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The Retail Property Telescope
April 2021
Strategy and Transactions
Investment & Financing Keys
Spain 2021
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Disclaimer
These materials are being made available during the COVID-19 crisis.
These materials are based on currently available information from primary or secondary Real Estate sources, which has notbeen independently verified and do not contain all the information needed to determine a future course of action. Given theuncertainty surrounding the pandemic, these materials are not a guarantee of results, and future results could differ materiallyfrom any projections. These materials do not constitute policy, legal, investment or any regulated advice. These materials areprovided “as is” solely for information purposes without any representation or warranty, and all liability is expressly disclaimed.
EXECUTIVE SUMMARY
The Retail Property TelescopeSpain 2021
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1 Market Overview
2 Financing Activity4
Supply & Demand
Retail Investment Market3 Key Performing
Indicators5 Lopsided recovery expected
after COVID impact
2021-2022
► Spanish GDP expected growth: +5.5%(-12.8% 2020).
► Unemployment rate growing up 120 bps to 17% in 2021.
► Exports will lead the recovery after falling 10% in 2020: Current Account deficit -58% YoY.
► Tax burden peak: Despite of the lower economic activity, tax income only fell 9%.
► Lowest Consumer Confidence Index since 2013 (73 bps) while other consumer indicators deteriorate more in 2021.
► Urgent need of Repositioning: 44% of Spanish Shopping Centres require value-added business planning to remain competitive.
► Commercial density reached 345 sqm/1,000 inhab2021YTD) with 7 new openings/enlargements last year (188,243 sqm).
► 5 out of the 19 new projects in pipeline until 2023 expected to be feasible (84,120 GLA/1,500,000 GLA)due to the current uncertain macro context.
► Covid-19 crisis is impacting differently on tenants performance
o Sports Wear, Health & Beauty, Entertainment and White&Electrical goods categories are taking up more space as sales/sqm are growing.
o Restaurants, Leisure and Household retailers are losing momentum as sales are plummeting.
► Worldwide Retail property Investment volume (€93Bn) decreased by 33% during 2020 and accounted for 17% of the total non-residential Real Estate investment worldwide, which is an unprecedented low stake over the whole Real Estate market.
► Investment in Europe fell by 14% YoY despite the large number of high volume transactions executed during 2020 Q1. Institutional investors foresee an uncertain performance of the retail industry as e-commerce penetration accelerates.
► Investors are currently overweighting Europe vs North America. EMEA region accounted for 38% of the total worldwide retail investment, much more than precedent years.
► Financing activity restricted to Prime properties supported by well-known sponsors.
► Spanish and International banks still cold to analyse new financing requests as long as third party appraisals adjust to the current circumstances Post-Covid-19.
► Borrowing costs rocketed to Financial Crisis ranges.
► Alternative capital providers at the chase of riskier transactions to structure junior or mezz.
Occupancy (sqm)
Sales (€) Sales (€/sqm)Effort Rate
(%)
Fashion & Accessor -2.8% -0.3% +2.6% -40 bps
Food Stores +2.1% +7.0% +5.0% -15 bps
Sports & Sportswear +0.6% +4.5% +3.9% +10 bps
Entertainment -4.4% +4.2% +9.0% -210 bps
White & Elect. goods -0.7% +3.9% +4.6% +50 bps
Health & Beauty +4.3% +4.4% +0.1% +50 bps
Rest. & Food Court -13.5% -15.1% -1.9% +70 bps
Services -0.9% -3.4% -2.5% +60 bps
Leisure -8.1% -8.5% -0.4% +40 bps
Prime Shopping Centre KPIs1Q ’21 vs. 1Q ‘20
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For further information…
Request the Expanded Edition
Contents (+150 pages):1. Macro economic overview related to the retail
segment2. Supply and demand analysis
• European and Spanish Commercial Density • Next Openings Pipeline• Spanish Market Understanding: Rent income, sales, effort
rates, and other factors. Evolution and conclusions
3. Retail investment market and transactions pipeline in Spain
4. Retail financing activity and main drivers5. Retail key investment factors and trends
To request the expanded edition, please contact Javier García-Mateo, email: [email protected], telephone number: +34 659 900 215
The Retail Property TelescopeInvestment & Financing KeysSpain 2021
#TheRetailPropertyTelescope
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Javier García-Mateo, MRICS
Partner
Strategy and Transactions | Real Estate
Ivan Azinovic Gamo
Partner
Legal | Real Estate
The Retail Property Telescope
April 2021
Strategy and Transactions
Investment & Financing Keys
Spain 2021
