Spanish property return is highest in a decade

MSCI research has recorded a 15.3% total return in 2015 in Spanish property investment as indicated in the IPD Spain Annual Property Index.

The total return achieved in Spanish property investments during the year marks a significant rise from 9.4% in 2014, and corresponds to the strongest performance since the record of 16.9% in 2006.

This performance has been driven by strong capital growth which accelerated to 9.7% from 3.6% in 2014.

The capital value growth is a result of yield compression and rising market rental values. The improvement in capital return has been seen across all market sectors, especially in the office, industrial and retail sector. Income return fell to 5.2% in 2015 from 5.6% in the year before.

Office was the best performing sector in 2015 with a total return of 17%, followed by industrial and retail with 16.2% and 14.2% respectively. Madrid offices and large shopping centres were the top performing segments in 2015.

Luis Francisco, senior associate at MSCI, said: “Yield compression created incentives for investors in the acceleration of capital value growth. We also saw that real estate became an attractive asset class for investors as it outperformed bonds and equities.”


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