Savills has advised IVG Institutional Funds in the sale of an exclusive office building.
Savills has advised IVG Institutional Funds in the sale of an exclusive office building.
The property is located in the epicentre of Madrid’s cultural and commercial activity, between Plaza de Colón and Plaza de Cibeles. The five storey office building comprises approximately 4,000 sqm and is currently fully let to leading national and international companies.
The building has been sold for an amount of approximately 28 M€ to local private investors. These types of investors are the most active for this type of investment in today’s market.
According to Savills, the Madrid market still lacks quality product for sale for which there is a highly competitive demand from investors who are tracking good quality assets in prime locations with enthusiasm. The imbalance between supply and demand is causing continuing yield compression. The sale of the building, with a net initial yield in the region of 5.25%, confirms this downward trend for CBD yields. Savills data shows that during the third quarter of 2010 prime yields ranged between 5.25% and 5.50% and they estimate that yields will stand at 5.00-5.25% by the end of the year.
Manuel Santos, Head of National Investment of Capital Markets said: “This transaction demonstrates the high level of interest currently being shown by investors for buildings of this type located in Madrid’s CBD. The recent downward pressure on rents and the lack of decent product has lead to an aggressive yield being paid for this building. To the contrary, if we look at current capital values per square meter, these now seem reasonable in comparison to historic figures for properties of this type located in this area.”