A recent
research report finds that southern Europe was one of the bright spots for
property investment in 2022. Investment volumes soared to record levels in
Spain, Italy and Portugal. Within the trio, Spain shines particularly brightly,
and Spanish multifamily real estate stands out as a favourite among
investors.
Record investment in 2022
Savills Southern Europe Investment report reveals that this part of the continent performed well in 2022. Investment levels soared to €31.7 billion in the three countries of Spain, Italy and Portugal, a record volume for the region.
The figure represents a 36% increase on 2021, while the rest of Europe saw investment levels decline. Europe received 23% less investment in 2022 compared to the previous year. Portugal experienced the highest year-on-year growth, with a leap of 67%. Spain stood in second place, with an increase of 39%, and Italy in third, with 26% growth.
All property types saw increased investment in southern Europe last year while many of their levels dropped for the continent generally. Stand-out sectors include industrial Spanish multifamily real estate. Spain, Portugal and Italy received 80% more investment in industrial real estate in 2022 than the previous five years. In the multifamily sector, levels jumped by 47%, in contrast to the rest of Europe, where they fell by 31%.
Solid economic figures
Savills attribute the popularity of southern Europe to several economic factors. They include:
· Return of domestic spending after the pandemic.
· Fewer effects of rising energy costs.
· Contained inflation, with Spain a particular highlight since the country’s rate fell earlier and more sharply.
· Return of tourism, with the hospitality and services sectors benefitting the most.
· Higher GDP growth than the rest of the EU. For example, 6.6% in Portugal and 4.6% in Spain.
Furthermore, all three countries are expected to post better economic results in 2023 than the EU average. The Spanish GDP is forecast to grow by 1% this year, considerably ahead of the EU (-0.1%).
Key takeaway
For Savills, the main reasons behind the record investment in Spain, Portugal and Italy in 2022 lie “in the combination of a comparatively strong economic landscape, solid property fundamentals and attractive pricing”.
Spanish multifamily real estate a rising star
Of the trio, Spain recorded the best performance in investment in multifamily real estate last year. Volumes in the apartment sector rose by 23% in 2022, almost 35% higher than the European average.
The main reasons behind the appeal of Spanish multifamily real estate to investors are threefold:
Affordability for tenants – according to Savills, the global financial crisis and high unemployment rates in Southern Europe have made property purchases difficult for many people. Renting, on the other hand, presents a much easier and more affordable option.
Cultural shift – renting has become more acceptable as a permanent housing solution rather than a temporary fix. As a result, many households are choosing to rent as a “lifestyle option”.
Demand from foreigners – the preference for working remotely in the sunshine has grown since the pandemic and many young professionals have moved to southern Europe. The introduction of the digital nomad visa in Spain will boost this trend yet further.
As a result of the three factors, Savills says there has been “a surge in demand for multifamily apartments to rent, which is limited compared to the fast-rising demand. Consequently, Spanish “multifamily will increasingly be an attractive asset for investors”.
(Source: Savills)
