JLL: 47 Halls of Residence for Students are Under Construction in Spain

24 April 2019 – El Confidencial

The student hall sector is on a roll. With almost fifty projects underway (47) and 17,500 new beds to be added to the existing portfolio by 2022, experts forecast total investment of €1 billion in the sector over the next 4 years.

In 2017, investment in the sector amounted to €560 million, ten times higher than the figure recorded in 2016 (€50 million). Last year, the number dropped to €141 million, but according to Nick Wride, Director of Living and Alternatives at JLL Spain, that was “due to a lack of residences in operation available for sale”. Moreover, it was still the highest figure ever recorded excluding corporate transactions – the data in 2017 was impacted by the completion of 2 large corporate deals.

Last year, 18 operations were closed involving the purchase of land or buildings for conversion. 55% of the investment was undertaken in Madrid and Barcelona, with the remaining 45% made in the main regional cities, such as Málaga, Sevilla and Granada. The operators behind the new beds under construction include Nexo, Resa, WPCarey, Invesco, CBRE GI, Axa and GSA, amongst others.

Student halls offer some of the highest yields in the sector: 5.5% in the secondary cities and 5% in Madrid and Barcelona, in line with those generated by nursing homes (5.5%) and logistics assets (5%), but well above those seen in other segments such as retail premises (3.15%), offices (3.50%), residential (3.50%) and hotels (4%).

The reason is the enormous demand that exists for these types of assets. In Spain, almost half a million students need accommodation, but there are currently just 91,000 student beds. The gap is clear, and growing, boosted by an increase in the number of domestic and international students travelling away from home to study. Those not finding student accommodation have to rent in the private market – an informal, heterogeneous, inflexible and potentially expensive option (particularly in Madrid and Barcelona where prices are soaring).

All this makes the market for student accommodation extremely attractive.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

Harrison Street Joins Forces with Nexo & Injects €200m

8 April 2019 – Cinco Días

The US fund Harrison Street has just injected almost €200 million into a company owned by Nexo Residencias, with the aim of launching a growth plan. To date, the company was owned in its entirety by GSA (Global Student Accommodation), a group operated from the UK and backed by capital from Dubai. GSA purchased acquired Nexo from the fund Oaktree in 2017 for €140 million.

But now, Harrison Street has become the majority stakeholder of Nexo under a co-investment formula, which the Dubai group uses in the different markets in which it operates. Harrison Street is already the firm’s partner in several other countries and so the partnership in Spain is merely an extension of its successful relationship.

Nexo is currently undergoing a major expansion process. It is building two halls of residence in Barcelona and one in Valencia. GSA’s objective is to grow its existing portfolio of 1,500 beds to between 10,000 and 14,000 in time.

Harrison Street is a real estate fund manager based in Chicago, which has assets under management amounting to around USD 18 billion (€16 billion).

Original story: Cinco Días (by Alfonso Simón and Pablo M. Simón)

Translation/Summary: Carmel Drake

PwC: Madrid Is One Of Europe’s Top 5 Most Attractive Cities For RE Investment

13 November 2017 – Eje Prime

Madrid is really winning over European investors. The Spanish capital is one of the top five cities to invest in over the course of the next year, as recommended by the consultancy firm PwC, according to its annual study Emerging Trends in Real Estate: Europe 2018. Whilst Madrid rose from 9th to 5th position, Barcelona managed to avoid the tense political situation in Cataluña to rise from 16th to 11th.

One of the reasons that led the consultancy firm to highlight Madrid as a safe house for real estate investment over the next year is its office market, which “after a cycle of compression”, has seen an increase in rental prices in the segment. “The increase in office rental prices suggests that Madrid is one of the most attractive opportunities for investors in Europe”, say sources at PwC.

With the (national) political uncertainty now “dissipated”, the recovery across Spain and, specifically, in Madrid is progressing “at full speed”. Real estate investment volumes in 2017 are on track to exceed records, especially in segments such as retail, where investment in this kind of asset is expected to soar by the end of the year, to exceed €4,000 million. Moreover, Madrid is also starring in alternative investment operations, such as those involving Resa and Nexo in the student hall segment, and the opening of the first Spanish WeWork office in Madrid, in the co-working sector.

During the 9 months to September, Spain closed transactions worth €10,300 million, according to a study compiled by the main real estate consultancy firms in Spain. In the third quarter alone, investment in real estate assets amounted to €3,000 million (…).

Offices remained the second most popular asset by investment volume (accounting for 24% of the total investment volume in Spain). Investors tend to focus on Madrid and Barcelona in this segment, with the two cities accounting for 90% of total office investment (…).

