• The slowdown in rental prices in Spain: what big data reveal


    Based on CaixaBank’s internal data regarding rent payments, we have constructed indicators for the recent trend in residential rental prices at a provincial level and for the largest municipalities. The results obtained show that there was already a generalised slowdown in rent growth before the pandemic arrived, and that the outbreak of the health crisis extended corrections to most provinces and municipalities, with decreases being especially pronounced among the lowest rents and in the most tourist-oriented municipalities.



    Área geográfica
    The downward trend in rental prices has been accentuated in the wake of the pandemic

    The trend towards rental price moderation in Spain began before the onset of COVID-19 and the pandemic merely accelerated it. This has been confirmed by the results of the analysis we have carried out using CaixaBank’s internal data on rent payments (duly anonymised and processed in aggregate using big data techniques). Specifically, we select payer-issuer operations that are six months old or less in order to capture the changes in trend occurring in the market, and construct rental price indicators for each province and for the major municipalities in Spain.

    Equipped with these indicators, the first chart shows that the year-on-year change in the average for the provinces reached a peak in May 2019 and then began to decelerate markedly in the second half of the year. Specifically, 42% of the provinces and 40% of the municipalities analysed reached their maximum value for new rents before December 2019. Consequently, in many locations we found that rental prices had peaked before the pandemic, after five years of much higher growth than the increase in household income.25

    With the arrival of the pandemic, more locations joined the downward trend, which became more pronounced, causing the year-on-year change in the provincial average rental price to reach negative figures from April to July. Several factors probably contributed to this decline, most notably falling household income, which has particularly affected low-income households who tend to live in rented accommodation. For its part, the significant increase in the supply of rented apartments, resulting from the transfer of dwellings intended for tourist rental to the traditional residential market, would also have had an impact on the drop in rental prices in tourist areas, as will be seen below.

    • 25. For an analysis of the factors that drove rental prices between 2014 and 2019, see «Rent is on the rise Spain», published in the Real Estate Sector Report for the second semester of 2019.

    New rental prices started to slow down before the pandemic

    Last actualization: 11 January 2022 - 17:47
    Rents were already experiencing a downward trend before the pandemic.

    The fall in household income and the transfer of properties for tourist rental contributed to this drop in prices

    In 2021, growth in rental prices has been in negative figures throughout much of Spain: 65% of the provinces and 55% of the municipalities analysed have lower prices in 2021 (with data up to September) compared to the 2020 average. The latest available data, corresponding to September 2021, show that 46% of the provinces and 42% of the municipalities analysed are still posting a lower average rental price than in December 2019, before the pandemic, so the recovery in the rental market is lagging far behind the sale market.

    The trend in rental prices in Madrid and Barcelona

    Special mention should be made of the municipalities in Madrid and Barcelona, marked with red and green circles, respectively, in the following chart. In the first case, rents fell sharply in 2020 (–8.3%) although it is true that this decline started from higher growth rates in previous years, and they began to recover in 2021 (+0.6%). In contrast, Barcelona rents experienced a slowdown in 2020 but rental prices resisted adjustment until October 2020, when the law limiting rents in Catalonia’s stressed markets came into force.26

    • 26. Law 11/2020, of 18 September, of the Catalan government, on urgent measures regarding rent containment in rental lease agreements. Since 1 October 2020, this law has limited rental prices in those Catalan municipalities declared a highprice zone.

    The moderation in rental prices has accentuated in the aftermath of the pandemic

    Annual change in the average rent by municipality (%)

    If we compare the trend in rents in the affected Catalan municipalities (where the rental price of new leases cannot exceed the previous price or the benchmark index) before and after this law’s entry into force and also compare it with the rest of the municipalities, we can see that, since October 2020, the year-on-year change in rental price would have been marginally lower in the affected Catalan municipalities (around 1 pp).27 However, the chart below shows that the rental price in the affected Catalan municipalities was somewhat resistant to falling in 2020, before the law came into effect, which could point to a possible reluctance to adjust rental leases to the market situation, anticipating that it will not be possible to raise rents once the new law is in force. However, it is difficult to carry out a rigorous empirical analysis to gauge the impact of this rental law in Catalonia, since it came into force at a time when the market was already adjusting and, in addition, the pandemic has had a different impact on the rental market in each municipality due to a multitude of factors, such as its degree of dependence on tourism, which will be examined below.28

    • 27. Methodologically, we carried out a difference-in-differences analysis.
    • 28. Similarly, other analyses show that the Catalan law would have had little impact on rental prices but a negative impact on supply. See «Efectos de la pandemia en el mercado del alquiler: ¿es conveniente una norma de regulación de precios?» EsadeEcPol Insight #27, February 2021, and «La regulación del alquiler en Cataluña apenas incide en los precios, pero destruye la oferta», Idealista, March 2021.

    The impact of the Catalan law on the price of new rents

    Last actualization: 11 January 2022 - 17:48
    What the average hides... and what microdata reveal

    One great advantage of internal rent payment data that they enable us to analyse the distribution of rents within one location. Generally, available rent indicators report the average rental price in a given area. But the truth is that, within the same location, the range of rental prices is relatively wide.29 Consequently, in order to analyse the trend in rents at different points of the distribution, we has calculated two additional indicators (apart from the average): the 75th percentile indicator (high rents) and the 25th percentile indicator (low rents).30

    • 29. Generally, the rental price depends on the property’s state of repair, its size and other specific factors apart from the area in which the property is located.
    • 30. The 25th percentile indicator (for a given month and location) is the value such that 25% of the rents in that location are below this value (and 75% of the rents are above). The 75th percentile indicator is defined in a similar way and measures the trend in high rents in an area.
    On average, low rents have fallen

    more than high rents in the provinces

    In doing so, we have found that rents at the lower end of the distribution (25th percentile) grew more moderately before the pandemic (up by 5.1% in 2018 versus 5.8% on average) and that their decline in 2021 is more pronounced (–6.1% versus –4.2% on average).31 In contrast, rents at the upper end of the distribution (75th percentile) grew more vigorously in 2019 (6.5%) and their decline in terms of the provincial average has been more limited in 2021 (–4.1%).32 This can be seen in the chart below, which shows the average annual change at a provincial level (the results at a municipal level are similar). These results suggest that much of the adjustment in rental prices has occurred among the lowest rents, generally in dwellings occupied by low-income households which have been the most affected by the crisis in terms of job losses and reduced income.

