Market Report 2018-19 Commercial - Spain and Andorra
MARKET REPORT 2018-19 · COMMERCIAL - SPAIN AND ANDORRA
INDEX 00
06
08
World Economic outlook
Spain’s Economy
10
The Real Estate Sector in Spain
05
Editor’s note
12
Commercial - Spain
22
Andorra
EDITOR’S NOTE
Alberto Sarrias The 10% investment increase in tertiary assets during 2018 is an indication of a very positive future for the real estate market in Spain. For the fourth consecutive year, the total investment activities have reached record figures in each of the commercial sectors. For the hotel industry, the figure stands out as 4.5 million euros (+ 25%), the retail sector’s assets with 4 million (+ 2.5%), the office market with 2.5 million euros (+ 13%) and the logistics sector with 1.3 million (+ 44%). We must also include the strong increase in activity in alternative investments to these figures, (such as student accommodation, elderly residences, etc.) totaling 600 million euros. This data proves that the commercial sector is a clearly diversified investment option. Spain is considered as one of the top destinations for foreign investment. In fact, 65% of transactions correspond to international investors (+ 23% compared to 2017), with the main investors coming from the United States, the United Kingdom, Germany and France. In the office sector, it is increasingly the large Asian and European international companies that choose Spain to set up their headquarters. According to the Business Climate Barometer, 95% of companies say that they will increase or maintain their investments in Spain and a
total of 94% confirmed that they will be maintaining or increasing their employees. A low interest rate environment; the high volume of capital granted by lending institutions, including investment funds -which have represented more than 60% of the total transacted in 2018-, together with SOCIMIs special tax regime and the high activity from the family offices, all mean that Spain’s tertiary sector is one of the most attractive in the world. However, there are other situations that have cast a shadow over this market, such as the disruptive consequences of Brexit, the political instability in Italy and France, the weakening of China’s economy, the trade situation with the United States, as well as the political situation in Spain after the upcoming elections. This is something that hasn’t yet affected our country’s economy, which is the world’s 13th largest by nominal GDP in terms of improved employment rates. In the three years following the activity of Engel & Völkers Commercial has increased its turnover by 60% in Iberia after brokering more than 300 commercial property intermediations in Madrid, Barcelona, Valencia, Bilbao, Vigo and Andorra, with a few more offices having opened in Lisbon recently.
Alberto Sarrias Managing Director Engel & Völkers Commercial Spain, Portugal and Andorra
4 | Market Report 2018-19 Commercial - Spain and Andorra
Editor’s note | 5
World Economic Outlook
Consumer price inflation
Real Estate Market
2,5
The current favourable financing conditions are positive for the real estate sector on an international level. One of the occurrences in this market since the economic recovery started is the stabilisation of property prices. As indicated by the IMF, an increase in this synchronisation has been observed in 40 countries and 44 of the main cities in the developed and emerging markets.
2,0 1,5 1,0 0,5 0,0 -0,5 -1,0 -1,5
Global Growth
2013
Advanced economies
2014
2015
2016
2017
Jul. 2018
Data in %. Source: FMI
Interest Rates GDP Growth
The weakening global expansion and a slowdown of global synchronisation will affect the development of the world’s economy during 2019. The growth will be 3.5%, two tenths less than in the previous years due to the negative effects of tariffs and trade war, the weakening of some emerging markets including China, and the economy slowdown in European countries, such as Italy and Germany. In addition, the rise of oil prices, geopolitical tensions and the worsening trade situation will all weight heavily on the world’s economy. According to the International Monetary Fund (IMF), the developed markets will experience further deceleration, going from a growth of 2.4% in 2018 to 2% in 2019. Special mention should be made about the US. Helped by its fiscal stimulus, it will remain above its full potential until 2020. This year the US economy will grow by 2.5% compared to 1.6% in the Eurozone, 1.5% in the United Kingdom and 1.1% in Japan. The emerging markets will grow by 4.5%, with the Asian countries prospering the most. India and China will experience gross domestic product increases (GDP) of more than 7.5% and 6.2%, respectively. On the other hand, the Latin American companies will cause business tensions due to volatility of raw materials and financing challenges and their economy will grow by less than 3%.
