Spain and Italy are attractive markets not just because of their growth prospects but also because they offer interesting investment opportunities in different sectors, panellists agreed at the PropertyEU Southern Europe Investment Briefing, which was held in London on Thursday.
There is something for every investor, whether interested in offices or residential, hospitality or logistics, retail or student housing, whether focused on prime markets or secondary cities, on large portfolios or small acquisitions.
‘Now everybody wants to be in Spain,’ said Marta Cladera de Codina, head of Iberia at TH Real Estate. ‘All investors are buying rental growth, because it is happening and we can see it. In offices we have still not reached the peak compared to previous cycles.’ The issue, she said, is ‘lack of core quality product for core investors.’
Italy has the same problem, said Maurizio Grilli, head of investment management analysis and strategy at BNP Paribas Real Estate: ‘The forced moratorium on development because of the crisis means the office stock in Milan is old and often obsolete, while the demand for new offices is strong and rising. We need many more Porta Nuovas.’ Big investments like the Qatar-owned gleaming new complex in central Milan are now justified by the rental levels, he added.
Office to resi conversion
Residential in all the major cities is another attractive investment, whether it involves development or refurbishing old buildings. ‘High-quality resi is coming back strongly in Madrid and Barcelona,’ said Cladera de Codina. ‘If you are lucky enough to find land in the city centres then opt for development.’ In Italy demand is so high and existing supply is so low that converting disused offices into resi is a good strategy, said Grilli.
Shopping centres have been actively traded recently in Spain in some high-profile deals. ‘We have seen very large acquisitions in excess of €500 mln, but smaller deals seem to be taking longer and there has been a reduction in the overall number,’ said Alfonso Fernández-Puebla, partner at Gómez-Acebo & Pombo Abogados. ‘There are still opportunities and things to do, but the sense is that the market is getting a bit slower.’
Retail has been a success story in both Spain and Italy, but the expectation is that e-commerce’s share will increase in the near future as it has done in Northern Europe. ‘Southern Europe needs to catch up on online shopping,’ said Grilli. ‘There is no reason why Italy shouldn’t have the same level of e-commerce as France or Germany. So logistics will the next big thing in Southern Europe.’
Amazon, which usually leads the way, has recently opened a hub near Milan and will soon open another near Rome. The potential is huge, but there is a lack of core product in both Italy and Spain, he said: ‘A lot of development is needed in the logistics sector. But if you find the product, now is the time to buy.’