    • 31. Moreover, in those provinces where prices have fallen in 2021, low rents have posted a considerable average annual decrease (–14%).
    • 32. Moreover, in those provinces where prices have risen in 2021, the prices seeing the highest growth are high rents (the 75th percentile has posted an average increase of 5.9% in these provinces).

    The price of new rents has fallen more in the lower part of the distribution

    Last actualization: 11 January 2022 - 17:48
    The impact of tourism on rental prices

    The pandemic hit international tourism hard, in turn having a direct impact on rental prices in the most tourist-oriented locations: properties that had been destined for tourist rental were shifted to the traditional residential market, increasing the supply and therefore pushing down prices. After classifying the municipalities into tourist and non-tourist (depending on whether spending via foreign cards at CaixaBank POS terminals was more or less than 10% of the total in 2019), we can see that the average rental price fell more sharply in 2020 in tourist-oriented municipalities and that this decline was more pronounced for high rents (75th percentile). We can also see that rental prices in non-tourist municipalities have been slower to adjust (no annual average declines are observed until 2021) and the decline was less sharp than in tourist municipalities and concentrated in the lower part of the distribution (25th percentile).33

    • 33. For an analysis of the impact of international tourism on demand for foreign housing and sale prices in tourist municipalities, see «How has the slump in foreign tourism affected the residential property market?».

    Rental prices have fallen more sharply in tourist-oriented municipalities, especially in the upper part of the distribution

    Average annual change in new rents (%)

    Tourist municipalities

    Last actualization: 11 January 2022 - 17:49

    Non-tourist municipalities

    Last actualization: 11 January 2022 - 17:49
    Final points

    The COVID-19 crisis has accentuated and extended the price adjustment which the rental market was already experiencing before the pandemic arrived. In this context, the draft bill for the right to housing presented by the Spanish government in October 2021 introduces a new regulatory instrument so that regional governments and municipal councils can declare highrent zones in order to limit rental prices in these areas. International experience stresses the importance of carefully assessing the effectiveness and impact of such measures since, in certain cases, they can be counterproductive.34

    • 34. See «Public intervention in the rental housing market: a review of international experience» Documentos Ocasionales no. 2002, Bank of Spain, 2020.
    Destacado Economia y Mercados
    Destacado Analisis Sectorial
    Destacado Área Geográfica
  • Sustainability in tourism: make or break


    One of the consequences of the COVID-19 health crisis has been the increased awareness of the population and, by extension, that of politicians regarding the need to include sustainability criteria in economic policies in order to promote a more sustainable and resilient reactivation of the economy. The tourism industry is no stranger to these trends; firstly, because its business can be adversely affected by the consequences of climate change and, secondly, because there is ample scope for the industry to become more sustainable. This article attempts to determine what we understand by sustainability in the tourism sector, how it can be measured, the current situation of Spain’s tourism industry and where it is heading.



    Área geográfica
    What do we mean when we talk about sustainability in tourism?

    Spain’s tourism industry has developed exceptionally in recent years, becoming one of the country’s main sources of business, income and employment. However, this strong development had also led to the emergence of some negative actions and social unease regarding the role played by tourism at certain destinations and moments until, in 2020, the coronavirus crisis paralysed the sector’s activity and highlighted its social and economic relevance for many areas in Spain. At present, the policies implemented by the European authorities and the Spanish government itself clearly indicate a way out of the crisis based on criteria of sustainability and resilience which, in the case of the tourism sector, consists of two aspects. On the one hand, tourism is particularly sensitive to the impact of climate change, such as rising sea levels, extreme weather events, environmental degradation and biodiversity loss. On the other hand, as tourism is an activity that involves high levels of atmospheric pollution and puts great pressure on natural resources, there is ample room for improvement to make the sector more sustainable.

    The World Tourism Organization defines

    the principles of sustainability in terms of the environmental, economic and socio-cultural aspects of tourism development

    In this respect, the World Tourism Organization (UNWTO) defines the principles of sustainability in terms of three areas: environmental, economic and socio-cultural. The first area aims to make optimal use of natural and environmental resources, as well as to preserve biological diversity. The economic aspect corresponds to tourism’s impact on the economy of the locality receiving tourists, in such a way as to promote long-term viable activities, with stable employment opportunities and well-distributed socio-economic benefits. Finally, the socio-cultural aspect seeks to conserve and strengthen the cultural and architectural assets and traditional values of the tourist destination in question.

    How can we measure the sector’s progress towards sustainability?

    In order to gauge the degree of sustainability in the sector and the steps that should be taken in the future, we have created a relevant indicator for each of the three aspects defined by the UNWTO regarding tourism’s sustainability. It should be noted that our analysis has been carried out using data prior to 2020, as the effect of the pandemic on these indicators would distort the analysis contained in this article.

    Most of the tourism industry’s greenhouse gas emissions

    concentrated in the transportation sector

    In environmental terms, we have taken the trend in greenhouse gas (GHG) emissions into the atmosphere by the sectors that make up Spain’s tourism industry.6 For this analysis, we have only taken into account the trend in the three gases that are most emitted into the atmosphere: carbon dioxide (CO2), nitrogen oxides (NOx) and carbon monoxide (CO). The first conclusion that can be drawn is that most of the GHG emissions come from the transport sector (accounting for around 12% of tourism GDP), specifically the emission of nitrogen oxides resulting from combustion engines. These sectors are among the most polluting of all industries. Moreover, the pollution level has increased since 2013 for air transport, and although they have decreased for land transport they are still at an incredibly high level. With respect to accommodation and hospitality services, as well as travel agency and tour operator activities, carbon monoxide is the pollutant emitted most into the atmosphere.7 Although the pollution level are not alarming, far from moderating they actually grew by 78% in the case of accommodation and 38% in the case of agencies and tour operators between 2013 and 2019.