Without inflationary pressures, financing conditions remain at accommodative levels and favour growth, although the central banks of the main economies continue with standardisation of the monetary policy. However, the expectations about the upcoming rate hikes by the weakening of the world economy have been lowered.
8 7 6 5 4 3 2 1 0
2011
Advanced economies
2013
2015
2017
2019
Emerging economies and the developing markets
Source: FMI
The less balanced growth has come with higher oil prices in recent years. Last year, a barrel of Brent oil was more than 85 dollars, the highest price since 2014. After stabilising around 70 dollars, the expected slowdown world-wide, and consequently, due to the lowest demand, it could put downward pressure on prices in the next few months. Similarly, inflation will continue to be contained, positioning itself around 1.7% in advanced economies. In Latin America, hyperinflation could get worse in Venezuela as a result of the financing of the large fiscal deficits and loss of confidence in the country’s currency.
Last year in the United States the interest rates were set above 2% for the first time in a decade due to the boost in economy - with the lowest level of unemployment since 2000- as well as the expectations of further fiscal stimulus. In Europe, the European Central Bank (ECB) has kept the interest rates at record low at 0% with the possibility of increasing them later than expected given the signs of economic slowdown in countries like Italy and Germany. In the currency market, the dollar will be maintained at current levels in the first half of the year before weakening in the second half as a consequence of the public and government deficit and debt generated by the tax laws from the Trump administration and the higher Federal reserves that will cause rate increases in the near future. Euro / dollar exchange rate 1,24 1,22 1,20
The factors mentioned, plus the shortage of supply and the search for profitable investments will result in the prices rising in the coming months, although the increases will be moderate. It should be noted that the normalisation of the monetary policy by central banks, which will entail stricter financing conditions, the impact of trade wars and the slowdown of some large economies, will result in lower demand for property. Although at the moment there are no risks of new bubbles occurring in the real estate market, the possible increases in interest rates should be treated with caution, especially if the credit growth gets higher than expected.
In Europe, the shortage of prime assets in the main capital cities and the rising prices after record investments in the most dynamic sectors, such as residential, hotels, retail and offices, have all led to investors opting for new niche markets. These alternative assets, such as residences for the elderly and students, which are less exposed to the economic cycle and more to the demographic needs, are joined by shared housing, data centres, logistics, and coworking spaces. All these are sectors that are supported by the current technological trends.
1,18 1,16 1,14 Source: Bloomberg
6 | Market Report 2018-19 Commercial - Spain and Andorra
World Economic Outlook | 7
Spain’s Economy
The 2.5% reduction in the growth rate in 2018 responds to the exhaustion of the external economic factors. The main one responsible for this development is the foreign sector, which already reduced its contribution to GDP last year partly because of the slowdown in the tourism industry. The deterioration of prospects for the economic situation, including the loss of dynamism in some of the main export markets of Spain, such as Italy and the United Kingdom, explains the moderation in exports.
The Outlook
Finally, the normalisation of the ECB’s monetary policy and the possible increases in interest rates constitute to yet another economic vulnerability that still has a bulky weight of public and private debt on its shoulder.
Annual IPC growth 2,5 2,0 1,5 1,0 0,5
jan feb mar apr may jun jul aug sep oct nov dec 2018
General index. Percentage Source: INE
The Spanish economy will slow down this year, in tune with the main countries of its surroundings, although it will still grow above the European average. Forecasts from national and international organisations point to an increase in national GDP of 2.1% -2.2%, compared to 1.6% planned for the Eurozone.
The annual inflation rate in December will be around 1%-1.2%; a stable rate compared to 1.2% at the end of 2018.
