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22 de February de 2021
Investment in office space has declined by 50% in 2020, while demand in the logistics sector has increased, especially in Madrid and Barcelona.
Gesvalt has released its latest Trend Report, relating to the real estate market behaviour expected for 2021. The study, carried out by the company’s Research Department, foresees a gradual recovery of confidence in the Spanish housing market, after having proven to be one of the most solid ones in the entire business fabric. According to this report, if the forecasts on the recovery of macroeconomic data are met, housing investment could increase by between 15% and 25% in 2021, driven especially by the build-to-rent segment.
However, the Trend Report also foresees a price reduction similar to that recorded in the last months of 2020. This drop will be more moderate in large urban hubs, where demand for housing is higher and a more agile recovery is expected. In the same way, Gesvalt points out that rents will record a less pronounced decline than sale prices, given the possible decrease in the purchasing power of Spaniards resulting from the economic downturn. This fact could reduce the ability to purchase a home and increase the demand for lease agreements. This circumstance, as pointed out by the advisory & consulting firm, could also give more importance to Build-to-Rent projects, which will be strongly reactivated in 2021.
As regards purchase and sale transactions, new-build homes will better resist the drop in prices than second-hand ones, according to Gesvalt. Nevertheless, the study states that a decline can be expected in the supply of this type of product in the coming years due to the adjustments in large listed developers’ expectations regarding new real estate developments.
The main reason for the greater strength of new-build homes with respect to second-hand ones is the fact that the former adapt better to the new needs arisen among Spaniards as a result of the lockdown, such as the search for more space, terraces and gardens to the detriment of a location closer to their offices. According to Gesvalt, 2021 will be a key year in which the role to be played by work from home will be determined, as well as which of these new trends in housing demand will be consolidated.
Gesvalt’s Trend Report indicates that, despite being most affected by the pandemic, retail was the only real estate segment -along with housing- where a year-on-year increase in investment activity was seen in 2020, reaching a volume close to € 1.9 billion. This was due to the large number of transactions involving large supermarkets and hypermarkets throughout the period, especially in the first half of the year.
Likewise, the advisory & consulting firm also indicates that 2021 will be a key year for retail, since the pandemic has accelerated the penetration of ecommerce in our country. In fact, mobility restrictions have led Spain to exceed the European average in terms of the number of people who have started to purchase products online for the first time. In this sense, income derived from electronic commerce is expected to increase by 20%, with the food industry having a particularly relevant weight.
In this situation, large retailers face the challenge of increasing omnichannel retailing, not only with the aim of increasing sales, but also in order to ensure their presence in the only trade channel that has remained active in any circumstance during the pandemic. At the same time, these companies will have to decide faster than expected what role they want their physical stores to play in the future. In this sense, many of these locations are already becoming mixed spaces, with options such as click & collect points or even a space fully dedicated to experiences.
Despite its good growth forecasts in early 2020, the office segment suffered a 50% contraction in investment, capturing just over € 2.1 billion. In this context, transactions became even more polarised between Madrid -with almost two thirds of the total investment volume- and Barcelona -with almost all of the rest-. Furthermore, rental prices remained stable in these large cities, even with slight increases in Barcelona.
In this situation, and having demonstrated that the Spanish business fabric was and is prepared for work from home, Gesvalt points out that it will be necessary to observe the intersection between two major trends to determine the future of the office segment. On the one hand, the need for more space per worker due to health restrictions and, on the other, the new possibilities open to companies in terms of work-family reconciliation or reduction of physical space.
Considering these factors, the advisory & consulting firm foresees that the housing stock will increase in 2021, with a 1 million sq. m expansion expected within the next two years, almost entirely concentrated in Madrid and Barcelona.
The logistics segment was the one that found the most opportunities in the scenario created by the pandemic. Gesvalt indicates that during 2020 a significant growth was seen in the demand for logistics platforms -driven by the increase in ecommerce-, which made this type of asset be highly desired especially in the Madrid and Barcelona areas, where the number of transactions grew year-on-year by 50% and 70% respectively. At the same time, rental prices remained very stable in these markets.
In this way, Gesvalt’s Trend Report highlights that the logistics industry will continue to be a key player in 2021, since in this period the trends broken in 2020 will appear again, although in a situation of even greater strength for the sector. For this reason, the advisory & consulting firm indicates that, in 2021, the logistics segment is starting from a privileged position to face the new challenges that lie ahead, such as the greater penetration of ecommerce, last-mile logistics and ecological transformation, through the implementation of concepts such as picking automation, the growth of city hubs and green logistics.