    • 6. This analysis considers the data provided by the National Statistics Institute by branch of activity: accommodation services, food and beverage services (branch 55-56, according to CNAE 2009); activities of travel agencies, tour operators, booking services and related activities (branch 79); land and tube transportation (branch 49), and air transport (branch 51).
    • 7. This type of GHG is produced every time a fossil fuel such as natural gas, propane gas, petrol, oil, kerosene, wood or coal is ignited. In other words, the sector produces this as a result of people using heating and cooling systems and combustion stoves.

    Greenhouse gas emissions by tourism sector

    Accommodation services, food and beverage services

    Last actualization: 26 January 2022 - 09:22

    Activities of travel agencies, tour operators and related activities

    Last actualization: 26 January 2022 - 09:24

    Land transport

    Last actualization: 26 January 2022 - 09:25

    Air transport

    Last actualization: 26 January 2022 - 09:26

    The indicators of economic value consider the contribution made by tourism to the economic sustainability of each destination. The variables we have used to measure this are the average number of overnight stays per month (volume of activity) and the expenditure per tourist (value of that activity). The volume and value of tourism are essential to the economic sustainability of a destination: the greater the expenditure per day, the more efficient the destination in terms of generating tourism value.

    The relationship between volume (number of overnight stays) and expenditure per tourist can be seen in the figure below.8 In the most tourism-oriented provinces (those with more than 10 million overnight stays per year), average expenditure is around 300 euros per tourist. The case of Las Palmas is particularly negative in this respect: it ranks second in terms of overnight stays but only has a modest average expenditure. Among the rest of the provinces, the average expenditure per tourist is below 175 euros. Girona, Alicante and Gipuzkoa are particularly positive in economic terms as they typically have a more modest volume of hotel stays but a very high expenditure per tourist.

    • 8. Total tourist expenditure by province has been estimated using in-person card payments by domestic and international tourists via CaixaBank POS terminals in 2019.

    Economic indicators: tourist expenditure vs. overnight stays

    Y axis: Expenditure/tourist; X axis: Overnight stays (million)

    p16 ING
    Source: CaixaBank Research, based on data from CaixaBank and the National Statistics Institute.

    As a basic indicator to gauge the social and cultural impact of different tourist destinations, we have measured congestion in the various provinces as this influences residents’ satisfaction and is a basic indicator of the social impact of tourism on a community. To this end, we have used the variable of the number of overnight stays in proportion to the resident population, the results of which can be seen in summary form in the map below. In general terms, no significant tourism pressure is observed in most of the country.9 However, the most noteworthy cases are the following: (i) the island regions, eminently beach and nature destinations which receive a lot of international tourism,10 (ii) certain areas close to the border with France that offer beach and mountain tourism (Huesca, Tarragona and Girona) with a small local population and that are visited by neighbouring countries, as well as (iii) certain towns in Andalusia that receive both domestic and international tourism (Malaga, Huelva and Almeria). It seems that congestion in the most tourist-oriented destinations has actually worsened in recent years, given that the population has grown, on average, much less than the number of tourists.11 

    • 9. In Spain, the ratio of the volume of overnight stays to the resident population is slightly above seven, which can be taken as a reference for the average congestion for the country as a whole. Congestion above these levels can be considered as high. In the case of the EU, it is around four, according to data provided by Eurostat.
    • 10. In fact, the Balearic Islands stand out as the European region with the highest congestion in terms of the number of annual visitors they receive, according to regional data provided by Eurostat, ahead of the autonomous province of Bolzano (Italy), the Algarve (Portugal), Tyrol and Salzburg (Austria).
    • 11. In the past 10 years, Spain’s population has grown by 2% on average while international tourist arrivals have increased by nearly 60%.

    Overnight stays as a share of the resident population

    p17 ING
    Source: CaixaBank Research, based on data from the National Statistics Institute.
    Towards a new, more sustainable and competitive model

    In light of the available indicators, it seems evident that there is room for improvement over the coming years. Regarding the environment, pollution levels have actually increased in recent years and the potential areas of improvement range from promoting more energy-efficient buildings and more modern air conditioning systems to more sustainable travel, among other aspects. In economic terms, there is no doubt regarding the importance of the sector for the Spanish economy as a whole, although it will be necessary to keep an eye on those destinations with high levels of congestion, where the sector’s economic contribution is modest. Finally, in socio-cultural terms there are some regions with an increasingly excessive tourism demand, which can make the resident populations uneasy due to congestion problems in small towns with limited public services, especially as they are not always prepared to absorb such a huge seasonal demand.

    The sector’s agenda for sustainability involves implementing initiatives that pre-date COVID-19 and now make it possible to take advantage of funds from Europe.12 Specifically, the Spanish tourism industry is covered by the government’s Recovery, Transformation and Resilience Plan via the policy of «Modernisation and digitisation of the industrial fabric and SMEs, recovery of tourism and promotion of an entrepreneurial nation Spain», in which component 14 outlines a Modernisation and Competitiveness Plan for the Tourism Sector. Within the latter, the area that will receive the most investment is the Strategy for Sustainable Tourism at Destinations, which has an estimated budget of 1.9 billion euros for the next three years.13

    • 12. At the beginning of 2019, the Spanish government and Secretary of State for Tourism had already begun work on Spain’s Sustainable Tourism Strategy 2030, which took into account the need to include sustainability criteria for the sector and began to introduce the objectives and criteria that, through the NGEU funds, have now been established in the new Strategy for Sustainable Tourism at Destinations.
    • 13. The government held the first extraordinary call for Sustainability Plans in November 2021. 615 million euros were disbursed to the autonomous regions, taking into account economic variables (percentage of tourism GDP with respect to regional GDP and the reduction in the number of tourism workers between December 2019 and December 2020), regional variables (the size of the autonomous region as a percentage of the total area of Spain and population density) and tourism variables (number of international tourists received in 2019 and spending by these tourists).
    The ultimate goal is none other than to try

    to improve the competitiveness of Spain’s tourism industry by means of a new model with greater added value

    The objective of these initiatives is not only to ensure that Spanish destinations are capable of integrating environmental, socio-economic and regional sustainability criteria into the tourism products and services they supply but also to develop resilience strategies in the face of current challenges (climate change, excessive demand for tourism, health and safety-related crises) and to achieve greater cohesion among the different regions. In other words, to improve the distribution of the burdens on the country and establish an integrated approach to help slow down its depopulation. The ultimate goal is none other than to try to improve the competitiveness of Spain’s tourism industry by means of a new model that is more sustainable, of higher quality and, therefore, of greater added value.

