23 October 2015 – Expansión
The rental market is on the rise in Spain – compared with the market for house sales and purchases, which is only just beginning to recover – but there is no structured supply. Covering this gap would make for an interesting business opportunity over the next few years, according to views shared yesterday by experts at Barcelona Meeting Point (BMP).
Looking towards Europe is not the solution, given the differences, for example, between Spain and Germany. For example, in the largest European economy, at least three companies have packages of more than 100,000 homes for rent. By contrast, in Spain, after two years of operations, (the largest player) Blackstone has accumulated just 10,000 homes.
“There is no volume”, said the CFO of Servihabitat, Feliu Formosa, who thinks that “rental housing that does exist is scattered, in such a way that makes its more difficult to manage”.
The decline in interest rates and the fact that house prices are low means that now is an ideal time for companies to buy properties to them lease out.
“Homes are cheap for executing this strategy”, said the President of CBRE España, Adolfo Ramírez-Escudero, who argued that there are economic, social, labour and entry cost reasons to believe that the rental segment is no longer going to be just a token market in comparison with the market for house sales and purchases.
There are more incentives for companies to develop this segment of the market. The main one is the improvement in yields.
According to the Director General of Morgan Stanley in London, Javier García-Carranza, the greatest returns should not come from the appreciation (of property prices) in the market – that would make the rental market a “cyclical business” – but rather from the provision of more value added services and improvements in capital costs.
According to the sources consulted, between 15% and 17% of the population are now chosing to rent (rather than buy), whilst at the beginning of the century, that figure amounted to just 10%.
Original story: Expansión (by A. Zanón)
Translation: Carmel Drake