The better economic performance in Spain stems from the positive internal factors, such as the increase in competitiveness, job creation, the deleveraging of the private sector and a healthy financial sector. The deceleration with respect to the economic growth of 2.5% in 2018 responds to the exhaustion of external tailwinds.
GDP growth in Spain 5
0
2007
2008
2009
2010
2011
8 | Market Report 2018-19 Commercial - Spain and Andorra
2012
2013
2014
2015
2016
2017
T4
T3
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
T2
T1
T4
T3
2006
T2
Source: INE
-5
2018
Spain’s Economy | 9
Real Estate Sector in Spain
Tertiary Sector
The greater growth of the Spanish economy compared to other European countries together with a tertiary sector going through a phase of maturity that’s less advanced than in the surrounding markets, will continue to favour investment throughout 2019.
Current situation
The real estate sector has accumulated five consecutive years of growth after the property bubble burst. The higher consumer trust, good financing conditions and the search for profitable investments in an environment of low interest rates result in a market in which both the purchase and sale prices can progress forward. The recovery, which will continue throughout 2019, is occurring in a standard manner but is still far from the historical maximums experienced during the full boom. All this lowers the risk of a new housing bubble in the short and medium term. The residential property market is still the engine of the sector. With the return of new-builds, the solid demand for resale properties and the growing weight of rentals means new price increases and higher demand in the coming months.
Financing
The normalisation of the ECB’s monetary policy goes to show that mortgages will become more expensive in the upcoming months, although the conditions will not be restrictive and interest rates will remain at accommodative levels. The Euribor, the reference rate to which most of the mortgages in Spain are linked to, has already started to reflect this trend. The Euribor rate closed at -0.129% in 2018, after accumulating nine consecutive monthly advances. Although the rate is currently negative, the rise has meant that last year the mortgage rates went up for the first time since 2014, both in the case of semi-annual and annual reviews.
Data in %
In Spain
Originating in Spain
33,2%
The attractiveness for investors is not just the traditional residential, office and retail markets, but also in the thriving logistics sector. The growth of electronic commerce in the heat of the ‘Amazon effect’ where the giant firms in the distribution sector accentuate the search for warehouses with storage orders driving investment towards logistics. According to the latest data from the National Commission of Markets and Competition (CNMC), the turnover of electronic commerce in Spain has for the first time ever exceeded 9 million euros after increasing by 27%.
47,6%
From abroad
19,2% Source: CNMC
The priority for firms is to find locations close to large urban areas or, at least, places that are well connected through intermodal infrastructures and road networks.
Electronic e-commerce revenue in Spain For example, the monthly payment amount for a mortgage of 120,000 euros for a term of 20 years and a rate of 1% would be changed to 544.99 euros based on the December Euribor rate. This equals to 3.2 euros more per month than a year before.
The main risks for the sector would be tougher lending conditions once the ECB starts to raise interest rates in the second half of the year.
Euro/dollar exchange rate 0,050 0,000 -0,050 -0,100 -0,150 -0,200 -0,250 jan
may 2016
sep
jan
may 2017
sep
jan
may 2018
sep
Data in millions of euros and %
9.500 9.000 8.500 8.000 7.500 7.000 6.500 6.000 5.500 5.000 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0
8.974
9.333
80%
8.526 7.785
70%
7.338 6.656 6.757 5.948
60%
6.167
5.303 5.309 5.414
50%
4.946 3.893 4.103
3.432 3.579 3.185 3.291 26,8 2.823 29,2 20,6 22,2 21,7
24,7
4.316 4.456
40% 32,8 27,0
25,8
29,2
24,5
25,4 23,0
21,5
26,2
24,8
20,3
23,4
30% 27,2
28,1
20%
16,3
15,1
10% 0%
T1
T2
T3
2013
Source: Engel & Völkers with data from the ECB Source: CNMC
10 | Market Report 2018-19 Commercial - Spain and Andorra
Geographically segmented e-commerce revenue
T4
T1
T2
T3
2014 Total volume of business
T4
T1
T2
T3
2015
T4
T1
T2
T3
2016
T4
T1
T2
T3
2017
T4
T1
T2
2018
Interanual variation
The Real Estate Sector in Spain | 11
INDEX
Trends of the Spanish Tertiary Sector
Asturias
Cantabria
14
Bilbao Basque Country
Galicia
Madrid
Andorra
16
Barcelona
Navarra La Rioja
Vigo Castile and Leรณn
Catalonia Aragรณn
Barcelona
18
Madrid
Bilbao Madrid
Castile-La Mancha
Valencia
Balearic Islands
20 Vigo
Extremadura
Murcia
Introduction
Andalusia
Canary Islands
12 | Market Report 2018-19 Commercial - Spain and Andorra
For the fourth year in a row, the tertiary sector has seen a growth of 10% in the investment revenue from resi-
companies and Socimis and, finally, the strong pull from logistics by the rise of e-commerce and residen-
dential buildings, offices, commercial premises, industrial, hotels and alternative products, strengthening the great results that are experienced in all the sectors.
