The Covid-19 pandemic has sunk the valuation of malls. The sector, one of the most affected by the closure of establishments and mobility restriction measures, suffer the greatest devaluation of your real estate assets which, in some cases, could reach 16% in 2021, as reflected in the second edition of the report ‘A new real estate horizon’, prepared by the real estate consultancy CBRE.
Specifically, the report establishes three types of shopping centers by location (prime, secondary and peripheral) with different ranges of devaluation. In this way, hethe shopping malls in locations prime or the dominant regionals will register a moderate adjustment in their values (4.6% and 8.6% respectively) at the end of this year, although they will continue with a downward trend in 2021 until reaching ranges between -4% and -6%, and -8% and -10%, respectively.
Adjusting the value of the ccommercial centers located in secondary areas could reach the -15% at the end of the year and for the first quarter of next year, this drop in valuations could increase to a range of between -14% and -16%, according to CBRE forecasts.
In the case of High Street, the consultancy’s forecasts point to better resilience by the assets located in the main shopping streets of Madrid and Barcelona (-10% and -11.5%, respectively at the end of this year) although this adjustment will be extended to the first months of 2021 (-12% in the capital and -13% in Barcelona, in the worst scenario).
Along the same lines, the hotel sector, affected by restrictions on tourism, will record double digit drops: fit to the drop in their valuations at the end of the year will be close to 12% for vacation rentals and somewhat more moderate (-11.5%) in urban hotels. CBRE experts foresee that the deterioration of valuations in the hotel segment will continue in 2021, with the possibility of extending this decline to -13% for both types of assets in the worst scenario
“The recovery of the Spanish hotel sector will be slower and later than initially expected, and it is estimated that it will not arrive until the end of 2023. Meanwhile, many leases are being renegotiated and a large number of hoteliers are reaching additional agreements that contemplate rent deferrals until 2023 or even 2024, as well as extensions of the rent bonuses during some months of 2021 ”, he explained Fernando Fuente, national director of the assessment and consulting area of CBRE Spain.
E-commerce unleashes an appetite for logistics assets
On the other hand, the logistics segment is the one that has best resisted the general downward adjustment in the value of real estate assets caused by the pandemic. In this way, taking into account the general decline in the sector, CBRE anticipates a appreciation of between 4% and 6% for logistics and industrial assets to be maintained in 2021.
By geographic markets, the consulting firm estimates that the valuations of real estate assets will close 2020 with increases, over 5% in the case of Barcelona (5.6%) and Madrid (5.3%) and above 4% in Valencia (4.7%) and Zaragoza (4.6%). This revaluation trend will persist in the first months of 2021 and, in the best of scenarios, it will expand to 7% in the Barcelona logistics market, up to 6% in the Central Zone and up to 5% in Valencia and Zaragoza
“It can be said that the logistics sector has been the most resilient to the effects of the health crisis caused by the pandemic. The investment has recovered the activity, operations are being closed with returns never seen before and the logistics promoters have not stopped their construction at any time “, explained Fuente.
For its part, in the residential segment will consolidate its leading role this year, with a investment volume similar to 2019 and an adjustment in the value of just -1.3%. In to the ground, it could adjust its value up to -10% in the metropolitan areas of Madrid and Barcelona.
Moderate fit in residences and offices
The report prepared by the experts of the CBRE Valuations area includes for the first time the analysis of alternative assets such as student residences and the elderly, which have also seen an impact on their valuations as a result of the pandemic. By mid-year, the value of these assets had already adjusted downwards compared to the end of 2019 (around -6% in nursing homes and around -8% in student residences), but CBRE experts predict that they will end up closing the year with somewhat lower settings in all cases.
The impact at the end of the year on the valuations of office assets it will be somewhat more moderate than in other segments and with some variation depending on its location. The adjustment in office values prime will be around -2% at the end of the year compared to a year earlier, those located in the center Secondary branches will register a reduction of close to -5% and peripheral offices, most affected, will see their value decrease by -8% and this adjustment could be extended in the first months of 2021 to -13%.