As the COVID-19 vaccines began to roll out, many cities are now loosening restrictions on businesses such as retail, restaurants, entertainment venues and gyms. The new year brought an improved investor sentiment and now we are witnessing a renewed willingness to deploy capital. Clearly, the economic recovery is building up and real estate trends seem to be following suit.
According to the latest EMEA Investor Intentions Survey from CBRE Group, covering from December 2020 to January 2021, 55% of the real estate investors are planning on increasing their purchasing activity this year. The key findings of this survey, with over 400 Europe-based investors, include a stronger focus on rent growth, growing interest in long-term demographic and technological trends and the wider adoption of Environmental, Social and Governance (ESG) principles and practices.
Head of Capital Markets from CBRE España, Mikel Marco-Gardoqui, expressed that the results of the survey show a positive investor sentiment, which will be reflected in an increased investment volume this year. Actually, this director is expecting up to 20% increase for Europe.
Investment strategies
Investors showed a preference for solid strategies due to the uncertain environment. In Spain, investment trends are rather diversified, with 30% of investors following value-add strategies for this year, and 26% favoring core-plus strategies.
Moreover, most objectives converge on attracting and keeping solvent and trustworthy tenants, while aiming at increasing renting rates. In this new landscape, the most relevant assets are the ones that allow for strategic repositioning.
Great (discount) expectations
According to Research Director of CBRE España, Lola Martínez Brioso, investors are expecting different discount rates according to the real estate sector.
Most investors generally expect sizable discounts, reaching up to 30%, for certain types of retail and hotels. Despite workplace flexibility, offices are still the favorite sector for Spanish investors, chosen by more than half of the survey respondents. Therefore, the prime office market will only be expecting conservative figures and discounts lower to 10%.
Last but not least, the Investor Intentions Survey portrayed an escalating interest in the adoption of Environmental, Social and Governance (ESG) principles and practices —three out of four investors in Spain are already deploying these in their investment strategies.
It is safe to say this year is bringing more opportunities for the industry. It is important to seize this moment and favor the economic recovery. One of the main lessons from the COVID-19 pandemic is that all sectors should be able to adapt fast, and commercial real estate will not fall behind.
