BNP Paribas: Spain’s Hall of Residence Market Will Grow by 4% in 2019

16 July 2018 – Eje Prime

(…). With 1,148 accommodation centres for university students located all over the country, split between halls of residences (963) and residential colleges (185), the domestic market comprised 93,500 beds at the end of 2017. Nevertheless, that supply “is small compared with current demand”, explains BNP Paribas Real Estate in a report to which Eje Prime has had access. For this reason, the international consultancy firm forecasts that this alternative market will grow by 4% in Spain in 2019.

In recent years, the sub-sector has recorded some major operations involving the sale of both assets and companies. The most important deal came at the end of 2017, when AXA Real Assets and CBRE Global Investment Partners invested almost €400 million in the purchase of the entire portfolio of Resa, the vehicle specialising in student halls previously owned by Lazora. Following the operation, the manager Greystar became the king of the halls in Spain with 37 assets under ownership (four of which were being developed). In total, more than 9,000 beds changed hands.

Resa’s sale is nothing more than a consequence of the current investor appetite, primarily from international funds, many of which specialise in this sector. In 2017 alone, fourteen student halls opened their doors, adding 2,149 new beds to the sector. Moreover, since this is a very fragmented market with many owners, we are seeing the purchase of large bundles of beds, which the new players arriving in Spain are using to initiate their expansion plans.

Such is the case of Corestate, an investment fund headquartered in Luxembourg, which purchased a former residence, containing 260 rooms and 302 beds, in Madrid in 2016 to renovate the building and give it its personal stamp. With support from Villar Mir, the company disbursed €40 million on that project. A year earlier, the Dutch company The Student Hotel paid the same amount for two halls of residence in Barcelona (Melon District Marina and Melon District Poblesec) containing 600 rooms in total.

Those operations led by international funds show the influence that foreign capital has and, above all, is going to have, in the student hall sector. A large part of this interest in the domestic market stems from Erasmus. Spain is the most sought-after country by university students, ahead of Germany, the United Kingdom and France. Two years ago, 45,813 young people arrived in the country, including Erasmus and international students on secondments, and all of them needed to find a bed for the year.

Geographical dispersion

Another one of the major attractions of the student hall market in Spain is its geographical dispersion. It is not only Madrid and Barcelona that are attractive: Málaga, Valencia, Sevilla, Salamanca and Granada are all cities with a large influx of students, many of them international, arriving every year.

Madrid is the city with the largest supply of rooms for students, with 21,159 beds in 198 centres at the end of 2017. That figure accounts for 23% of the total stock on the market in Spain (…). Cataluña was ranked in second place (…) with 170 centres and 14,177 beds, accounting for 14% of the stock. It was followed by Castilla y León (where Salamanca plays an important role) and Andalucía, with shares of 14% and 12%, respectively (…).

Activity is spreading to the north too. Just last week, the fund WP Carey paid €10 million to buy an office building in San Sebastián from Solvia, which it is going to convert into a hall of residence for students (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

C&W: RE Investment Grew By 20% In Q1 2016

22 April 2016 – Expansión

According to Cushman & Wakefield, during Q1 2016, 40 operations were closed in the real estate sector, worth €2,400 million.

Real estate investment in Spain grew by 20% during the first quarter compared with the same period in 2015, with the signing of around 40 operations, worth €2,400 million, according to a report published on Thursday by Cushman & Wakefield.

“The first quarter of the year continues to show the strength of investment activity in the Spanish real estate sector”, said the real estate consultancy, which explained that more than 40% of the figure recorded during the 3 months to March related to a single transaction, namely the portfolio of offices acquired by Metrovacesa.

The office sector secured the most capital (51% of the total), with investment of almost €1,200 million, followed by the retail sector, which accounted for 36% of the total investment volume.

The main operations closed during the quarter were: Invesco’s purchase of an Eroski portfolio for €358 million; and the portfolio of offices in Madrid and Barcelona, owned by BBVA, Santander and Banco Popular, which are now owned by Metrovacesa.

According to the CEO of Cushman and Wakefield, Oriol Barrachina, “the lack of available high quality office space is creating difficulties for companies to find the space that they need, which has caused the rate of new rentals to drop but, at the same time, the price of office rentals, in the best areas of Madrid and Barcelona, to rise, as the availability of the best buildings continues to decline”.

“This potential for rental growth, which we have seen now for over a year, is one of the main reasons why investors are so still so interested in taking up positions in the sector”, he explained.

Original story: Expansión

Translation: Carmel Drake