The impressive rise in prices of rental and sale housing in recent years has opened a gap that has made it difficult for the less affluent classes to access a home. To contextualize, since 2015, Nationwide average purchase price increased 30%, while rentals increased 60%According to Brainsre. This situation is exacerbated in big cities such as Madrid or Barcelona, where real estate prices are above the national average. Prior to this impressive rise, the country’s economy experienced the bursting of the real estate bubble that left the industry’s credibility on the ground.
Since 2008, different Public Administrations have withdrawn any public subsidy for the construction of officially protected dwellings. “Affordable housing has not been built in Spain (VPO) since 2008. there came a point the protected was more expensive than the free because the free had sunk”, Joan Clos, former mayor of Barcelona and current president of the Association of Rental Home Owners (ASVAL), in a speech hosted by Bnew. The former politician believes that re-subsidizing the construction of the VPO will be the first step to stimulate the creation of a stock of affordable rental housing.
Another solution to tackle the housing accessibility problem was proposed by Rafael Angulo, head of the Metropolitan House Foundation. Angle believes that swapping public land might be a good optionthat is, an Administration’s structuring a social housing portfolio in the hands of a local administration and putting forward a land development that will be put out to tender in return for an active housing donation to a public institution.
Collaboration formulas
In recent months, several public-private partnership formulas have emerged to expand the supply of affordable and quality rental housing. Two of the most famous were carried out in Madrid: Plan Vive de la Comunidad and an initiative of the City Council. Although the first continues, There was no excessive interest from real estate companies.. This is demonstrated by one of the first four bands of the first phase of Vive to be abandoned.
“Public administration must go hand in hand with the private. In many cases we see that Public tenders with some features that do not approximate real demand” points out Juan Galbis, head of wealth management at Stoneweg, one of the companies that invest in residential rentals in Spain. The low inclination of different public institutions to ask for help is a situation that has been repeated in the sector in recent months. “Working groups between governments and private companies should be more encouraged to prepare this jointly,” adds Juan Galbis.
rental status
According to Eurostat’s 2020 report, Spain is currently a landlord country where only 24.9% of the population lives for rent. The European average is 30.3%, five points higher; while neighboring countries reach much higher levels: Germany 49.6% or France 36%. The current market trend indicates that Spain needs to Europeanize its housing model. “We need to change the understanding that renting is for the poor or the underdog. and that the smart thing is to buy. The statement that all that doesn’t buy is throwing money away is a mistake many people discover a few years after they started owning property,” says the former minister and former mayor of Barcelona. Joan Clos believes that the richer a country is, the less percentage it owns.
Rafael Angulo believes the rental market is a good bet for the future: “There is no other way out. “Demand for housing is strong, offer is scarce, there is no land to build on, and the procedures for qualifying land are long.” Cristina Mora, co-founder of architecture studio 08023, adds: “We live in a society that demands more and more flexibility. There are more and more different needs and new family models. We live in the same houses as 100 years ago.“.
One of the most successful options, build to rent, houses built for direct rental. This market saw an opportunity in the lack of a quality offering. Ares Asset Management is one of the most focused international funds through its company, Avalon Properties. Also, other funds such as Talus Real Estate and Socimi Global Pielago, CBRE IM, Catella AM or Lazora; but also insurers like Axa or Allianz. Developers such as Aedas, Neinor or Via Célere have built residential complexes that are delivered on a turnkey basis to funds or investment vehicles. While this market has developed especially in Madrid and Barcelona, it has also spread rapidly to other major cities such as Malaga or Valencia.