    Destacado Economia y Mercados
    Destacado Analisis Sectorial
    Destacado Área Geográfica
  • The importance of revitalising the tourism industry’s digitalisation


    The sectors most closely related to tourism are digitalising faster than the average for the Spanish economy but there is still a long way to go, especially when compared to other tourism industries in Europe. In the next few years, it will be crucial for Spain’s tourism industry to be able to remedy this situation by  means of a clear commitment to digitalisation, which will help to improve its long-term growth capacity. The European NGEU funds are an opportunity to revitalise investment in the digitalisation of tourism businesses after two very tough years for the industry.



    Área geográfica

    Digitalisation has gained even more prominence in our lives In the wake of the pandemic. Consumers have radically changed how they communicate, work and consume and the business fabric has adapted very quickly to these changes, accelerating its digitalisation with the extensive implementation of teleworking and enormous growth in e-commerce sales.14 This transformation is crucial to ensure the long-term growth of all sectors. Companies that invest in digitalisation in the coming years will be investing in a strategy that will help them to gain in productivity and competitiveness and will therefore improve their prospects considerably, while those that lag behind may lose prominence.

    Some sectors, such as retail, have made great strides during the pandemic thanks to the unprecedented incorporation of digitalisation into their sales channels. The tourism industry has also realised the importance of e-commerce although, due to the economic problems it has experienced during the pandemic, it has not been able to make such remarkable progress. Nevertheless, the industry’s economic recovery and the arrival of the Next Generation EU (NGEU) funds could provide an impetus for the sector to continue digitalising.

    • 14. See «e-commerce: years of progress in just a few months» from our Retail Sector Report 2021 and the Focus «The COVID-19 outbreak boosts remote working» from our June 2020 Monthly Report.
    The current state of digitalisation in the tourism sector

    To understand the next steps that should be taken by the tourism industry in digitalisation terms, we need to understand the current state of the businesses in the sector. We have used the CaixaBank Sectoral Digitalisation Index (CSDI) to gauge the extent of digitalisation in tourism companies. Our index provides a holistic view of the business digitalisation process, identifying the strengths and weaknesses of the different sectors of activity in various areas: digital assets (capital and human resources); digital intensity of interactions with clients, suppliers and public authorities, and how intensively both traditional and emerging digital technologies are used.15

    As can be seen below, according to the CSDI for 2020 the benchmark sector in Spain is information and communications technology (ICT) with a score of 67 points out of 100.16 Retail, accommodation and transport and storage (the three sectors most closely linked to tourism that are covered by the index) scored 48, 46 and 42 points, respectively, which implies a significant gap with respect to more digital sectors. It should be noted that, although there is no significant difference in any of these three sectors most closely linked to tourism, the trend between 2017 (the first year calculated) and 2020 has been more positive than average, suggesting that the tourism industry is improving its relative position. 

    CaixaBank Sectoral Digitalisation Index (CSDI)

    Index between 0 (min.) and 100 (max.)

    p20 ING
    Source: CaixaBank Research.
    According to the CaixaBank Sectoral Digitalisation Index

    the tourism sector is digitalising faster than the average for the Spanish economy 

    The CSDI enables us to carry out a more in-depth analysis as it is composed of various pillars and sub-pillars that illustrate the degree of digitalisation in more specific fields. In this respect, if we analyse the digitalisation pillars for inputs and interactions (see the table), it can be observed that businesses in the tourism industry stand out in particular areas. We can see that the accommodation sector stands out in digitalisation terms regarding its client relations, thanks to the marketing of services being digitalised, a process that has been gaining ground over other traditional marketing methods for many years now. On the other hand, it is evident that many areas still need improvement, such as the digitalisation of supplier relations and banking, as well as the digitalisation of the factors of production (capital and labour).

    Breakdown of the CSDI 2020 by component of the input pillar and interaction pillar

    Index between 0 (min.) and 100 (max.)

    p21 ING
    Source: CaixaBank Research.

    This analysis raises the question of to what extent it is necessary for the digitalisation of the tourism industry to advance to the same extent as a sector such as ICT. Due to the idiosyncratic features of each sector, the optimal extent of capital and labour digitalisation may vary greatly between sectors. To better understand the gap with the technological frontier of each tourism-related sector, we analysed the degree of digitalisation of the factors of production at an international level, specifically by comparing the degree that advanced digital technologies are used in EU countries for the accommodation and retail sectors.

    As can be seen in the following charts, the use of big data and cloud computing technologies by Spain’s accommodation and retail sectors is below the EU average. Moreover, there is a very wide gap between them and the technological frontier (the difference with respect to the most digitalised European country) in all cases, indicating the great room for improvement in tourism-related companies in Spain.

    Companies using digital technologies in the EU-27 countries

    % of total for each country

    p22 ING
    Source: CaixaBank Research, based on data from Eurostat.
    The accommodation sector is a reference regarding the degree of digitalisation

    of its client relations, thanks to the digitalisation of its marketing services

    The role played by digitalisation in the future of the tourism sector

    Having analysed the strengths and weaknesses of the digitalisation process in the tourism industry, it is important to determine what this process can offer companies since digitalisation is not an end in itself but a means of increasing competitiveness and productivity. In this respect, the tourism sector can learn from what the industry itself has gained from digitalising its interactions with clients, a process which, according to the CSDI, has reached a very high level, mainly as a result of the emergence of OTAs (online travel agencies, such as Booking and Expedia) and the development of direct online sales by the major hotel chains.