tial buildings given the high demand from Socimis, family office and investment in renovation projects.
While in commercial premises, in recent years the large shops, such as Ikea and Media Markt, have opted to move to the main streets of cities, in the office market, there has been a growing interest in extending commercial premises to the peripheral areas by setting up co-working spaces in the centre of large capital cities. For hotels, business activity has been motivated by the rotation of portfolios in investment firms, hotel
All the above are factors that confirm the good climate of real estate market in Spain. Investors, both national and international, are starting to see a more mature market, but will still watch for good investment opportunities, which will maintain the upward trend throughout 2019. As an example, there is the forecast for construction of 17 commercial premises totaling 650,000 sqm taking place in the next years in the whole of Spain.
Trends of the Spanish Tertiary Sector | 13
Madrid
Madrid
In 2018, the development of the tertiary sector in Madrid was determined by the increase in the demand for commercial premises that required renovation, where the search was focused on the prime areas that experienced scarcer supply. The office market has also maintained its growth, also driven by the shortage of supply in the primary areas. The operations of the tertiary sector in Madrid are mostly carried out by national investors. The exceptions are the hotels and residential buildings in which most of the contracts signed by foreign investors consist of Venezuelan and Portuguese investors. The forecasts for 2019 point to an increase in the logistics premises that are destined to become new commercial centres, although this exercise will also produce an increase in the demand for offices and / or co-working spaces. An increase in demand for alternative products such as hotels and businesses, which are focused on ecofriendly tourism is also expected. For its part, the retail sector is going through an upward cycle in investment and rentals. The greater demand for premises will once again be focused on restoration, with operations carried out by large international companies and new chain projects nationwide.
Retail
Offices
Private investors and family offices, whose strategy is based on diversifying the risk factors of their portfolios, and investors seeking large premises in which to invest, constitute the main profiles of buyers and lessees of commercial premises. The profitability ranges between 4% and 6%, depending on the profile of the tenant who occupies the premises, as well as the location of the same.
The office market is drawn up by the demand for higher quality premises and new-build spaces. The profile of coworking and technology investors continues to rebound in the search for offices. An activity in which buyers and tenants are in a large majority sicavs and socimis who are seeking complete buildings to renovate and medium-sized investors specialising in office market for complete floors that require renovation. Paseo de la Castellana maintains its position as the most highly-sought location, and there is a great rental fluctuation according to the section and type of building. The Central Business Area has reached a maximum of 45 euros / sqm. Regarding the exterior part of the building, the importance is not on the street it is located in, but it must be accessible via the main route of the M-30, A-1, A-2 or M-11.
Commercial premises for rent, mainly for catering purposes, are the most demanded in the downtown area of the capital; such as in Chamberí, Chamartín, Arganzuela, Ciudad Lineal and Moncloa. While, in the neighbourhood of Salamanca, the most sought after are both the premises and offices. Outside of Madrid capital, the demand is distributed in office buildings, hotels, industrial warehouses, offices and plots of land.
