Multifamily Overview – Q3 2022
Multifamily is comprised of different types of residential rental assets, with the particularity that it includes complementary services which are normally absent in ordinary leases. In this asset class, investors seek entire buildings or residential complexes in order to professionalise the investment as well as the management of it, obtaining a higher profitability and providing better services to their clients.
In terms of investment volume, the multifamily sector accounted for 26% of all investment in Spain with a total €3.76 billion during the first three quarters of the year. Such volume, represents a 74% increase compared to the same period last year.
By segments, investment volumes were as follows:
- Student accommodation reached a record c.€1.4 billion (37% of the total investment in multifamily), specially impacted by Dutch pension fund PGGM’s acquisition of RESA, the biggest owner/operator of student residences in the country with c.11,200 beds.
- Co-living accounted for 13% of all investments in multifamily, with transactions worth €503 million, of which Greystar’s acquisition of King Street’s Madrid portfolio stands out.
- Senior living, which still has to take off in Spain (specially as it has one of the highest life expectancies in the world), registered c.€100 million with four transactions. One of the most active players of the year has been the Spanish REIT Adriano Care, whose investments include the €35 million acquisition for two assets in Santander and Sant Cugat del Valles (Barcelona).
As residential yields decompressed during Q3 2022 (between +0.25% and +0.50%), yields in the less traditional segments of multifamily remained stable (4.50% – 5.00% for student accommodation and 4.00% – 4.50% for co-living).
Overall, investors in the multifamily sector appear to be changing its preference from the traditional residential segment into alternatives assets (accounting for 53% of the total investment volume in multifamily), which are being professionalised to a similar standard as our European peers.