    According to a Phocuswright study, between 2014 and 2019 turnover from hotel room sales in the EU made via electronic channels were very strong, growing at an average annual rate of 8.1%, especially through OTAs whose sales increased by 11% per year. This contrasts with the poorer performance of traditional sales channels (direct face-to-face, physical travel agencies and tour operators), which barely grew at an annual rate of 0.8%. Consequently, the relative share of online sales in the EU reached 40% in 2019 (27% OTAs and 13% direct online sales), suggesting that these sales channels are much more competitive than traditional ones in the eyes of tourists. These trends become even more evident when we look specifically at hotel SMEs, which between 2016 and 2019 only recorded growth in sales channels that were not face-to-face.

    Between 2014 and 2019, the online sale of hotel rooms

    grew at an average annual rate of 8.1%, much higher than the 0.8% posted by sales via traditional channels

    Regarding supply, the greater focus on online sales channels has been a successful formula, offering much more visibility and access to a much larger market for all types of destinations and hotels, regardless of the amount of resources available to invest in marketing. In other words, digital sales channels make it possible for a small hotel in a municipality in Spain that is not particularly tourism-oriented to sell bookings to a tourist on any continent in the world. If we examine CaixaBank POS terminal payments in hotel businesses between 2019 and 2021, we can see that the likelihood of a foreigner making a purchase from a hotel business is substantially higher via the e-commerce channel. This is even the case in 2020, when the volume of foreign tourists in Spain was 79% lower than in 2019, although 63% of foreign tourist expenditure on hotels was carried out via online channels.

    Breakdown of payments via CaixaBank POS terminals with accommodation businesses by origin of tourist and sales channel

    (% of total expenditure)

    p24 ING
    Source: CaixaBank Research, based on CaixaBank’s internal data.

    Sales of tourism services are already relatively digitalised, confirming the enormous potential of digitalisation to improve competitiveness and productivity. However, according to the CSDI results analysed in this article, there is still a lot of scope for improvement in other areas (B2B relations, investment in technological capital, greater use of data analytics, etc.) which could play a key role in the industry’s future. To progress in digitalising these weak points, it will be necessary for companies in the sector to invest decisively in digitalisation.

    Between 2019 and 2021, the likelihood of hotel payments being made

    by an international tourist was greater via e-commerce sales channels

    But not everyone in the tourism industry will be a winner. Traditional sectors with less capacity to digitalise could lose market share, leaving room for those businesses that do develop their digital channels. According to our analysis, the main winners of digitalisation could be: (i) smaller tourism companies, with more potential to improve their efficiency than large companies; (ii) companies offering differentiated services, given that online sales provide a wide range of options for the buyer, and (iii) tourists, who will have access to a larger number of services that are more personalised and more competitively priced.

    The role of the NGEU funds in the tourism industry’s digitalisation

    As noted earlier in this article, digitalisation requires considerable investment. However, the crisis caused by the pandemic has significantly limited the investment capacity of tourism companies. The role played by the European NGEU funds through the Recovery, Transformation and Resilience Plan (PRTR) could therefore be crucial. Spain’s tourism industry appears in the PRTR via the policy of «Modernisation and digitisation of the industrial fabric and SMEs, recovery of tourism and promotion of an entrepreneurial nation Spain», in which component 14 outlines a Plan for the Modernisation and Competitiveness of the Tourism Sector. Despite this, the item budgeted to digitalise the tourism industry within component 14 of the plan is only 337 million euros, a figure that seems very limited given the size of the sector which, in 2019, achieved a tourism GDP of 154 billion euros (investment in digitalisation would represent 0.2% of tourism GDP in 2019).

    The NGEU funds budgeted to digitalise the tourism industry

    are limited but could act as a lever to revitalise private investment in digitalisation

    The objectives of the PRTR’s Digital Transformation Plan for the tourism industry have focused on developing digital platforms that add value or represent a growth lever for the sector. Consequently, the three main lines of action will be:

    • Investment in developing smart destinations to boost Spain’s tourism brands.
    • Developing a tourism intelligence system for public authorities and companies in the sector, so that data are collected from the companies and organisations along the entire value chain.
    • Investment in innovative projects and initiatives involving digital solutions for the sector (developing applications, collaborative platforms, etc.).

    In conclusion, the lines drawn out by the plan are highly appropriate given the weaknesses identified in this article in the tourism industry’s digitalisation. Although we estimate that the extent of the resources allocated in the PRTR for these initiatives is limited, we do expect it will have a leverage effect and revitalise private investment initiatives in digitalisation that were put on hold with the outbreak of COVID-19. In any case, the tourism industry will have to get back on its pre-pandemic track by investing heavily in its transformation, and especially in its digital transformation.

    Destacado Economia y Mercados
    Destacado Analisis Sectorial
    Destacado Área Geográfica
  • Changes in retail real estate investment resulting from the impact of COVID-19


    The outbreak of the pandemic has changed the scenario for investment in retail-related property. On the one hand, severe mobility restrictions and social distancing measures have lowered prices and rents for commercial premises, reducing investor interest. On the other hand, COVID-19 has brought about a change in the habits of Spanish consumers that has benefited supermarkets, where investment reached record highs in 2020, and has accelerated the penetration of online commerce in the retail sector, boosting investment in the logistics required to support this sales channel.



    Pre Titulo
    Área geográfica
    Structure of commercial real estate investment in Spain

    Over the last five years, commercial real estate investment has averaged around 3 billion euros per year in the Spanish retail sector. In 2019, before the arrival of the pandemic, office investment had by far the largest share in the commercial real estate sector (accounting for more than 30% of the total). However, mobilty restrictions and the rise in working from home ended up reducing investment in this type of asset to below 20% of the total by 2020. Meanwhile, investment in retail real estate increased its share of the total, accounting for nearly 25% of all commercial real estate investment in 2020, behind only the multi-family (rented residential and student housing) and logistics categories. In this case, the pandemic has allowed the retail sector to absorb the reduced interest in office and hotel investment.

