International investors see attractive opportunities in Spain, where economic growth is outperforming the eurozone average. Quality retail assets are also showing strong performance results on the back of healthy sales.
The retail trade index rose 6.4% year-on-year in June. which tracks sales growth.
Large chain stores recorded the highest sales growth at 12.3% while single retail sales recorded the lowest with 3.1% year on year.
Consumer confidence and tourism are behind the favourable sales activity in the first half of the year.
The former grew by 10.9 points in June against May while tourism has rebounded to 2019 levels, reaching 29 million international tourists from January to May with average spend per visitor rising.
Retail sales volume, in real terms, is expected to increase and end the year at a healthy 5.75%, according to Oxford Economics.
The strong economic data is reflected in the upbeat second-half results of Lar España, the listed retail specialist. It is the Spanish market leader in retail, with more than 550,000 square metres of assets under management . It owns some of the most importante shopping centers like Lagoh Shopping Centre in Seville with 69,734 square metres.
Revenues in the first half increased 16.4%, and the company recorded a €35.1 million profit. Sales declared by its tenants came to €505.1 million, 7.5% more than in the same period of 2022 and 16.1% above the first half of 2019.
The independent valuation of the company's 14 assets, amounted to €1.47 billion at 30 June, demonstrating stability with minimal adjustment of 0.3% from six months earlier.
Although real estate investment has slowed down in 2023 due to the complex financing conditions and the fast rise in interest rates, some investors, especially French ones, are taking advantage of the lower number of active players to take a position in the Spanish market.
This is the case for Proudreed, which acquired its first asset in Spain this year, Quadernillo, a 30,000 gross leasable area shopping centre in the Madrid metropolitan area. The French investor plans to invest and develop a portfolio of €150 million over the next 24 months on the Iberian peninsula.
Another French investor, the société civile de placement immobilier (or fund) Iroko Zen bought a 20,000-square-metre retail park in Valencia for circa €26.6 million in May. AEW Patrimoine, the French SCPI fund manager, announced in July it had acquired two retail parks in Madrid and Alicante, on behalf of three SCPIs. With these acquisitions, totalling over 70,000 square metres, AEW Patrimoine is becoming one of the largest investors in Spanish retail with more than 230,000 square metres of retail assets under management.
Retail parks are an increasingly attractive asset type for investors. In fact, all of the projects scheduled to open next year in Spain and over 50% of the 900,000 gross leasable area space to be developed by 2025 are retail parks according to the Spanish Assocation of Shopping Centres, AECC.
The shopping centre and retail park market in Spain continues its profound transformation with new developments focusing on customer experience, leisure, sustainability, and the combination of different uses such as clinics and offices spaces.
For example, Carrefour Property is leading, for the first time in Spain, a project to completely convert the 22,000-square-metre Puerta de Alicante shopping centre into a mixed-use space.
The new Work City will house 7,5000 square metres of offices and coworking and 3,500 square metres of food and beverage. It is intended to reproduce the centre of a city, with streets, squares, vegetation and outdoor spaces and with all the services of a city: market, restaurants, games room, gym, cinema, children’s play centre, shops and offices.
This restructuring is part of Carrefour Property's strategy to transform commercial assets.
Despite the difficult conditions in Europe, Spain is standing out and the retail market is no exception.