There are 1.4 million students enrolled in a career or master’s degree in Spain. A total of 588,000 are studying in a province where they do not have a habitual residence, are foreigners or come from Erasmus. Despite the high demand, student dormitory beds are low in supplyonly 102,707 in the academic year 2021/2022; According to a report by real estate consultancy JLL. To this figure we must add the 20,000 units currently under construction.
“The situation in Spain imbalance between supply and demand It’s the UK 12 years ago”, says Juan Manuel Pardo, director of ‘living’ in consulting. only in our country 7.3% of students have access to a bed in the dormitory, 0.6% more than 5 years ago. Compared to what happened in Europe, England is 32.2%, France is 14.9% and Germany is 11.4%. Also, according to the JLL expert, “both dormitory bed offers and demand for students are increasing at a rate of 3.5% per year.”
Large international investment funds, faced with a structural shortage of supply, job opportunity and started investing in student hostels in Spain. Currently, according to a previous report, 57.5% of the beds are in the hands of dormitories, public institutions and sects.; categorized as obsolete. Who are the funds behind the new student dormitory companies? Dutch pension fund PGGM in Resa, manager Stoneshield in MiCampus, Temprano Capital fund in Livensa, and Spanish Grupo Moraval and EQT fund in Nodis.
These imbalances between supply and demand will not only be resolved by the inflow of available funds, they will continue. attract a lot of capital. “To maintain the current rate of growth, an investment of 3,600 million euros in new developments will be required, while the realignment of 58,540 unused stock represents an investment of approximately 3,220 million,” says JLL. Altogether, this represents an investment of €6,820 million in student residences, excluding purchases made entirely from operational assets. For this to continue, the main obstacle investors face when developing new properties will need to be resolved: the lack of raw materials, namely the finalist land to build on.
If this investment is closed as foreseen by the advisor, Spain will add 181,960 places in residence halls for 1.6 million students corresponds to 11.4% coverage, similar to what Germany has today. JLL living room manager adds: “The market can accept 100,000 more beds than existing beds, twice the current figure, and touch coverage rates of 14% to 15%. The problem is, I don’t know if we’re going to accept them. See them.”
residential investment
Investment in the purchase of assets that already have tenants is growing rapidly in 2022. Why? It is a segment of the real estate market recorded between 200 and 500 million euros per year from 2019 to 2021. However, in July 2022, the sale of Resa, the largest housing transaction in Spanish history, to Dutch pension fund PGGM was completed by Axa, CBRE IM and Greystar. The buyer paid about 820 million euros. This is not the only major operation, Patrizia manager bought The Student Hotel for 110 million and Round Hill gained two student residences in Madrid and Seville for 65 million through Canada Pension Plan Investments. These big operations will increase the investment figure to 1,500 million for the yearThree times higher than the 2021 figure.
A business not only from Madrid and Barcelona
Another feature of the student dormitories market is that it is not focused only on Madrid and Barcelona, as in other segments such as offices. Secondary cities, or cities that attract a large number of students each year, are in the foreground. According to a JLL survey, “investors are interested in all markets, Special attention in Madrid, Granada, Bilbao and Malaga“.
Although nowhere in Spain there is an abundance of beds, there are cities where the bed/student ratio is very low: Murcia (68 students per available bed), Cádiz (36:1) or Zaragoza (17:1) ). Juan Manuel Pardo, considering the lack of land, points out that one of the solutions to increase this offer is to initiate new concessions of 50-75 years between public administration and private companies. However, there are some assets that not only encourage the creation of a new proposal but also hinder its development. This is the case of the Barcelona City Council, which prohibits the construction of new assets. The Council, led by Ada Colau, does not issue building permits for residences unless they are promoted in the suburbs of Barcelona.
Source: Informacion
James Sean is a writer for “Social Bites”. He covers a wide range of topics, bringing the latest news and developments to his readers. With a keen sense of what’s important and a passion for writing, James delivers unique and insightful articles that keep his readers informed and engaged.