WHAT´S HAPPENING HERE?
2nd December 2020
2020, YEAR OF THE CONSOLIDATION OF THE BUILD-TO-BUILD SECTOR IN SPAIN
Market Research
The build-to-rent trend is going strong in Spain. According to important consulting firms, in the coming years we will see build-to-rent projects in most of the Spanish cities. The demand exists and the opportunity is good.
In 2012, with the need to dispose off the built homes for the athletes of the London Olympics, the built-to-rent market was born and it is booming on the European continent.
In Spain, despite having a short history, the business is growing exponentially, both from the investors and the tenants sides.
It is not surprising if we take into account that, according to the latest Eurostat data, in 2019, 23.8% of the population lived in rental units antcipating an increase of up to 30% in Europe in the coming years.
Who are the build-to-rent tenants?
Rental housing has suffered an increase in demand due to two factors. The first is of a sociodemographic nature and responds to the change in patterns regarding the concept of housing, the younger generations are the most prone for “renting”. The second has an economic origin and is related to the barriers that a part of the population finds while deciding to buy a house. Their financial inability to meet the necessary down payments "forces" them to rent.
Talking about a person's purchasing capacity, the saving time required to buy a house is increasing in some areas of large Spanish cities such as Madrid, Barcelona, Malaga or Valencia. In these cities, it is not uncommon to have to save money for more than 10-15 years, which is what it takes to collect 20% of the income and 10% of the taxes required to obtain the mortgage. During this period, young people find that their only option is to rent a home.
It can be expected that the rental sector will reach 30% of all homes in about 5-10 years. The build-to-rent will be one of the businesses necessary to cover the demand for residential accommodation that we will see in the comming years.
In the first half of 2020, the business closed operations was worth 600 million euros.
Who are the investors in the market?
From the investment side, we can currently distinguish several active profiles based on location.
Investors who are committed to security and long-term income are most interested in the more established areas of the market.
Other investors seeking to achieve greater capital gains or value-added gains seek the less consolidated areas.
The perimeter areas of Madrid and Barcelona are the most attractive for the former, while secondary cities such as Malaga, Valencia, Seville, Palma de Mallorca, Alicante are in the sights of the latter.