Logistics assets are also sparking a great deal of interest, especially warehouses located in Madrid and Barcelona. The volume of investment in these types of assets has not stopped growing since 2012 and so far this year, investment has reached €811 million, up by €100 million compared to 2016 as a whole (…).

Barcelona rises but misses out on Top 10 place

Outside the top ten by one position, Barcelona is nevertheless above average for the European cities recommended by PwC for investment. After rising several places from 16th to 11th in the ranking, the Catalan capital has caused alarm bells to ring due to the political situation, which has led some funds to put their real estate investments in the autonomous region on standby.

PwC says that, although there is a certain degree of concern, after interviewing a large number of investors for the preparation of its report, it concludes that no one is going to stop taking Barcelona into account for their real estate investments. “Investors are applying almost zero political risk, given that they do not believe that Cataluña is going to become independent”, said one of the main directors of a Spanish real estate business to the consultancy firm (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

GSA With ‘High Honours’ in Spain: Investments of €300 million for New Acquisitions

2 November 2017

GSA’s overall objective is to have 250,000 beds under management by 2025. Barrelling into the Spanish market, it plans to manage 10,000 beds within the next five years.

GSA, a British group specializing in student residences business, has a strong presence in the Spanish market and intends to keep it that way. The company is planning its route in Spain, in which it plans to invest around 300 million euros over the next five years in adding 10,000 beds to its portfolio, as Christopher Holloway, CEO of GSA in Spain, and Miguel Muñoz, GSA’s director of real estate acquisitions, explained to EjePrime.

GSA’s initial foray into Spain was through Nexo, a company that it acquired mid-year from Threesixty Developments, a firm owned by funds managed by Oaktree Capital Management. Nexo took its first steps in the hands of Holloway and Muñoz with the purchase of the Residencia Galdós in Madrid.

In the following years, Nexo acquired more assets in Madrid, Alcalá de Henares and Barcelona. “GreenOak wanted to leave the shareholding since its horizon in the company was five to seven years, and GSA wanted to start operating in Spain,” the executive added. GSA, which sees its investment in Nexo as “something long-term”, is now ready to grow in Spain through the acquisition of new real estate assets where they can develop their business.

While GSA’s overall goal is to have 250,000 beds under management by 2025, barrelling into the Spanish market, the plan is to manage 10,000 beds within next five years. For this, the group foresees an investment of between 300 million euros and 350 million euros, although “it could grow,” meaning that it is an “approximate, not closed” investment figure.

GSA currently manages two projects in Barcelona that will involve an investment of almost 60 million euros

“To carry out our plan for the coming months, we focused our objective on three main tracks: one part would be the purchase of land for the development of new student residences; another the acquisition of assets, with its subsequent rehabilitation and management, and a third possibility, which is the management of third-party assets, through management contract agreements.

GSA, which has a presence in Germany, China, Japan, Australia, the United Kingdom, Ireland and Dubai, has already set to work on the first two projects to be carried out in Spain under its management. They are two residences located in Barcelona. The first, in the South Campus of the University of Barcelona, will involve an investment of 30 million euros. “For now, we have all the licenses to start building, although construction will not start until February,” GSA stated.

The second project in the Catalan capital will be in the Sants Station and will be carried out in collaboration with the Barcelona City Council. This residence, which is already being built, signified an investment by the group of more than 27 million euros.

“We are now looking for new assets in our primary markets, which are Madrid and Barcelona, and then we will expand our focus to other cities, such as Salamanca, as well as cities in the south and north of Spain,” both executives added.

Regarding the purchase of new companies, at the moment, the CEO of GSA in Spain dismisses the possibility: “the only company that could interest a group like ours is Resa, and its sale was carried out recently.” “For now, we do not know of any other company that interests us,” he says.

The business in Spain

As a Spanish-speaking country, Spain receives a large number of Latin American students every year. Of the more than 100,000 international students that arrived in the last year, 10% were Colombians and Peruvians. They are, together with Italians, the foreign nationalities which most contribute students to the Spanish universities.

The Swiss fund Corestate paid 13.5 million euros for a college in Madrid

This international influx, which represents 7% of the total number of students in state universities, has led different funds to become interested in the construction and purchase of residences in the country. The Swiss fund Corestate entered the market last year, through the acquisition of a college in Madrid, for which it paid 13.5 million euros, while Early Capital will build a residence of 10,000 square meters in Esplugues de Llobregat (Barcelona). Also, the multinational The Student Hotel is already active in Barcelona.

In total, the market for student residences in Spain is expected to receive investments of €600 million in 2017, with a return on prime residences of 5.75%, above countries such as the United Kingdom or Germany (5% in both). Just with the sale of Resa, that quota has already been fulfilled.

Original Story: EjePrime – C. Pareja

Translation: Richard Turner