In the current climate of market instability and the ongoing conflict between Russia and Ukraine, investors are increasingly seeking safe investment opportunities with higher returns without taking on excessive risks. Real estate is emerging as a popular option for investment, according to experts at Cat Real Estate group. Economists consulted by ON ECONOMIA also highlighted the housing sector as a prime investment field for those with capital looking to move it away from the low returns offered by banks.
One key factor driving this trend is the demand for a minimum yield of 6% from investments. A study conducted by Cat Real Estate, a group specializing in managing real estate assets for family offices, revealed that Family Offices are the most active players in the Barcelona real estate market but are now demanding higher returns. While the average yield of operations has been 5.5%, investors are increasingly seeking higher yields as conservative investment alternatives in the financial market are becoming less attractive. For the remainder of the year, family groups are expected to require a minimum yield of 6% for well-located retail and office spaces in the heart of the Catalan capital.
Amidst soaring inflation and rising interest rates, family offices are becoming the primary investors in real estate assets. Investors in need of significant financing have put their investments on hold, with only those with ample liquidity proceeding with new acquisitions. „The average yield of operations has been 5.5%, but investors are increasingly demanding higher yields as conservative investment alternatives in the financial market are becoming less attractive,“ explains Nacho Castella, CEO of Cat Real Estate.
But what exactly is a family office? A family office represents a family business that, upon reaching a certain level of business wealth or following the sale of their industrial company, must manage a financial or real estate portfolio with the goal of preserving it through efficient management. In most cases, the family structure is composed of different branches with multiple members, often spanning across second or third generations. The primary objectives of a family office are financial and asset management through effective financial and tax efficiency, as well as establishing a well-organized family structure for informed decision-making.
Focusing on the Barcelona market, Cat Real Estate, which has a mandate to invest 10 million euros from family offices in Barcelona in 2023, is fully operational and has closed the first quarter of the year with over 7 million euros invested in retail and office spaces in the city. All investments were made by local family offices managed and administered by Cat Real Estate group. Financing was not utilized in 80% of the transactions, with only one investment being partially financed at 50%. The company specializes in managing real estate assets for family offices and oversees a portfolio worth 770 million euros.
In conclusion, the current economic landscape, characterized by market volatility and geopolitical tensions, has led investors to seek secure and profitable investment opportunities. Real estate, particularly in prime locations like Barcelona, is proving to be an attractive option for family offices looking to diversify their portfolios and achieve higher yields. As the demand for real estate investments continues to rise, it is essential for investors to carefully assess their options and work with experienced professionals to navigate the market effectively.