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Date Published: 08/03/2022

ARCHIVED - Real estate investment doubles on the Costa Blanca

ARCHIVED ARTICLE

The sector remains strong and has experienced continued growth in the Valencia region

<span style='color:#780948'>ARCHIVED</span> - Real estate investment doubles on the Costa Blanca

The real estate market in the Valencia region is holding its own, in spite of a global health crisis which brought many other industries to their knees, attracting new major players and doubling investment in 2021.

Unlike stocks and shares, real estate is a tangible asset and the pandemic hasn't deterred national and international investors from taking advantage of high yields and competitive prices in the Valencia region compared to more consolidated cities such as Madrid and Barcelona.

Last year, investment in the region stood at 425 million euros, double the previous year marked by the onset of the pandemic, and closed with 240 million euros, according to a report by BNP Paribas, a European bank of reference in Spain.

And whilst the data is positive, the figures are still a way off the region's high of 815 million euros in 2018 - although that year was exceptional in that three major transactions accounted for 50% of the total investment.

But the region is on the right track with a surge in investment in logistics, assure the real estate experts.

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So who are the major investors at the moment?

According to Joaquín Ivars, a BNP Paribas director, the profile has changed.

Previously, it was local family offices, i.e. large Valencian wealth funds, that accounted for most of the transactions in the region, but since 2019, the Socimi's (Listed Limited Real Estate Investment Companies) and national and international funds are the ones that are moving capital in the region's real estate market.

"Before, we only worked with Valencian families, but now they are coming from Madrid, Barcelona and abroad driven by the high profitability here," explained Ivars.

And their priorities have also changed. Assets that traditionally moved most of the investment were retail and the office market, but the pandemic has "strongly awakened the appetite for logistics and alternative assets", such as student residences or residences for the elderly.

According to the bank's data, logistics accounted for 41% of total investment in the region in 2021, followed by alternative assets - student or retirement homes - with 25%; residential, 15%; hotel, 9%; and retail and offices, both 5%.

In the housing market, the trend that has marked the past year and will guide the following developments will be build-to-rent due to the need to increase the professional rental offer.

"The logistics market in Valencia and its metropolitan area is experiencing its best moment. This is reflected in the levels of investment and contracting, and in the type of investor. In the last year we have seen how, not only is this sector attracting more and more international investors, but we are also bringing in new players who traditionally did not focus on logistics assets," added Ivars.

Ecommerce has had a lot to do with the 'logistics fever', but also the need for large platforms for food and health storage.

"The truth is that this good performance took off two years ago, but it continues unstoppable, registering record contracting figures and maximum levels of activity."

Contracting reached 402,850 sqm in 2021, an all-time high and almost double that of 2020 (+93%) and an increase of 34% on 2019, the previous market peak.

And one of the main attractions of the Valencian real estate market, as mentioned earlier, is the higher yields it offers - around 5% compared to Madrid and Barcelona, which are around 3.9%, according to BNP Paribas.

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