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sset valuations in the commercial real estate market have historically been inversely related to interest rates, making investments less attractive when rates rise. This trend was evident in 2022 and 2023, with a decline in valuations and transactions. However, following changes in monetary policy in 2024, investment activity picked up, driven by strong demand for living, hotel, and commercial premises segments.

    According to the Bank of Spain's price indices, prime real estate and industrial buildings have seen significant improvements in valuation, with increases of +18% and +4%, respectively. Investment data from major consultancy firms shows a rebound at an annual rate of 10-20% in 2024, more than double the EU average.

    Looking ahead to 2025, projections indicate an expanding commercial real estate market, driven by rising valuations, increased transactions, and investment. The living, hotel, and logistics segments are expected to perform well due to favourable fundamentals, including demographic growth, international student demand, and e-commerce trends.

    The living segment will continue to attract interest, particularly in build-to-rent and flex-living options, as Spain's housing supply remains limited. Hotel demand is also expected to remain strong, with an estimated 98.5 million international tourist arrivals in 2025, a 5% increase from the previous year. The logistics sector will benefit from e-commerce growth, while retail valuations may converge on pre-pandemic levels due to private consumption and labour market strength.

    Offices have not yet recovered their pre-pandemic valuations but could benefit from a strong labour market and lower teleworking adoption rates. With many companies pushing for a return to the office and employees demanding flexibility, the hybrid model is expected to define the evolution of this segment in 2025.