Prices of offices
Engel & Völkers has exclusive office buildings available in the main areas of the capital, including some of the most representative streets. These include 25 Avenida Victoria, and 5 Eloy Gonzalo. The company also has a residential building in the downtown area and a residential building in the Tetuán area. This offer also includes plots in Alcorcón, Fuenlabrada and Torrejón de Ardoz , a Finca Santa Lucia and a hotel in Segovia.
(Figures in euros / sqm)
City Madrid
The areas most in demand are the prime locations with the neighbourhoods of Salamanca, Chamberí, Sol, Chueca-Justicia and Malasaña in the lead. Within these areas there is a big difference in the level of income between the main and secondary streets. While the first reach a maximum price of 90 euros / sqm, in secondary streets the maximum is 55 euros / sqm and outside the central almond of Madrid, they reach 45 euros / sqm.
City Madrid
14 | Market Report 2018-19 Commercial - Spain and Andorra
Zone, district or neighborhood
Average monthly price
Prime
55
Secondary prime
35
Exterior M-30
27,5
CBD (Center Business Development)
33
Secondary CBD
19,5
A1 - Exit branch to Burgos
16
A2 - Exit branch to Zaragoza and Barcelona
15,5
A6 - Exit branch to Galicia
14
(Figures in euros / sqm)
Madrid (Figures in euros / sqm)
Average monthly price
Prices of residential renovated buildings
City
Prices of retail units
Zone, district or neighborhood
Zone, district or neighborhood
Average monthly price
Prime (Centro, Salamanca, Chamberí)
5.000
No Prime (Retiro, Tetuán, Chamartín)
3.000
Trends of the Spanish Tertiary Sector | 15
Barcelona Retail The most highly-sought commercial premises for rent and purchase are those that are located in the centre of the city -Eixample and Ciutat Vella-, in the places with the greatest traffic. The most demanded are especially the corner establishments that have large storefronts.
Barcelona
Looking ahead to 2019, the commercial premises market will further appreciate the strong development of multi-channel commerce. A growth that is causing the redesign strategy of the most important brands in our country that have set up their retail business in large stores, flagship, located in very central locations, which entails disinvestment in the most secondary areas.
Prices of retail units (Figures in euros / sqm) Average monthly rental price
Average selling price
Ciutat Vella
30
6.000
Eixample
20
4.800
Gràcia
15
3.600
Les Corts
13
3.000
Sant Martí
13
3.000
Sants-Montjuïc
11
2.600
Sarrià-Sant Gervasi
12
2.880
District
The last quarter of 2018 brought stability to the real estate market in Barcelona, which has enabled moderate growth in prices. This means investment in commercial premises still has its attractiveness, especially those located in prime locations and main streets offering the most profitability. As for offices, the best investment is in modern buildings from 500 sqm and new-builds, due to the high demand for this type of product. The rental operations that were completed in 2018 accounted for 56% of the total transactions carried out by Engel & Völkers, most of them with Spanish clients (90%). The purchases, which accounted for the remai-
ning 44%, have a greater presence from international clients, who made up 17% of purchases. The profile of buyers is concentrated in the family office, both in the case of domestic and foreign clients, especially in the case of buy-to-lets. Among the most outstanding operations of 2018, it is worth mentioning the rental of 9,000 sqm premises in Torre Glòries. Engel & Völkers was also involved in the launch of the Facebook operating centre in Barcelona with the commercialisation of several office floors in one of the most emblematic skyscrapers in Barcelona.
The most expensive streets for the rental of commercial premises, according to the operations completed by Engel & Völkers in 2018, were concentrated in Ciutat Vella. The roads with the greatest number of people passing through are always the ones with the highest demand and, therefore, with the highest prices. These also include Tapineria and Eixample streets, such as Provença. The maximum price range reached by all of them is between 30 and 40 euros / sqm per month. On the other hand, the sales operations of commercial premises are concentrated in arteries of the districts of Eixample and Ciutat Vella, both highly touristic areas and with great affluence. The sale prices in these two neighbourhoods can vary significantly depending on the street in which they are located, as well as the proximity to the most important commercial roads in the city, such as Passeig de Gràcia, Rambla Catalunya and Portal de l’Àngel. Avenida Diagonal has been consolidated as another commercial point of reference.
