Spain's Big Deal
Investors bought more than €6 billion of Spain's commercial real estate in 2014, evidence of that country's economic turnaround in the last two years, according to Knight Frank. Almost €3 billion of retail assets were sold, and that trend continues in 2015 with the sale of the Hines-owned Zielo Shopping Centre, in Pozuelo, Madrid, to Swiss firm UBS for €70 million. The transaction indicates a return of institutional investor interest in Spain, according to Knight Frank, which is predicting increased demand for smaller retail assets in the next two years.
Markets to Watch
Despite a slide in its stock market, China's real estate investment volumes grew 29 percent YOY in 2Q 2015, according to JLL. However, continuing stock market troubles may push Chinese investors to place their money elsewhere. Chinese outbound investment is expected to reach $20 billion this year, up from $16.4 billion in 2014.
The London CBD office vacancy rate has dropped to 4.8 percent in 2Q15, the lowest in recent history, verifying the tight conditions tenants are finding, according to Knight Frank. Development is picking up, with spec construction up 86 percent YOY and 34 percent QOQ, which spells good news for 2017-18, as 78 percent of new starts will come on line then. However, 2016 will be a very landlord friendly market: 3.6 msf of product completes, but recent demand has been in the neighborhood of 6.3 msf.