Madrid and Barcelona: two of the most attractive cities in the world for retail

The Spanish economy has grown non-stop for the past four years and tourism has risen consistently year-on-year for the past five years. The country is in a strong position which has led to a steep increase in interest from international investors; the number of assets managed by international funds increased by €6 billion in Q1 2018, this represents a 3.5% increase compared with Q1 2017 – a clear demonstration of the market’s buoyancy.

Barcelona and Madrid in particular are becoming progressively popular places. They are both thriving cities: key fashion influencing destinations, popular (and still rising) tourist locations, enjoying low unemployment levels and offer attractive opportunities for investors, retailers and developers alike!

In the retail market, there is plenty of positive activity; British retailer Quiz entered the market at the end of 2017 with three stores, JD Sports plan to open an additional 15 new sites in 2018, the American brand, Anthropologie is to open their first store in the country in Barcelona in the coming months and Diageo’s Scotch Whisky brand, Johnnie Walker, is set to open its first flagship experiential store in central Madrid. It is clear brands are targeting Barcelona and Madrid to reap the benefits from increased consumer spending, growing economy and heightened footfall!

The demand for space from retailers is making assets very attractive to investors; Knight Frank have reported that retail investment totalled an impressive €850 million in the first half of 2018. Some key acquisitions this year include:

  • Redevco Iberian Ventures and Ares have acquired a 70% stake of Parque Corredor for €200m. This is the third largest shopping centre in the Community of Madrid and they plan to spend a further €40m completely renovating the asset.
  • Carmila (Paris:CARM) is expanding its presence in Spain with the acquisition of six shopping centres from the Pradera European Retail Fund. This includes the Terrassa shopping centre and the Manresa shopping centre, both in Barcelona. This mass investment has totalled €182 million.
  • More recently (October 2018), Henderson Park Capital Management expanded its Spanish retail and office portfolio with the acquisition of Gran Via 43 in Madrid. Nick Weber, Founding Partner of Henderson Park said: “We are confident in the prospects for the Spanish market which has enjoyed a strong economic recovery and continues to draw high tourist numbers, underscoring our confidence in this latest addition to our portfolio.”

There have been an array of leading high-street retailers derive from Spain including Mango, Zara, Stradivarius, Desigual and Pull & Bear to name a few! It’s fantastic to see the country that introduced these – now internationally recognised – fashion brands, have a lucrative retail market to grow sales, increase revenue and build their brand further!

With the market booming, it is clear Spain is an attractive destination for foreign and local investors alike – looking forward to what’s next to come.

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