Spanish Market Overview for Student Accommodation in H1 2022
The student accommodation market continues to show positive data. So far, in H1 2022, the total investment volume has already tripled compared to the figures for FY21, which stood at over €400 million. Currently, €1.2bn of investment volume in student residences has been exceeded. This volume has largely been driven by PGGM’s purchase of RESA, and Patrizia’s purchase of two assets in Barcelona.
It is estimated that, in Spain, there are just over 1,500,000 students, of whom c.550,000 live in residences, of which 360,000 are Spanish students selecting a residence to live, c. 132,000 are international students and the rest are Erasmus scholarship students. Furthermore, the most expensive city to study is Madrid, which is well above the monthly fee paid in a residence in Barcelona, where the price varies between €800 and €1,200, compared to €1,000 and €1,600 in the case of Madrid.
On the one hand, the Spanish market will continue to adapt to international standards and improve assets’ quality, which will improve its position in the European investment market with capital inflows. In addition, the creation of Joint Ventures between international capital and local developers for the development of new projects in medium-sized university cities is improving.
During the last 5 years, Spain has seen a cumulative growth in demand for student accommodation of c.15% and it is estimated that FY22 will end with more than 20 projects completed, and it is expected that in FY23 c.15 new projects will be developed. In fact, the forecast for student housing investment is very positive as by FY25 more than 13,000 new beds will be offered in student residences, 75% of which will be found in Madrid, Barcelona, Seville and Valencia.
At CG Capital Europe we see this type of investment consolidating both in terms of asset quality and services and we believe it is a suitable alternative to obtain solid returns in the medium and long term.