Jesús González Nieto-Márquez, General Manager of BME Growth, and Enrique Losantos, CEO of JLL, today presented in the Madrid stock exchange the third edition of the report jointly prepared by BME and JLL España on the trend followed by the REITs market. The report is entitled REITs 2021: a sustainable future.
Jesús González Nieto-Márquez stressed that REITs are clearly an option for an increasingly broad spectrum of investors. "Insurance companies, pension funds, high income investors and retail investors are starting to become regulars in this market. The prospects for the end of the pandemic are beginning to provide opportunities for consolidation in a segment that has lost none of its attractiveness," he concluded.
Enrique Losantos pointed out that REITs are already becoming aware of the investment community’s sustainability demands. "If we factor in the CO2 emissions’ impact of construction activities and the impact from property operations, the real estate sector is the one with the greatest environmental impact, which is why real estate companies must focus on achieving higher sustainability levels".
This edition of the report is based on a detailed analysis of the 79 vehicles active in the Spanish market and one listed in Luxembourg.
At the end of April 2021, the REITs market reached a value of 22.5 billion euros, compared to 22 billion euros the previous year, which represents an increase of 2% (just under 500 million euros) and a loss of 13% (3.3 billion euros) if compared to the close of the 2019 financial year. The weight of the five largest vehicles in terms of market capitalisation accounts for 64% of the total market, compared to 67% in 2019.
By market, as of December 2020, BME Growth had a market value of 13.6 billion euros, compared to 8.3 billion euros in the main market, which in relative terms represents an increase of 4.5% and a loss of 34% (respectively) compared to year-end 2019. The effect of the recovery in share prices over the first four months of this year was felt more heavily on the stock market, as it recovered more than 11% in value, compared to the flat trend followed by the alternative market.
In terms of shareholder remuneration, while in 2019 1.2 billion euros in dividends were paid out, of which 437 million euros corresponded to the 4 major listed REITs, in 2020 the total amount distributed fell to 707 million euros, of which 257 million euros corresponded to the main investment vehicles.
In the European market, the global value of REITs amounted to 210 billion dollars as of December 2020, which represents a solid growth compared to the previous year, with the UK, France, the Netherlands and Spain being the key countries in the recovery, accounting for 1.5% of the total capitalisation of the stock market. The big "but" of the European market - in comparison with the American - continues to be the small size of the vehicles on an individual basis, lower than 1 billion dollars.
Finally, the report features a specific chapter on sustainability and the responsibility that the real estate sector must take on to meet the challenges of decarbonisation and the application of ESG criteria in its activities, a trend that is here to stay in all economic sectors.
According to estimates by the Green Building Council, a carbon neutral office will be 17% more costly to build, but less burdensome to maintain. These direct benefits are having a positive impact on tenants, but the trend followed by the market will determine whether they will have an effect in terms of increased rents.