Colonial: A Comprehensive Perspective
Analysts at the French firm AlphaValue have evaluated a target price for Inmobiliaria Colonial shares at 5.56 euros, with a recommendation to reduce, which represents a downside potential of -2% from current prices [[1]].
The manager points out that Colonial is a Spanish company whose main asset is the French Société Foncière Lyonnaise, in which Colonial holds a 98% stake [[1]].
The 30% recovery of Colonial’s price between October 2023 and December 2023 was in line with the behavior of the real estate segment as a whole, which has amplified market expectations regarding the next drop in interest rates [[ 1]].
Colonial: Impact on Barcelona
The Madrid market has been relatively quiet, while the 4.3% of new construction space in the Barcelona market has been responsible for the 270 basis point increase in Colonial’s vacancy rate in the last year [[1]].
New supply in Barcelona has reduced significantly in the last year, unlike the situation in Madrid, suggesting a lower probability of imbalances caused by new supply [[1]].
Office Market Outlook
Despite stable business demand, the transaction market is beginning to reflect rising financing costs, which has led to a drop in prices per m2 in the CBD, where Colonial has its buildings [[1]].
We remain cautious about the office market, as any additional externalities could act as a trigger for a fall in nominal rents, accelerating the downward trend in offices [[1]].
