on economic climate and availability of finance. Key developments scheduled for completion over the coming months include the 70,000 sq m retail park in Torrecardenas, Almería, by Bogaris which is due to open in 2015 with retailers including Media Markt, C&A, and Foster's Hollywood. A 48,000 sq m Avenida M-40 shopping centre in Leganes, Madrid, is scheduled to reopen in 2014 following major refurbishment and the 45,000 sq m Cruce de Caminos retail complex in Sagunto, Valencia, is being developed by Grupo Lar and WIT Retail, with Decathlon and AKI DIY among tenants.
Whilst prime shopping centres with high occupancy rates have recorded a slight rental increase, reaching top rents of €85 per sq m/month, overall retail rents have declined according to Savills data. The firm records average retail rents at €19 per sq m/month, representing a 12% decreased compared to the same figure in 2011.