16 | Market Report 2018-19 Commercial - Spain and Andorra
Offices The vacant office premises in Barcelona equals to about 300,000 sqm. The highest prices for rent are located in the streets such as Passeig de Gràcia, where the most elegant offices are located in stately buildings with a price that can even reach 50 euros / sqm per month. This year, the office market will see the consolidation of the increase in demand for rental office spaces by foreign companies, especially in the digital-technology sector. It is foreseeable that the prices in the central areas will go up due to lack of supply, especially in business districts such as the 22 @. In these areas, the most sought after are floors or complete office buildings.
Prices of offices (Figures in euros / sqm)
District
Average monthly rental price
Average selling price
Eixample
18
7.000
Les Corts
14
3.400
Sant Martí
19
4.500
Trends of the Spanish Tertiary Sector | 17
Bilbao
Bilbao
Bilbao is experiencing interesting occurrences and investments in the tertiary sector, among which are some transactions involving the sale of buildings to investors who want to convert them into hotels and in some cases to public office institutions. One of the most relevant operations was the leasing to an international businessman and the subsequent sale to a national investment group consisting of a commercial space in prime area with a price of four million euros. There are currently 7,250 sqm in offices for rent available and 4,800 sqm are for sale, while in commercial premises there are 6,950 sqm for rent and 4,800 sqm for sale. Among the most relevant assets in the portfolio, there is a 1,100 sqm shop in the centre of the city and 1,800 sqm offices in a town near the city. We also have a portfolio of land plots of up to 6,000 sqm. The demand from investors is focused in central areas, where they have an immediate profitability of around 6% per annum. In this way, close to 90% of investors seek commercial premises in the prime area, which are easy to rent out and provide them with complete security. There is hardly any demand for the rest of the assets.
18 | Market Report 2018-19 Commercial - Spain and Andorra
2019 will be the year of consolidation for the commercial division of Engel & Völkers in the Bilbao market. The attraction of assets continues in an upward curve and in recent months agreements have been reached with operators and investors that will turn the company the point of reference for the tertiary market in the city.
Retail
Offices
Currently there is an increasing demand in commercial retail units for hotels that have the necessary licenses and facilities. There is also a growing demand for hotel chains that are going through the expansion and positioning phase in new leisure areas. In almost all cases they are international business firms, many of them under a franchise group and also belong to other sectors besides the hotel business, such as health, aesthetics and sports. In any case, there is hardly any demand for premises to set up independent shops, and the existing ones are closing down.
The profile of the office leasers in Bilbao is drawn mostly by independent professionals who need a good location and seek relatively small premises. However, this year rentals have been taken up by multinational companies and start-ups, as well as doctor surgeries. 95% of these clients are national.
The client that looks for commercial premises is 100% national. The most sought-after street is Ercilla, which has traditionally been home to the best shops in Bilbao, and experienced an increase in prices when it became a pedestrian street. It is still a highly-sought street among chains of all sectors with maximum prices that can be around or even exceed 100 euros / sqm per month. The high prices on this emblematic street are also caused by the lack of supply of premises in the prime area of Gran Vía, occupied mostly by first-class businesses that have made Ercilla the alternative option.
City
Zone, district or neighborhood
Average monthly price
Bilbao
Abando
20
The most popular area is the main artery of the city, Gran Vía, which is the preferred place for activities that require a representative location such as consultations or professional offices. The maximum price in this street can reach 50 euros / sqm per month for pre-
Indautxu
50
mises less than 80 sqm.