    In the case of Europe, the drop in office investment has been smaller and, after the impact of the pandemic, continues to be, by far, the main commercial real estate investment (around 35% of the total) thanks to the recovery in the second half of the year in the region’s major financial centres (Germany, the United Kingdom and Netherlands). On the other hand, the retail sector’s share decreased compared to previous years, in this case harder hit by the restrictions. There is a common trend: the boom in the logistics sector (associated with the greater penetration of online commerce) and the decline in assets associated with accommodation and hotels, suffering from limited mobility internationally.

    The share of retail real estate investment in Spain has increased

    Breakdown of investment by sector in Spain

    Last actualization: 07 July 2021 - 15:49

    Breakdown of investment by sector in Europe

    Last actualization: 07 July 2021 - 15:49
    Impact of the pandemic on retail real estate investment

    According to real estate consultancy firm JLL, retail real estate investment increased by 40% in 2020 in the Spanish market, reaching 2.25 billion euros. This is a surprising figure, given the backdrop of severe restrictions to face-to-face transactions, and it is possible that much of the increase is a correction effect following particularly low investment levels in 2019. If we compare this figure with the average from the previous three years, we can see a 30% drop in retail real estate investment in 2020.

    Shopping centres accounted for most of the real estate investment, with a volume of around 1.1 billion euros, although 80% of this figure is due exclusively to two large operations (Intu Asturias and Puerto Venecia) which were negotiated and closed at the beginning of the year, before the outbreak of the pandemic. In other words, if we exclude these two operations, the level of investment would be the lowest since 2013; i.e. since the Spanish economy had recovered from the financial and sovereign debt crisis.

    This was followed, in volume terms, by supermarket investment which posted an all-time high in 2020 with an investment of around €600 million, representing 30% of retail real estate investment, when between 2017 and 2019 it barely accounted for 5%-10% of the total. Its success is not surprising: it has been one of the sectors that has emerged the strongest from the health crisis thanks to its role as a supplier to the population.

    On the other hand, commercial premises, especially in the textile, leisure and restaurant sectors, were the most affected real estate assets. Firstly, they have been hit particularly hard by the restrictions (on capacity, limited opening times and forced closures) and by lower levels of tourism (–77% in 2020). Secondly, the pandemic has speeded up the growth in e-commerce, resulting in an oversupply of commercial premises in the short term.

    Supermarkets and shopping centres led investment in 2020

    Real estate investment in the retail sector in Spain

    Last actualization: 07 July 2021 - 15:52

    On the other hand, rents for real estate assets declined across the board throughout 2020 as a result of the pandemic. The lack of buyers and the economic recession resulting from the health crisis have led to an increase in vacancy rates and the availability of premises, as well as triggering higher turnover rates among operators. Not only have small stores closed but the big brands have also taken the opportunity to reduce their bricks and mortar stores while boosting their online presence. As a result, according to JLL data from the end of 2020, prime rents on the high street (premises of 100 m2 or more) fell by 16% year-on-year in Madrid and 18% in Barcelona.12 Meanwhile, prime rents in shopping centres and retail parks in Spain also fell over the course of 2020, albeit to a lesser extent, posting declines of between 10% and 12.5% year-on-year.

    • 12. Prime rent refers to the most sought after and exclusive commercial locations.
    Shopping centres in Spain, closely linked to leisure and restaurants

    In Spain, shopping centres account for 1 out of every 4 purchases in the retail sector. The situation of this business model, especially at this time of sharp declines in the influx of visitors, is being widely debated due to the decline observed for several years in the US: shopping malls, which had become popular in the 1960s and 1970s and reached maturity in the 1990s, have gone from enjoying a 75% share of retail sales to accounting for less than 10% in 2019. Given that, between 2010 and 2019, retail sales grew at a rate of 4% per year and household confidence has remained high, it seems clear that the decline in this model in the US is probably due more to structural factors: the country’s oversupply (retail density per inhabitant is five times higher than in Europe), a lack of investment in recent years, which has left the sector obsolete (more than a third of the centres were built before the 1980s), and the growing importance of e-commerce (the US is one of the countries with the highest penetration of online shopping) account for most of this decline.

    In the case of Spain, there is no evidence of problems of oversupply or obsolescence comparable to those in the US and it doesn’t look like this business model is going to follow the same path as in the American giant in the short term. Firstly, Spanish retailers have only just entered a mature phase and the country’s density of shopping centres (0.34 mper inhabitant) is far from that of the United States (2.35 m2 per inhabitant). Secondly, Spanish shopping centres are much more modern, most of them being built in the 2000s, and their composition is more in line with new trends and consumer habits: more space is allocated to leisure and hospitality in contrast to the Anglo-Saxon model of more space for department stores and hypermarkets, which had acted as a driving force in the 1960s and 1970s but are now clearly in decline.

    Unlike the US, Spanish shopping centres do not have problems of oversupply or obsolescence.

    Here the supply has just entered its maturity phase, is more modern and in line with new consumer trends

    The composition of Spanish shopping centres is more modern

    The composition of Spanish shopping centres is more modern
    Source: CaixaBank Research, based on data from CBRE.

    Finally, the only factor that may pose a risk to this business model is the rise in online shopping. E-commerce accounted for around 5.4% of retail sales in Spain in 2019 but the health crisis has speeded up changes in Spanish consumer habits.13 According to estimates by the Centre for Retail Research, which offers internationally comparable data, this percentage will have shot up to around 10% by 2020. However, this e-commerce penetration is far from the figures in the US  (around 20% of total sales), in the large European economies (26% in the UK, 20% in Germany and 14% in France) or even the EU average (16% estimated for 2020).

