Spain is one of the five European countries that will attract the most real estate investment in 2022

The United Kingdom, Germany, France, the Netherlands and Spain will be the biggest investment destinations in the Europe, Middle East and Africa (EMEA) region over the coming year, in order of volume, according to international real estate consultancy firm Knight Frank.

This is one of the conclusions of the 6th edition of the Active Capital report, presented by the company in which it studies the markets and capital at a global level, and it summarises the company’s global real estate predictions for the next investment cycle.

Thus, during the next financial year Spain will be confirmed as a key investment destination in the real estate sector. Specifically, according to Knight Frank experts’ forecasts, Spain will receive an investment in real estate of close to 7,500 million euros, across the various sectors.

“Spain is a very attractive country for investment in real estate assets, thanks to yields in prime areas above those of other countries. After the pandemic hit, the Spanish real estate sector is recovering strongly, especially in the areas of logistics, data centres, offices, and residential. We are confident that 2022 will consolidate the growth we are witnessing now,” said Knight Frank Spain partner and Commercial Area Director Jorge Sena.

The study also includes the highlights of global capital flows in 2022, divided by type of investor and sector. Thus, Knight Frank experts believe that investment in these countries will be marked by the recovery of cross-border investment. The Active Capital report forecasts that 2022 will be a record year for cross-border real estate investment in terms of volume.

In terms of distinct branches of activity, the team of professionals from the real estate consultancy firm predicts that 2022 “will show that the office market is still very much alive“. Specifically, they point out that the UK office sector will see the largest inflow of capital in EMEA, followed by Germany, France and the Netherlands. Of this investment, 61% will come from investment managers and institutions.

Other sectors of strong investor interest include PRS and student housing, which will continue to attract the largest share of capital from the specialist sector, as reflected in the report. Data centres, booming with the growth of e-commerce and the cloud computing world, and healthcare are also receiving an unprecedented level of enquiries for assets.

Knight Frank’s Active Capital report also focuses on the themes and trends that will shape the next investment cycle. In the last edition, the focus was on ‘resilience’ and the potential post-pandemic trajectory of global markets. This time around, ESG (corporate, social and environmental best practice) and sustainability issues are at the forefront of pre-investment considerations.

Investors are increasingly having to deal with climate risk and carbon considerations in the cities in which they operate. This is mainly because there are increasing expectations of carbon and climate benchmarking of assets, so as investors they are looking to manage their risk.

In terms of individual buildings, there is a sales premium for green-rated office buildings, and this is in cities at opposite ends of the world – from London to the Australian cities of Sydney and Melbourne.

In line with this trend, sustainable finance will also show significant growth over the coming period. Europe is already very much in the mainstream and is leading the way in terms of its growth.

Between January and June 2021, almost half of global sustainable lending came out of Europe. Demand for sustainable finance is supported by central banks implementing new policy initiatives to facilitate the transition to a net-zero emissions economy.

With the built environment accounting for around 40% of total carbon emissions, bank and non-bank lenders across Europe are increasingly taking ESG credentials into account in their real estate lending. At EU level, real estate finance activities will have to conform to EU taxonomy and meet technical screening criteria, among others.

“We expect the real estate market to see more sustainable financing in the coming years, as political and regulatory attention on the development of a greener economy increases,” said Knight Frank European Research Associate Judith Fischer.