Basurto
12
Gran Vía
46
Prices of retail units (Figures in euros / sqm)
Prices of offices (Figures in euros / sqm)
City
Zone, district or neighborhood
Average monthly price
Bilbao
Abando
20
Indautxu
15
Deusto
8
Gran Vía
25
Trends of the Spanish Tertiary Sector | 19
Vigo Retail
Offices
Engel & Völkers has 4,300 sqm of premises available for sale and 7,500 sqm for rent, among which the most important assets are two commercial premises on Colón Street for 1.2 million and 1.1 million euros as well as a third location in Velázquez Moreno Street with a price of 1.4 million euros.
Engel & Völkers is currently offering 2,700 sqm for the rental of offices and 1,400 sqm for sale. Among them, three buildings stand out in Colón, Rosalía de Castro and Velázquez Moreno streets. The first of them is the most expensive one in Vigo to rent an office, with a monthly price of around 2,500 euros.
Vigo Prices of offices (Figures in euros / sqm)
The city of Vigo is going through a good investment period in assets of the tertiary sector with a profitability that reached 5% in 2018. Over the past year, the operations carried out by Engel & Völkers in the city have been led by the commercial premises segment, with 30% of them, followed by 20% in offices, industrial buildings and residential buildings, respectively , while the remaining 10% has corresponded to hotels.
Among the most noteworthy operations are the rental of an office on Colón Street to the multinational audit and business consultancy Grant Thorton, for the opening of its first office in Galicia. The profile of the buyer and the tenant, both for offices and commercial premises, is 100% national.
City
Zone, district or neighborhood
Average monthly price
Vigo
Centro - Areal
16,75
Plaza España El Corte Inglés
9,00
Plaza Independencia
8,75
O Castro
9,00
Prices of residential renovated buildings
The area with the greatest demand for this type of asset is in Urzáiz - Príncipe and in Plaza de Compostela. It is in Príncipe street where the maximum prices of the city are reaching 7,000 euros per month for a rental of a local commercial premise, a price that doubles that of Casco Vello and Plaza de España, where the maximum is at 3,000 euros per sqm.
(Figures in euros / sqm)
City
Zone, district or neighborhood
Average price
Vigo
Centro - Areal
1.000
Casco Vello
1.225
Prices of retail units (Figures in euros / sqm)
20 | Market Report 2018-19 Commercial - Spain and Andorra
City
Zone, district or neighborhood
Average monthly price
Vigo
Centro - Areal
22
Casco Vello
11
Plaza España El Corte Inglés
11
O Castro
7,50
Plaza Independencia
7,25
Trends of the Spanish Tertiary Sector | 21
Andorra
The country’s economic outlook
Nominal GDP of Andorra
The Principality of Andorra is characterised as a society and a dynamic economy that has a very stable political and institutional system. With 468 square kilometres and 75,000 inhabitants, more than 100 nationalities coexist in the country. The Andorran economy is oriented towards services and amenities with tourism and commerce as its two fundamental pillars. With a specialised offer in winter activities, but also with a high influx of visitors throughout the year, tourism is the main source of economic resources in the country. More than eight million people visit the Principality every year.
3000
2,6% 2,2% 2.553
2500
2.471
2.525
0,4% 2000
2013
2.674
0,4% 2014
Data in millions of euros.
The economy of Andorra maintains the path of growth and forecasts point to 2019 being its sixth consecutive year of growth. The Department of Statistics for the Government of Andorra places the progression of the real gross domestic product (GDP) at 2.3% for the past year, although the forecasts made for the coming years reflect some slowdown with real GDP growth of the 1.8% in 2019, 1.5% in 2020 and 1.1% in 2021.
2.601
2,8%
2015
2016
2017
%
In the parish of Escaldes-Engordany, the most sought-after area is Avenida Carlemany, where the premises reach maximums of 90 euros / sqm for rent per month and offices up to 30 euros / sqm for rent per month. Escaldes- Engordany is also one of the most expensive areas in renovation buildings with prices of up to 3,000 euros / sqm.
