Rental Housing Is Booming Following The Crisis
26 October 2016 – El Economista
The rental market, which had never really caught on before in Spain, is now enjoying a genuine boom following the economic crisis. The employment instability experienced in recent years and the inability of people to buy a home in the face of mortgage restrictions have raised the prominence of the rental market in Spain, which now accounts for 15.6% (of the total housing stock), a ratio not seen since 1987, according to the latest data from the Bank of Spain and reported by Idealista. By contrast, the percentage of owned homes has decreased to 77.3%, a figure not seen since 1988.
With this data on the table, it is logical to think that the decrease in owned homes this year will exceed the figure recorded in 2015. Specifically, last year, there was a decrease (in the number of rental properties) of almost 9% from the peaks registered in 2002, when owned homes accounted for 84.72% of the total housing stock.
The increase in demand for rental properties has had a significant impact on prices. After seven years of continuous decreases, which peaked at 25% in some cases, the first increase – of 3% on average – was recorded in 2015. The impact on rental prices was felt most acutely in the country’s ten largest cities, led by Barcelona, where prices rose by 17% on average.
Although the supply has also increased since then, average rental prices have continued to rise and according to pisos.com, they increased by 5.09% during the third quarter of 2016. In this way, the average rental price amounted to €661 in September 2016 for a typical home with an average surface area of 112 m2. In comparative terms, this figure represents a 0.3% increase compared to August. Nevertheless, the YoY increase amounted to 9.26%.
These average increases are symbolic if we focus on specific areas in Madrid and Barcelona, where potential rental clients look for properties in central, prime areas, that are well connected (in terms of transport links). Thus, in the Catalan neighbourhoods of Sant Martí, Gràcia and Sants-Montjuïc, prices are rising by between 12% and 16% p.a..
The real estate market itself is not oblivious to this trend and for this reason, a wave of Socimis are getting reach to focus on the rental housing sector.
For the time being, Fidere and Optimum III are the only Socimis that are actually up and running. Imminent debuts are expected from Alquiler Seguro, with its Socimi Quid Pro Quo, which will have 625 units in its first phase, and Domo Activos Socimi, the cooperative manager, with its portfolio of 1,400 units. The Valencian group Inveriplus, the US fund Blackstone – with Albinara Properties, Pegarena and Tourmalet – and Testa Residencial, with 4,700 homes, are also expected to enter the market.
Original story: El Economista (by Alba Brualla and Cristina Alonso)
Translation: Carmel Drake