Real estate giant Hines expanded its retail portfolio this month with the purchase of Arcs 10, an upscale retail asset in Barcelona. Houston-based Hines forked out almost €40m for the 1,200m² property, located close to the Cathedral and Plaza Sant Jaume in Spain's perennially popular tourist hotspot.
The building is leased to Barcelona-based international fashion retailer Desigual, who emerged in Ibiza back in 1984 to become one of the largest fashion retailers in Europe with a presence in 42 countries around the world. Arcs 10 is also home to the four star hotel, Catalonia Catedral.
Hines acquired the retail asset from a private Spanish investor on behalf of its Pan-European Core Fund (HCEF), a euro-dominated Luxembourg-based investment fund established in 2007. Managed by the Hines group, the fund aims to develop an extensive portfolio of commercial real estate assets across Europe.
The acquisition comes at a time when confidence in Spain's economic stability and future performance is riding high among investors.
"With the acceleration of economic growth, take off of retail sales and consequent performance of the High Street, Spain is an attractive market, where tenant activity is seen to be strongly improving, for both existing retailers in the market, and newcomers seeking to make a presence," said Jamie Rea, managing director for Hines España.
As part of its Europe expansion, Hines entered the Spanish market with an investment in 84 acres of land in downtown Barcelona in 1996. That investment, fronting onto the Mediterranean Sea, is now known as Diagonal Mar, one of Europe's largest mixed-use developments, totalling more than 37 hectares.
The project consists of a retail and leisure centre, which opened in November 2001, five residential phases totalling 1,400 apartments, three hotels, three office buildings and the third-largest public park in Barcelona. Hines expanded its Spain operations in 2000 by opening the Madrid office and in 2004 with its Marbella office.
Significant purchases of this nature are proving to boost investor interest in Spain's real estate markets. Investors in residential properties have been growing in numbers in recent months, buoyed further by euro weakness against other currencies. With major players taking the lead, this is a trend that is set to continue well into 2016 and beyond.