“It’s a market with a very interesting journey. The students are there and know what to expect in terms of prices and services, and for investors there is little risk. “We see tremendous new opportunities.” It is with these words that Alberto Nin, general manager of the Canadian investment fund Brookfield for Southern Europe, summed up a few days ago, at the Barcelona real estate fair The District, the appetite of investors for residences students in Spain, a sector that has been booming for a few years ago and is gradually gaining ground among colleges and religious congregations.
According to data from the real estate consultancy firm JLL that ElDiario.es was able to consult, the PBSA sector, which is how investment in student housing is known by its acronym in English, represented 280 million euros in during the first nine months of the year, almost all concentrated in Barcelona, where the course started with 66 residences.
According to data from Barcelona City Hall, there are eight more residential complexes than five years ago. To them we must add those that are in progress, such as Blau Housing Barcelona – designed for foreign students, with prices of 1,000 to 2,000 euros per month – or Fábrica & Co, in the Poblenou district; or the three new residences under construction in the Paral·lel district.
Across Spain this figure reaches 115,000 beds. In 2023, investments in this type of asset reached 416 million euros, ahead of France and Italy. Spain was the largest beneficiary of investments in Europe during the period 2018-2023, with more than 4 billion euros accumulated, or 24% of the total, according to the real estate consultancy CBRE, which predicts that 14,500 new beds will be added in student residences. until 2026, mainly between Madrid and Barcelona.
This figure does not, however, take into account the future purchase by Azora from the Swedish giant EQT and the Spanish company Moraval of their entire portfolio of student residences, a very advanced operation which would be valued at nearly 500 million euros. , according to El Confidential. Azora is thus returning to the student residential market. It was a pioneer in 2011, by acquiring Resa, the leading operator in the sector in Spain with nearly 12,000 seats, which in recent years has passed through several hands and which since 2022 has belonged to the Dutch pension fund PGGM.
The market is hectic, both to enter and to exit and earn cash. Several specialized media point out that Brookfield, which launched Livensa Living Studios in 2018, with more than 8,000 operational beds, plans to sell it for around 1 billion euros.
All agents of the sector, from real estate consultants to funds owning residences, predict a growth of the market which will occur in Europe and will also be led by Spain, a country which is attributed with “untapped growth potential”, according to the Barometer. European investment in PBSA, prepared by the consultancy firm Savills and The Class Foundation, the European lobby which brings together the entire sector.
What is behind this boom in investment in student residences? This is mainly due to a mismatch between supply and demand, on the one hand, and, on the other hand, assured profitability, according to industry sources. In the Spanish market, the bed availability rate (which represents the ratio between the number of beds and the number of students) is 6.7%, less than half of the European average, according to reports from several consultants. And it will continue to grow in a period of lower interest rates like the current one, because it will make borrowing cheaper for investments.
University students forced out of the residential market
The increase in the number of students is continuous. Not only Spanish, but international. Alberto Nin and Pablo García-Morales, co-general manager of Amro Partners in Spain and Portugal, underline “the strong capacity of Spanish universities to attract international students”, who, at the same time, “are being expelled from the residential market” in due to the increase in rental prices, with increases of 30% between 2015 and 2022.
According to the Shanghai ranking of the best universities in the world, Spain has nine. The young population, aged 18 to 24, now exceeds 3.5 million inhabitants, according to the National Institute of Statistics (INE), a group that has increased by 11% in the last five years , thanks in particular to immigration. It is estimated that by 2030 it will exceed four million people.
“It doesn’t matter that Spain is one of the countries with the lowest birth rate in the European Union, what matters is mobility, people go to university,” says Carlos Ortega, from King Street, an American fund which has just created Bravo. group of student residences in collaboration with the Spanish management company Medinvest – founded by Juan de la Peña and Jacobo Casanovas – with an investment of 250 million euros planned in several university towns.
National mobility represents around 30% of the total number of students residing in Spain, notably in Madrid, Barcelona, Valencia, Seville, Bilbao or Salamanca, according to JLL data, while foreigners who enroll in Spanish universities record a new record in each course. Spain is, without going any further, one of the most popular destinations for Erasmus students.
Looking for top colleges
In addition to booming demand, there is a shortage of supply. CBRE estimates the deficit at 450,000 beds. At the beginning of last September, it had 114,000 operational beds – 4% more than two years ago – compared to the 580,000 it estimates necessary to satisfy demand which continues to grow and whose supply is described as “for the ‘obsolete essential’.
Investors say most beds are “obsolete,” which hurts university residences, which have historically had a duopoly of residence halls and religious congregations. “While private capital talks about beds and security, modern spaces and coliving“We focus on the intangibles, such as the connection between the university and the students or extracurricular training,” explains a spokesperson for the Council of University Colleges of Spain, an association that represents 110 establishments throughout the state.
Although they started the course with an occupancy rate of over 98%, they are concerned about the rise of investment funds in the sector. Between the pandemic and new student residences from private operators, university residences have halved their market share over the last six years, going from almost 30% of places to 15%, they admit. And for another reason: funds and operators are starting to buy beds in retirement homes.
The manager of Amro Partners puts it bluntly: “We don’t like the offer, but it is very attractive for investors because they are in excellent locations.” One of the keys due to the scarcity of land. The operations come in two forms: in some cases they purchase the real estate, the building, and in others only the operation of the residence.
In Madrid, for example, the Santa María del Estudiante (Moncloa) and Miguel Antonio Caro (in the heart of the University City) colleges are managed by Resa, while in Barcelona, the Madrid fund Plenium Partners took over the College in 2022. , by auction of Mayor Sant Jordi, until then owned by the University of Barcelona (UB).
5% returns
Safe bet, safe bet. This seems to be the mantra that capital invests in student accommodation with little risk. The occupancy rate remains, on average, above 95%, due to growing and recurring demand. And because there is a mismatch with supply, rents – rent prices – will continue to increase.
The profitability of the so-called PBSA sector is 5% on average, lower than the 6% of shopping centers and health centers, but higher than the office (4.5%) and residential (4%) market, according to JLL. But the sector expects higher returns (around 5.5%) for “high quality regional assets in other regional cities”, second tier, beyond Madrid and Barcelona. University cities such as Valladolid, Salamanca, Valencia, Granada and Seville are considered the new Eldorado which, combined with the scarcity of land, further weighs on property prices.
Resa’s latest investment is the Valladolid student residence which will open its doors during the 2025-2026 academic year with a capacity to offer 200 beds. The building where it will be located belongs to the Army Orphan Board (PAHUET) and will be managed by the operator who controls PGGM. While the operator Nodis, controlled by Moraval, has just put more than 1,200 beds on the market with the opening of five new residences, in addition to Madrid and L’Hospitalet de Llobregat, also in Malaga, Granada, Madrid , Girona, which represents his landing in Catalonia