    The great advantage of Spanish shopping centres in the face of the rise in online shopping is, precisely, their greater focus on leisure and hospitality, services and experiences which, to a large extent, cannot be obtained digitally. Paradoxically, what acts as a structural advantage in the medium and long term has become a liability during the pandemic because of the reduction in social interaction due to the fear of contagion. Shopping centres were the last to reopen their doors when restrictions were eased in 2020, with severe limits to capacity and, precisely, without being able to offer their leisure services in order to avoid crowds. Even so, visits to shopping centres have rebounded from the low levels in the first state of emergency: in April and May 2020, these had fallen by more than 80% year-on-year, improving in the second half of the year and, since the third wave of the virus, has remained at around 60%-70% of the pre-COVID level.

    • 13. According to CaixaBank’s internal data, the share of e-commerce in retail trade was 5.6% in 2019. In 2020, e-commerce came to represent 9.2% of the total turnover, although at the end of March 2021 this advance moderated to 6.5% of the total. For more details on e-commerce trends see the article «e-commerce: years of progress in just a few months» in this report.
    Paradoxically, what acts as a structural advantage in the medium and long term for Spanish shopping centres

    (its focus on leisure and hospitality) has become a liability during the pandemic

    Visits to shopping centres fell by more than 30% in 2020

    Visits to shopping centres

    Last actualization: 07 July 2021 - 15:53

    In principle, all the evidence suggests that, once the social distancing measures are eased and people can return to interacting socially, when we have overcome the current health crisis, Spanish consumers will resume much of their pre-COVID leisure pursuits. In fact, the survival of shopping centres in the medium and long term will depend on people returning to such social habits, making it possible to offset the rise in online shopping. Pending the outcome of these forces working both for and against face-to-face retail activity, the Spanish Association of Shopping Centres (AECC) and the main real estate consultants still believe the gross leasable area (GLA) in shopping centres will continue to increase in Spain; currently the country has 567 shopping centres and around 16.4 million m2 of area.

    The pandemic has boosted investment in supermarkets

    There is no doubt that the agrifood industry has been one of the sectors emerging stronger from the pandemic, so it comes as no surprise that its retail distribution channel has also been strengthened. In fact, supermarkets have been the only retail branch that has become stronger during the health crisis.

    The health crisis has left us with consumers who eat more often at home, on a healthier, more sustainable diet, who prefer ready-to-cook food, are not so interested in the manufacturer’s brand and pay more attention to the offers available (hard discount supermarkets have come out stronger), who would rather buy local products and brands and have lost their fear of buying fresh products online. As a result, three very clear trends can be deduced for the sector: (i) the importance of proximity, given the continuing restrictions on mobility; (ii) the preference for healthier, more sustainable products and behaviour due to changing habits and greater environmental awareness, and (iii) the rise in e-commerce, also in terms of food distribution, again due to people’s restricted mobility. In this respect, supermarkets are the format that offers greater proximity and they have made a huge, in a short period of time, to include fresh, organic and gourmet products and to adapt to the new reality of online shopping.

    In this context, 2020 has been an unprecedented year in terms of investment in food retail space, with a closing volume of around 650 million euros, more than double the average investment of the previous five years, according to data from the consultancy firm Savills (see the chart below). In the short term, investment in supermarkets remains an attractive option, thanks to (i) their role as distributors of staple products, with a continuous demand over time; (ii) they have proven to be particularly resilient to a crisis of these characteristics, and (iii) are perceived as a defensive, liquid produce with moderate risk.

    Record investment in food retail outlets

    Supermarket investment

    Last actualization: 07 July 2021 - 15:54

    Distribution in different retail distribution formats

    Last actualization: 07 July 2021 - 15:55

    Once the current health crisis is over, the medium to long-term outlook for supermarkets remains favourable. Undoubtedly, the online channel will continue to gain market share, albeit more gradually than in 2020. Nevertheless, it is expected that physical stores (at least those that are easily accessible and with a good location) will remain irreplaceable for food distribution given the growing preference for fresh products: in fact, it is predicted that that physical retail outlets will attract 90% of Europe’s food sales. Again, hybrid models will continue to be sought to be able to adapt more quickly to consumer preferences and, in this respect, supermarkets have proven to be flexible and agile in adjusting to changing circumstances.

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    The birth of logistics associated with the retail channel

    The forced drop in face-to-face sales experienced by the retail sector due to restrictions on people’s mobility has been a clear catalyst for the development of e-commerce.14 At the same time, the logistics market, until a few years ago the sector with the smallest presence in commercial real estate, has seen an unprecedented upturn, boosted by the urgent storage needs that arose throughout 2020, especially in the initial few weeks of the first state of emergency when it was even feared that certain essential products would be out of stock. On balance, this boom in e-commerce has given way to a certain symbiosis between retail and logistics.

    In this respect, medium-sized retail parks located in urban areas close to the city of reference have been unexpectedly favoured by this change in consumer habits: they are in privileged locations for logistics (close to the centre, with good connections, large car parks, etc.) and can now benefit from their storage capacity or simply offer click&collect services. In other words, such types of retail facilities now stand out for their ability to be converted into logistic centres, optimise «last mile» distribution (warehousing, distribution and picking warehouses) and form part of the hybrid logistics-commercial model that seems to have emerged from the health crisis.

    This change in trend can be seen in investment volumes in recent months. Historically, retail real estate investment has outweighed logistics investment but in recent years interest in logistics assets has picked up: according to data from the consultancy firm JLL, 120 transactions have been processed in logistics since 2018, compared to the 86 that were signed in the retail sector.

    • 14. For more details on e-commerce trends see the article «e-commerce: years of progress in just a few months» in this report.
    What will happen once the health crisis is over?

    Overall, the outlook for the retail sector and therefore for retail commercial real estate investment is favourable, as long as the recovery continues to consolidate. On the one hand, there is ample pent-up demand from the months of severe restrictions.15 On the other hand, low interest rates and ample liquidity in the market will continue to boost the appeal of commercial real estate investment compared to other alternative investments.

    In order to understand how the sector will develop in the medium and long term, it is worth considering which trends are here to stay and which are merely one-off changes associated with the consequences of the pandemic, and which therefore should ease or disappear as the health crisis passes.

