The economic recovery, the tourist attraction and the interest of large investors, among the reasons given by the management company
Spain offers many opportunities for investors in the coming years. And, according to Inmsa Real Estate Investments, it is the most attractive country to invest in real estate.
Mariano Capellino, CEO of the real estate investment manager, says that, although investors should be aware of a complex and challenging situation, “the impact of the Russian invasion on the world is asymmetric. There are countries that are more and less affected and, even in terms of economic activity, specific sectors within some countries benefit. Such is the case of real estate investment in Spain. Of course, this is not a fortuitous situation, nor did it happen overnight, but rather the situation has consolidated a recovery process that has been going on for some years and makes this market the most attractive one for families who want to protect and increase their capital“.
Capellino reviews in a study the reasons why he sees Spain as the most attractive market to invest in real estate:
- Economic growth. One of the fund manager’s reasons for betting on the domestic market is the economic recovery. Capellino recalls that the Spanish economy was hit hard by the covid-19 crisis. In 2020, GDP contracted by around 12%, unemployment grew by 7.5% and this reality translated into a doubling of the average correction of developed countries. However, everything points to it being one of the countries that will grow the most this year, despite the current turbulence and the downward revision of the forecasts of national and international organizations.
- Tourism recovery. Tourism, which accounts for 15% of GDP, fell by 70% in 2020, generating an increase in unemployment and driving many small and medium-sized companies into bankruptcy proceedings. “But today, after the invasion of Ukraine, Spain is once again positioning itself as a safer tourist destination that will generate a significant amount of employment and consumption,” emphasizes the CEO of the management company.
- Opportunities in hospitality, retail and offices. A large number of small and medium-sized companies and investors were forced to liquidate their assets to save their companies, and some were or are being foreclosed by the banks. And the drop in activity in the hotel, retail and office sectors “offers a great opportunity in the face of the considerable fall in the values of the real estate where these activities were carried out”, details the first sword of Inmsa Real Estate. In this regard, he also recalls that private indebtedness is low, as are interest rates, but demand is strong. All this coincides with high inflation, which translates into financial market volatility and fixed income close to zero. “Both variables are operating as drivers of demand for real goods,” Capellino sentences.
- Low rates and excess liquidity. The combination of low interest rates and excess liquidity in the world “turned real estate back into the most important real estate market in the world”. the world’s most profitable and secure asset in a new cycle of opportunity. Even more so in a market like Spain’s, which is a treasure trove of opportunities,” stresses the CEO of the fund manager.
- A good return on investment. Another of the points highlighted by the company is that the return multiplication factor of fixed income in real estate has soared thanks to the substitution of financial investment for real estate. In addition, it is worth remembering that real estate asset prices in Spain are comparatively lower than those in more mature European markets (United Kingdom, Germany and France).
- More investment is expected in the coming months. Capellino explains that the main real estate investment funds plan to continue investing in Spain and that in a year and a half the volume could reach 30,000 million euros, which would be an investment record. He also recalls that the foreseeable depreciation of the euro in the short term “is good for boosting Spain’s already good position, as it makes it more competitive in attracting tourism and foreign investment”.
- Spain, the focus of major investors. Spain has been attracting the interest of large international investors for several years. Two years ago, in the middle of the pandemic, the world’s second largest real estate fund, Blackstone, raised 800 million euros to invest in the European real estate sector, including Spain, and in recent months the insurance sector (with companies such as AXA and Allianz) has also been involved in many operations. Another example is Warren Buffett, one of the richest men in the world, who acquired the VA Property agency in Spain to enter the commercial market (hotel, office, retail and logistics) and complement his investment in the residential market, which he had already made a few years earlier.
- Spain, a country to relocate to. According to a survey of foreigners from 44 countries conducted by the Knight Frank consulting firm, Spain is, after the United Kingdom, the most attractive country to relocate to after the coronavirus crisis. “This trend has deepened after the war crisis. Remoteness, climate, quality of life in health and education, a stable currency, accessibility, the possibility of acquiring a second home, commercial opportunities, security in the safeguarding of assets and the prospects of an early recovery make Spain an ideal housing destination,” emphasizes the CEO of the real estate investment manager.
- Attractive prices. Finally, Capellino stresses that Spain, compared to other developed countries in Europe and the USA, continues to offer attractive prices (the residential market is 30% below 2008 levels) and is a refuge from the uncertainty of the financial market and high inflation. These inflation rebounds, which in March was on the verge of 10% in the leading indicator, according to the INE, “will undoubtedly be reflected in the buyer’s final prices. With higher inflation, investing in real assets is the answer,” concludes the first sword of Inmsa Real Estate Investments.
Source: idealista.com
