Outlook improving for Spain’s commercial property market.

Signs that Spain’s residential property market is recovering and now a new report shows that its commercial markets are also growing.

International real estate advisor at Savills commercial department is predicting CBD office yields in Madrid will move from 5% to 4% and 4.5% for super prime properties, as a lack of good quality stock puts pressure on pricing.

With increased volume in Spain’s office market during 2014 in which €2.8 billion was transacted, triple the €990 million total in 2013.

Which in terms of location, 60% of investment was made in Madrid, 30% in Barcelona and the remaining 10% in other locations throughout the country. With the growing amount of demand and the lack of supply continuing, prime yields at the end of the year moved in 100 basis points, secondary areas 75 basis points and out of town locations saw a change of 50 basis points. ‘Investors preference for Spain’s more mature market of Madrid is undeniable, accounting for a total of €1.65 billion. But the lack of good quality stock is putting pressure on yields,’ said Luis Espadas, director of investment at Savills Spain.

The Savills report also states that take up in the office market at the end of 2014 was 382,000 square meters, some 2.5% less than the previous year. However, 2013 take up was heavily distorted by the Vodafone letting of 50,000 square meters, and discounting that letting take-up grew 12% on the previous year.

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