Thursday, September 1, 2011

Foreign investment increase in Madrid office market

Foreign investor interest in the Madrid office sector has increased significantly which is showing signs of recovery particularly in Madrid's central business district (CBD).

The latest research from Savills has revealed that vacancy rates in Madrid has dropped during the second quarter of the year to reach 4.73 per cent, compared to the 5.31 per cent recorded in the shortage of new developments has resulted in property-owners refurbishing their properties in Spain to bring new space on to the market. She added that due to the delivery of a number of new and refurbished state-of-the-art properties in Madrid’s central business district, the market is very competitive in terms of quality supply on offer at good prices. This should lead to a revival of interest in the central business district from large corporations in 2011.

According to Savills reports, Madrid’s office market has reached 440,000 m sq (4.7m ft sq) in 2010, which is a 40% increase when compared to 2009. It also records that Madrid’s Central Business District’s (CBD) vacancy rate currently standing at 4.73% while other prime sub-markets outside of the M-30 range between 5% and 8% and some outer lying periphery areas of the city have a vacancy rate of 25%. Savills believes this is because companies have chosen to take advantage of considerable vacant space in the city at affordable rental prices. Tenant take-up in the Madrid office market improved in 2010, up 40% on the previous year despite concerns over the Spanish economy.

Meanwhile, Luis Espadas, Head of Capital Markets at Savills Madrid has stated that the rising interest shown by foreign investors in Madrid is heartening, although national investors continue to be active and dominate the market, both as buyers and sellers.