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Real Estate Sector Anticipates Recovery in 2024 Despite High Interest Rates

The real estate market is poised for a recovery in 2024 despite challenges posed by high-interest rates, according to the head of Blackrock in Spain, the world's largest asset manager. During The District real estate fair in Barcelona, which brought together 10,000 industry executives, several factors were highlighted that point towards a revival.

Price Adjustment and Monetary Policy Shift

The price adjustment and the downturn in real estate investment are nearing an end, marking a new phase for the sector. The shift in monetary policy implemented by the European Central Bank (ECB) from September 2022 has triggered this adjustment, where investment volumes experienced a drastic reduction. Funds, the main players in this market, sought to understand how far interest rates could go and what profitability they should demand from properties.

With interest rates exceeding 4%, the market anticipates that the ECB will curb increases, directly impacting yields—the returns investors demand from assets. It is expected that these yields will stabilize, providing greater certainty to investors and encouraging them to reactivate acquisition plans.

Positive Outlook for 2024

Alfonso Favieres, real estate director of Blackrock in Spain, stated during The District that investment "will begin to reactivate from the first quarter of 2024," and the "third quarter will be a good time to invest."

Adolfo Ramírez-Escudero, CEO of CBRE, also expressed optimism about the coming year, stating that "2024 will be better than 2023 in terms of investment volume." He also noted that the Spanish real estate market is not experiencing a bubble, as there is no excess supply or leverage.

Preferred Assets and Challenges

The assets most highlighted by executives are residential properties and logistics warehouses. Investment opportunities are expected for student residences in Spain, supported by the country's maturity as a destination for international students. Interest is also emphasized in "flex living" formulas, such as residential rental (BTR and PRS), coliving, and senior living.

Despite the positive outlook, the rise in interest rates and, consequently, the required returns pose challenges to the real estate sector as it competes with other financial assets. Adolfo Ramírez-Escudero states that "we are entering a new stage, where there will be more competition for capital but also more opportunities to transform and create value through real estate."

Challenges in the Office Segment

While opportunities are glimpsed in various sectors, offices face challenges, especially those located outside the city center. According to Javier Faus, founder of the management company Meridia Capital, the situation of offices is "dramatic," and those outside the center will suffer considerably.

In conclusion, despite current challenges, the Spanish real estate sector is gearing up for a recovery in 2024, with emerging opportunities and the need to adapt to the new dynamics of the financial market.