    First, it seems clear that the lifting of restrictions associated with containing the pandemic and the return of tourists will result in a rebound in visits to retail outlets, turning the situation around: this will revive investor interest, increase the rents of premises and their profitability. For 2021, forecasts for the high street point to increases in prime rents of 0.5% in Madrid and 1% in Barcelona, modest rates and below pre-pandemic levels, similar to those expected for the major European cities. In the medium and long term, average annual prime rents are expected to grow by around 2.5% in Madrid and Barcelona, placing them among the top 10 European cities in terms of expected rental growth. Be that as it may, recovery to pre-COVID rent levels is not expected before 2024. In the case of shopping centres, a 3% annual increase in prime rents is projected, both this year and in the next few years, so that pre-COVID levels would be regained in 2023-2024.

    • 15. See the outlook section of the article «Pent-up demand during the health crisis and the outlook for consumption» in this report.
    Recovery to pre-COVID rent levels is not expected before 2024.

    In the case of shopping centres, an annual increase of 3% in prime rents is estimated and pre-COVID levels would be regained in 2023-2024

    Another of the clearest aspects in the scenario is that e-commerce will go on increasing its penetration in the retail sector over the coming months, albeit more gradually, which will continue to force the sector to adapt to the new situation, especially in the case of commercial premises. Although the sector realises that face-to-face shopping will continue to be, by far, the largest source of revenue, stores will not be able to turn their backs on increasingly omni-channel consumers. The stores of the future will be an integrated combination of bricks and mortar and e-commerce, reducing the costs of online orders by acting as «last mile»  distribution centres and click&collect spaces. This will require allocating some of their shop space to storage and the preparation of orders, as well as developing tools and technologies to enable inventory control.

    Projected average annual growth 2021-2024 for prime rentals

    Annual growth in high street premises

    Last actualization: 07 July 2021 - 15:56

    Annual growth in shopping centres

    Last actualization: 07 July 2021 - 15:56
    Destacado Economia y Mercados
    Destacado Analisis Sectorial
    Destacado Área Geográfica

The impact of financial conditions on Spain’s public debt burden

One of the hot economic topics of today is the impact that a tightening of the financial conditions will have on the cost of Spanish public debt. Since the beginning of the year, we have witnessed a rebound in euro area sovereign yields and in risk premiums of the periphery, including that of Spain. Thus, the question arises as to how sensitive the general government’s cost of financing will be to a changing and highly uncertain macro-financial environment.

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The average cost of debt will remain contained

We have analysed the sensitivity that the cost of Spanish public debt has historically shown to changes in financial conditions and we have carried out an exercise to assess how the next few years could pan out. In particular, we analysed three scenarios. The first is based on the interest-rate forecasts that were envisaged at the end of 2021, before the ECB changed its forward guidance on its monetary policy and prior to the outbreak of the military conflict in Ukraine. This scenario was characterised by interest rates that were expected to remain very low throughout the forecast period, as the ECB was not expected to begin to raise the benchmark rate until late 2023. The second scenario provides for a gradual normalisation of financial conditions over the coming years. This is a scenario that would occur, for example, if the economic impact of the conflict in Ukraine were limited and inflation concerns became the main focus of attention during the second half of the year. As a benchmark, this would be consistent with the ECB beginning to raise interest rates at the end of 2022, followed in 2023 by two additional rate hikes. The third scenario assesses the impact of a tightening of financial conditions, which could occur if the ECB were to pursue a more rapid increase in interest rates due to inflation remaining high for longer than expected and the risk premium rising substantially.1 In the first chart, we can see the evolution of the cost of debt in issue and the average cost of overall debt in these three scenarios.2

  • 1. In particular, it would be an additional increase of 100 bps throughout the length of the yield curve.
  • 2. The key assumptions we have use are: (i) each year the Treasury issues debt to finance the new deficit (estimated using our own forecasts) and to refinance maturities, (ii) the maturity structure with which the new debt is issued mirrors the current time structure and (iii) we have taken into account the refinancing of bills that has to be carried out each year.
Spain: cost of public debt according to the financial conditions

In the scenario with a gradual normalisation of financial conditions, the cost of new debt issued would increase sharply, reaching above 1.7% by the end of 2024. For reference, this scenario assumes that the cost of 10-year debt rises to 2.55% at the end of 2024, while at the end of December it is expected to stand at around 1.55%. In the third scenario, the cost of new debt issued would increase even more sharply, above 3.5% in 2024.

This contrasts with the evolution of the cost of outstanding debt in circulation, which remains moderate in all scenarios. The difference between the evolution of the cost of outstanding debt and issued debt is largely explained by the fact that the higher issue costs are offset by the maturity of debt that was issued years ago at higher rates. Another factor to be taken into account is the increase in debt maturities in recent years. In 2021, the average term of Spanish public debt securities was above eight years for the first time, a figure which ought to stabilise or could even increase slightly in 2022. The Treasury has taken advantage of the favourable financing conditions that have prevailed since 2014, thanks to the ECB’s unconventional monetary policies, to issue debt securities in the longer sections of the yield curve at very low rates.

Spain: public debt interest bill
The interest bill as a percentage of GDP: an increase, but not in excess

Similarly, it is interesting to analyse how the burden of interest charges on public debt might evolve relative to GDP in the various scenarios. We conclude, with a high probability, that the debt burden would remain low or moderate. Specifically, in the scenario with a gradual normalisation of financial conditions, the interest burden of public debt as a percentage of GDP would continue to fall until 2023, before stabilising in 2024 below 2.0%. In the stressed scenario, the interest bill as a percentage of GDP would increase moderately to around 2.0% in 2024, a level very similar to that of 2021 and well below the 3.0% registered in 2012, when public debt as a percentage of GDP was much lower. That said, it would likely lead to a steepening of the yield curve if this situation were to persist in subsequent years.

Ultimately, in the short term, there are important factors that will temper the rise in public debt financing costs. However, the trend points towards higher debt costs, and while this is unlikely to lead to a substantial increase in the public sector’s interest burden in the coming years, it will be essential to design a strategy for gradual yet sustained fiscal consolidation.

Spain: interest on public debt