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Madrid: Real estate firms are diversifying out of Spain's cooling housing market and moving into more profitable sectors such as shopping centres and offices, according to an industry report.
After expanding over 13 per cent a year since 2002, Spanish house price growth will fall to high single digits this year and tumble to around the rate of inflation in 2007 - currently at 2.6 per cent, according to property consultants CB Richard Ellis.
Higher European Central Bank interest rates and falling demand have hurt Spain's house market, which has dominated the real estate market for the last decade.
Investors are moving into Spain's booming tertiary real estate sector - such as shopping centres, strip malls, industrial and office parks - where investment is expected to rise 19 per cent in 2006 amid six-year-high economic growth, the report said.
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