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After two years of uncertainty in the dominant sector, investors have turned their attention back to various real estate sectors. Encouraged by the recovery of the tourism sector and low interest rates, investors are looking for ways to turn their savings into profits.
The pandemic is gradually disappearing, and the real estate market is emerging victorious from the crisis. However, there are new reasons for uncertainty, driven by the conflict between Russia and Ukraine.
Anyway, after the pandemic, hotels have become one of the significant sources of income for investors. In the midst of the COVID-19 outbreak and the introduction of various quarantine measures, the sector experienced one of the biggest declines in market revenues. Resort hotels in popular tourist destinations suffered the most.
But this situation also created opportunities for brave investors who took advantage of the situation to acquire a promising portfolio of assets at a low price and renovate to prepare them for entering the market in a more favorable environment.
The pandemic has stimulated business activity in Spain. In 2021, almost 150 hotels changed their owners, and the total investment exceeded 3 billion euro. This figure is three times more than the results of 2020, and 26% more than in 2019. The further the market went from the pandemic, the more active the market was.
However, given the enormous consequences of the Eastern European conflict, the Spanish hotel real estate sector has a long way to go.
The key years for this market segment will be 2022-23. There are two important reasons for this:
- Tourism in the country is actively recovering, as the pandemic is increasing under control.
- The land that should be used for the construction of hotels continues to actively change owners.
It is worth noting that hotel offers are in good condition: they are renovated and ready to receive guests.
“Build to Rent” real estate is another current investment direction. Unlike "Build to Sell", or purchasing a property to sell, BtR is the acquisition of real estate to make money by renting it out. This sector is developing very rapidly, although it is necessary to have significant investment capital to overcome the crisis.
It is estimated that more than 3.5 billion direct investments will be made in this market segment in 2022. This is an optimistic forecast, but it is justified by the active growth of various "unions" of national funds and residential communities with international funds to build affordable housing on the outskirts of large Spanish cities (2-3-bedroom housing at a rental rate of 400-650 euros per month).
In general, the Spanish market is consolidating and is in good condition. Overseas investors are interested in entering large and coastal areas.
To consolidate the current dynamics of the real estate market development, state regulators and the administrative body need to increase efficiency in the development of legislation, licensing, procedures for the use of real estate, and so on.
Currently, there is no generally accepted unified system of work on the market. Each municipality, city, and district operates on its own principles without consolidation at the national level. This leads to the fact that many opportunities for market development are missed due to the banal inefficiency of communication.
Separately, it is worth noting the insufficient level of transparency.
Many investors do not want to risk their funds by investing in regional projects if they are constantly facing the threat of loss due to various bureaucratic problems and costs.
While growth towards Spain and belief in its real estate is strong, it is necessary to quickly establish communications and bridges between the market and the state.