Fair Value Index: Abundance of Undervaluation
The Fair Value Index (FVI) slightly decreased to 89, with 78% of the tracked markets remaining undervalued. Lower bond yields and risk premiums were offset by softer capital growth forecasts, which slightly affected the main index score.
Strategic Themes and Capital Dynamics
Lenders have re-engaged faster than equity, using refinancing and restructuring to gain market share and establish new clearing prices. Intense competition is compressing margins across all asset classes and risk profiles, and structures are becoming increasingly flexible. The 5-year SONIA is materially below last year's level, and the EURIBOR has stabilized, supporting cumulative debt in most non-landmark assets. Debt capital is leading the recovery, with lenders moving 12-18 months ahead of equity, driving renewed liquidity and price discovery.
Financing and International Capital
Debt is leading the recovery in Europe, and Spain is no exception. Current conditions, with margins at cyclical lows and stabilized rates, make financing particularly attractive for strategic operations. This opens opportunities to leverage acquisitions in core and logistics assets. Additionally, international funds are returning with a focus on secure income, reinforcing liquidity and competitiveness in the Spanish market.
Strategy for Investors in Spain
The current moment is crucial for anticipating the cycle and taking advantage of the window opening between 2025 and 2026. The strategy should focus on undervalued sectors, prioritizing logistics and hospitality, complemented by selective retail and prime offices with ESG standards. Debt financing presents itself as a fundamental tool to optimize returns and position in quality assets. Spain, with its political stability, tourist appeal, and economic resilience, is in a privileged position to capitalize on the European recovery.
Outlook: Confidence Returns
As the gaps between supply and demand narrow and liquidity improves, transaction volumes are expected to increase. Value-driven entries are particularly attractive, as 78% of European markets are undervalued. Selectivity and quality will drive superior performance: focusing on core income, diversified strategies, and top-tier assets aligned with ESG criteria, while maintaining flexibility to adapt to changing sector and geographic opportunities.
TIME SCORE
The TIME score offers a simplified method to illustrate key changes across various crucial indicators, providing investors with valuable tools to assess and predict market dynamics.
FAIR VALUE INDEX
The Fair Value Index is a forward-looking tool that provides insights into the attractiveness of prices in major office, retail, and logistics markets across Europe.
