Spanish IB: Market expands beyond Madrid and Barcelona

A clear move towards dominant regional shopping centres in secondary cities such as Valencia is starting to emerge in Spain, market experts told attendees at PropertyEU's Europe & Spain Investment Briefing held last week in Madrid.

Recent deals such as Merlin’s purchase of the Marinade City centre in La Coruna and Oaktree acquiring the Gran Via de Vigo shopping park reflect this trend, according to Patricio Palomar, director of offices advisory and alternative investments for CBRE Spain.

'For the last four months we have seen some transactions in the Valencia community, small shopping centres lower than 25,000 m2, and we have seen some transactions in the south of Spain as well that were not really appealing in the past to investors. So we have seen some transactions, not only in the prime market but also in the secondary as well,' Palomar noted.

The picture is similar in the office sector, where private investors, insurance companies and large Spanish institutions dominate the scene and there is little rotation of prime stock. At the same time, the secondary market is entering a period of rationalisation.

'There is definitely oversupply and overextension and some of it will have to go,' said Mikel Marco-Gardoqui, head of capital markets at CBRE Spain. 'Investors are saying they like the current momentum of the Spanish market in retail, offices and industrial, there is capital to be invested and we will benefit from a drive to quality. There is a lack of quality stock, good opportunities, Grade A office buildings and dominant shopping centres that will allow an increase in sales.'

He added: 'Madrid and Barcelona are by far the main markets, but investors are diversifying in terms of sectors and looking at other places. Bilbao, the Basque country and Valencia are definitely places with strong fundamentals. Those are good secondary cities which are definitely going to be on the radar. They are liquid enough and there is stock rotation.'