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The tension of the rents gives wings to the business of student residences

Date: March 29, 2024 Time: 18:33:50

Residence halls are undergoing transformation with the entry of new operators and ready to attract dissatisfied customers of shared flats. This asset, known in the real estate sector as Purpose Built Student Accommodation (Pbsa), is one of the most established alternatives in the country and with a larger growth projection.

In Madrid alone, it is estimated that more than 100,000 beds are missing to cover the demand, the same as there are throughout the Spanish territory. One of the great drivers for its growth, in addition to the investment appetite for funds in Spain, is the tension in the market of its main competitor: the rental of shared flats, which only raises prices and lowers stock.

Shared flats have recorded a significant loss of beds in the last year. Specifically, the average stock of the ten main provincial capitals of Spain between July 2021 and 2022 has fallen by 8.9%, while demand has skyrocketed by 40% from the third quarter of last year, according to data from the specialized portal Spotahome.

In the most stressed places, the drop in stock has come to exceed 40%. Specifically, in Barcelona the decrease in the supply of this type of asset has been 62%, while that of Madrid has been 47% and that of Granada 41%. With increased competition, prices have gone up. In the same ten main capitals of the province of Spain, the rent of shared rooms has become more expensive by 21.4%, according to data from the consultancy Atlas Real Estate.

Given this scenario, the door opens to a model of student residences capable of alleviating the pressure on shared flats. The model has a longer run in Europe, specifically in the United Kingdom, which from January to September of last year accounted for 73% of the investment in this segment of the entire continent, followed by Spain with 7.7%, according to data from the British consultancy Savills.

In Spain, the supply of beds is concentrated in the capital, which each year welcomes new young students. The supply of beds in Madrid is 19,215, but it falls short of the demand, which stands at 11,429 units. Barcelona is the second most active city in the student residence market, with a demand for 74,355 beds and only 13,217 available units. Beyond Madrid and Barcelona, ​​​​Valencia and Seville have one of the highest demands in the country, with 39,129 spaces and 34,937 spaces, respectively, closely followed by Granada, with 34,122 spaces.

However, student residences as a plan to escape the congested flat-sharing market are not for all budgets. In Madrid, the largest market for this segment, the ten most expensive residences in the country are located, where a room can cost 1,780 euros. The average price of the largest operator of student residences in Spain, the Dutch Resa, with forty residences throughout the country, is 814 euros per month.

The beds in student residences on the market in Spain have risen in price in the last year. In Madrid, the price of has increased by 3.5% in 2022, due to other secondary places such as Malaga (7.6%), Valencia (4.6%) or Seville (4%). “With several promotions postponed due to the pandemic, and the already high occupancy levels and number of students, we anticipate that this imbalance between supply and demand will continue to put upward pressure on rents for Pbña pros a primemos in the ”, Savills .

The internal struggle of the ‘resis’

In 2022, the number of beds in student residences in Spain increased by 8.5%, according to data from the Atlas Real Estate consultancy, although it was not a uniform. The old student residences in the form of Colegio Mayor or run by religious congregations lose places, with 150 beds less in the first and up to 425 beds less in the second. Public residences also lowered their offer, with 365 fewer beds.

The only type of residence that improved its offer in the last year were the so-called “modern standard”. This category includes state-of-the-art student residences, recently built or renovated following design, service and facilities criteria demanded by the university public. This category has added 8,445 places in the last year, increasing its weight in the Spanish student residence market by 26.4%.

Between the rises and falls of the different operators, this new standard of residence accounts for 42.8% of the offer, a domination that will continue to widen in the coming years. Three of the major operators in the sector, the Belgian Life group, the Dutch Student Experience and the British Vita Student, plan to open new residences in Spain, adding 2,000 more beds. And they are not the only specialized operators that have a large pipeline in the Spanish market: Bcome, with 1,237 units; Xion, with 1,223 or Resa with 1,000, are just one example of the offensive of international and professional operators who have large aircraft in Spain.

The domain of the new residences does not come only from the new construction. Old halls of residence, religious or public residences are being reformed to adapt to modern standards and adhere to the most demanded typology and not lose their cool in the market. Faced with this objective, the transaction market has chosen a run. In 2022, purchase and sale operations were registered in Spain for 1,217 million euros, four times more than the previous year.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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