The strong growth potential of the rental housing market in Spain is attracting international investors and encouraging the development of build-to-rent projects.
Fundamentally, the proportion of households living in rented accommodations at market rent is steadily increasing, jumping by over 7 percentage points for the under-29 age group over the past decade. Rising financing costs should deliver additional demand to the rental market.
Ultra-tight rental accommodation markets in Barcelona and Madrid are pushing up rents, with many of the available rental properties owned by smaller capital-constrained operators.
This growing demand and lack of supply is attracting institutional investors with experience in other European countries where institutional multifamily markets are more advanced.
Build-to-rent activity is expected to remain concentrated in the cities of Madrid and Barcelona and their metropolitan areas as well as in locations with significant economic activity and strong real estate fundamentals, such as Valencia, Seville, Pamplona and Málaga.
New types of rented accommodation such as coliving, serviced apartments or senior living are set to increasingly draw interest from investors as social needs and household structures evolve.
The country is witnessing a growing number of people living alone. According to the National Statistical Institute, one-person households is the group that will experience the biggest growth, increasing by 27.3% by 2037 to represent nearly one-third of total households.
As a result, we do not expect the build-to-rent sector to slow down in 2023, despite economic headwinds.
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