Fear (exaggerated) of a fall in office demand affecting Colonial’s share price

ColonialThe fear (exaggerated) of decline in office demand hits Colonial

Intermoney | The figures from consultancy firm Cushman & Wakefield (C&W) indicate that investment in property in Spain during the first 9 months of this year stood at 12.718 billion euros. This is already more than that for the whole of 2021, which stood at 11.926 billion, according to the daily Expansión.

The data to September also beats the total figure for both 2017 and 2018. It is worth highlighting that 58% of the investment in 2022 comes from overseas. While C&W flags the strength of the market throughout the year, the consultancy warns that the current market turbulence points to a more cautious 4th quarter. By asset type, retail grabbed the biggest investment (30%), followed by residential (28%) and offices (18%).


La strength of retail assets is due to the offices transaction between BBVA and the socimi Merlin Properties (Buy, T.P. 13 euros/share), for close to 2 billion euros. Meanwhile a growing sector is student residences, with sales of 900 million euros this year. It’s true that market turbulences have begun to affect the socimis’ share prices, particularly I. Colonial (Buy, T.P. 9,5 euros/share). Without doubt, there is an impact from the hike in interest rates. However, in the latter’s case the markets are already concerned about a decline in the demand for offices; we believe these fears are exaggerated. If this did occur, what would happen would be a concentration of the demand in premium locations (CBD), precisely where Colonial is present.

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