Spain’s residential market closed 2025 with strong and broad-based growth, confirming the living sector as one of the key engines of real estate activity. Beyond traditional housing, rental residential, PBSA (student housing), senior living, flex living and prime residential have become increasingly relevant for investors.

The year was characterised by demand significantly exceeding supply, leading to double-digit price increases, with residential prices rising 12.8% year-on-year according to INE data, and transaction volumes approaching 800,000 deals. Structural constraints, including limited land availability and slow development processes, continue to widen the housing deficit, now exceeding 600,000 units.

Financial conditions have remained supportive. Lower interest rates, longer mortgage tenors and a high share of cash purchases (over 30%) have sustained activity despite rising prices. However, the main structural driver of the living sector is demographic: population growth through immigration, an increase in single-person households, labour mobility and strong demand concentration in major urban centres.

These trends are evident across all living segments. Senior living faces a significant long-term challenge, with an estimated €15–25 billion investment required to expand capacity by 55% by 2040. At the same time, PBSA continues to grow, driven by more than half a million students enrolling each year and a persistent shortage of purpose-built accommodation in key university cities.

From an investment perspective, 2025 has been a record year for the living sector, with volumes significantly exceeding previous years and accounting for close to 30% of total real estate investment. Capital has focused primarily on income-producing assets, large rental portfolios and alternative living segments, while new development activity has been largely concentrated in public-private partnerships and affordable housing initiatives.

Looking ahead to 2026, the market is expected to remain positive albeit more moderate, with regional disparities becoming more pronounced. Nevertheless, strong underlying demand and structurally constrained supply will continue to underpin the living sector in Spain.
At CG Capital Europe, we bring extensive experience in residential and living-focused investments, spanning rental housing, PBSA and senior living assets. Our strategy combines deep market expertise, rigorous analysis and a long-term investment perspective, allowing us to identify opportunities in a sector driven by powerful demographic trends and sustained demand.

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