Country Report Spain Q2-2021
“At the moment, optimism is palpable in the market.”

Dear readers,

“Despite the positive trend observed over the past few months, the expectations of a strong recovery slowed somewhat towards the end of the second quarter as new coronavirus mutations emerged. The developments have also impacted the tourism industry that is so vital to Spain, with major uncertainty surrounding new regulations. The real estate market is seeing a high level of activity once again, as investment volume has risen across almost all sectors and in some cases nearing pre-crisis levels. In particular, demand for prime office buildings has risen sharply. After months of uncertainty regarding the developments around remote work, it appears that many major companies will be looking to combine remote and office work. Vacancy rates are lower than expected, thanks partly to current economic growth. Rental properties are also in demand, including from international funds and institutional investors. As an inflation-proof asset class, the real estate sector continues to benefit from low interest rates and moderate inflation outlooks. At the moment, optimism is palpable in the market, and the prospects for the second half of the year appear positive.”

Maria Teresa Linares Fernández

Contact

Ms María Teresa Linares Fernández
Managing Director Spain

Phone: +34 618 109905
E-mail: Maite.Linares@Deutsche-Hypo.de

Spanish real estate market activity remains on recovery course

After a solid start to the year, the positive trend in the Spanish real estate market continued in the second quarter. Increases were recorded in April (+3.6 %) and May (+1.6 %), with June (-0.4 %) proving to be the sole outlier. The Spanish REECOX closed the quarter at 183.4 points, up 4.9 % on the previous quarter. However, this was the lowest quarter-on-quarter rise of all monitored European markets.

All leading input variables negative in June

The Spanish stock markets performed well overall in the first quarter, and the positive trend continued into the second quarter, albeit at a more moderate pace. The Spanish benchmark index, the IBEX 35, developed positively for most of the quarter (April +2.7 %, May +3.8 %, June -3.6 %) and closed at 8,821.2 points, up 2.8 % on the previous quarter. The Spanish real estate index, the FTSE EPRA NAREIT, performed similarly: growth in April (+4.0 %) and May (+7.0 %) was followed by a notable slump in June (-7.4 %). All in all, the index performed positively in the second quarter, with an increase of 3.1 % to 23.8 points. Business sentiment in Spain as recorded by the Economic Sentiment Indicator (ESI) rose in comparison to the previous quarter by 10.6 % to 107.2 points.

Synopsis of Input Variables and Real Estate Economic Situations Q2-2021

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q1-2104/2105/21Q2-21Delta (%)
Q1-21 / Q2-21
DE
up
up
upup
eq
eq
328.9
339.4
348.4
356.4
8.4
GB
up
up
upup
eq
eq
203.0
217.0
219.5
219.9
8.3
PL
upup
upup
upup
eq
up
181.7
191.4
197.6
197.8
8.9
NL
up
up
upup
eq
eq
188.2
197.4
201.7
204.3
8.6
FR
up
up
upup
eq
up
229.0
237.3
244.8
245.0
7.0
ES
up
up
upup
eq
up
175.1
181.2
184.1
183.4
4.7