On the other hand, the European Union eliminated Andorra from the list of tax havens in December 2018, culminating a process that began in 2009. Although the Andorran economy still has a strong dependence on the financial sector, it is estimated that it represents just under 20% of GDP.
Rental prices of offices (Figures in euros / sqm) Country
Zone, parish or neighborhood
Average monthly price
Andorra
Andorra la Vella
20
Escaldes-Engordany
20
La Massana
15
Ordino
10
Sant Julià de Lòria
10
Encamp
10
Canillo
10
Trends in the Tertiary Sector The Andorran market has shown good returns even during the global economic crisis. For 2019 and on the basis of this historical performance, an increase is once again expected in the different segments of activity in the tertiary sector. Among the most outstanding assets that Engel & Völkers has in its portfolio are plots in privileged locations and renowned hotels, all of them with great potential for going up in value.
Source: Department of statistics Government of Andorra
Rental prices of retail units (Figures in euros / sqm) Country
Zone, parish or neighborhood
Average monthly price
Andorra
Andorra la Vella
40
Escaldes-Engordany
20
La Massana
20
Ordino
20
Sant Julià de Lòria
20
Encamp
15
Canillo
15
Main magnitudes of the economy of Andorra 2014
2015
2016
2017
Nominal GDP per capita (euros)
35.786
35.342
35.580
35.753
IPC
-0,1%
-0,9%
0,4%
2,6%
Public Debt (% GDP)
41%
40,6%
40%
37,6%
Business
7.216
7.666
8.051
8.408
Source: Departament of statistics Government of Andorra
The Principality is in the process of modernising its economy and has opened up to foreign investment. A development that began in 2012 with the introduction of the Foreign Investment Law coming in full force. Since then, it has received a total of 3,481 applications from foreign entrepreneurs to invest in, out of which 2,831 have been approved and finalised, contributing
22 | Market Report 2018-19 Commercial - Spain and Andorra
to 361 million in the country. According to the report from the statistics department, with the introduction of this Law being enforced, the country has gone from receiving 60 annual requests from companies interested in investing in the principality to 609 of 2017. By countries, Spanish entrepreneurs make up 46% of the total investment, followed by the French, with 25%.
Prices of residential renovated buildings (Figures in euros / sqm)
The profile of both the buyer and the tenant of commercial premises and offices, hotels, industrial buildings and residential buildings, are comprised of entrepreneurs, foreign companies resident in the Principality, as well as local clients. In Andorra la Vella, the area with the highest demand is Avenida Meritxell, where the prices of commercial premises can reach a maximum price of 300 euros / sqm per month and offices are for 30 euros / sqm rent per month.
Country
Zone, parish or neighborhood
Average price
Andorra
Andorra la Vella
2.000
Escaldes-Engordany
2.000
La Massana
1.750
Ordino
1.750
Sant Julià de Lòria
1.500
Encamp
1.500
Canillo
1.500
Trends of the Andorran Tertiary Sector | 23
24 | Market Report 2018-19 Commercial - Spain and Andorra
Editor’s note | 25
Credits Editor Engel & Völkers Spain S.L. Avenida Diagonal, 640 6th floor E-08017 Barcelona Spain Drafting PR Stakeholders Layout Vänster and Lei Coordination Paula Cruells Silke Dittrich Sources For the preparation of this market report, all the data and statistics have been collected from the following entities and agencies: Tax Agency (AET), European Central Bank (ECB), Bank of Spain, Bloomberg, Comisión Nacional de los Mercados y la Competencia (CNMC), Fondo Monetario Internacional (FMI), Inverco, National Institute of Statistics (INE), Ministry of Public Works, Housing and Land Observatory, Organisation for Economic Cooperation and Development (OECD) and Tinsa.
All the information has been thoroughly researched. No responsibility can be taken for the accuracy of the content. The reproduction of content protected by copyright is only allowed with the consent of Engel & Völkers Spain S.L. provided that an appropriate reference to the source is made.