Foundations challenge the throne of student residences with the church and universities

This is an area that private capital is targeting, creating 14,500 new beds in the next two years. of which 54% will be located in Madrid and Barcelona

, the two capitals with the greatest absorptive capacity thanks to the greater presence of private universities and business schools, which in turn are a magnet for international students, one of the most interesting niches for investors. According to CBRE, the number of student beds is projected to double in the next 15 years.

But the flow slowed in the early stages of 2024. In the first quarter, investment in student accommodation amounted to 59 million euros and was allocated entirely to Barcelona. For the whole of 2023, it amounted to 416 million euros through 13 transactions totaling 3,700 units. Madrid (32%) and Barcelona (31%) concentrated two-thirds of investments, with Valencia in third place with 22%. Domestic investors were the most active with 45% of deal volume, followed by North American capital (30%). Between 2018 and 2022, the total transaction volume in Spain was €3.510 million, the European country that invested the most (24% of the total), ahead of Germany (19%) and France (13%).

Another funding pitfall is the lack of quality and quantity of student offerings. According to CBRE, 60% of the beds offered in Spain are outdated and much lower than those available in the rest of Europe, since our country has a 6.7% share of residential beds over students, while the European average is 18%. which makes us a continental galley.

Foreign students

“This deficit, together with the increasing number of foreign students, makes Spain an attractive country for foreign investment. In Spain, in the last academic year 2022-2023, there were more than 1.7 million university students, of which 11% were students from abroad, mainly from the European Union and Latin America,” explains Stefano Somogyi, Head of Alternative Investments. at CBRE in Spain. As a decisive factor, the expert adds the growth in the number of students in private centers, which now increases to 24% of the total, while in the 2016-2017 academic year it was 16%.

Who undertakes the housing investment? Currently, ten major private operators account for 38% of the total number of operating beds. Resa has been owned by a Dutch foundation for two years PGGM, leads the market with approximately 11,500 beds. Near MyCampus (Stoneshield, Luxembourg) and Livensa Living (Brookfield, Canada) control 21% of the 130,000 student housing units planned through 2026. At the moment, most of the new supply comes from new developments.

Somogyi explains that the capital focus is particularly active in Madrid, Barcelona and Andalusia, as 51% of all university students in Spain live there. But the strong demand they perceive means there is already strong interest in other secondary capital growth. Without going into detail, Resa announced this week that it will operate a new student residence in Valladolid (200 beds), which will be located on the territory of the Army Orphans’ Council.

Reza denies any confrontation with traditional owners and says they also rely on universities and faith communities, despite criticism of the trusts from both sides in recent years. “We have more than 80 agreements with universities and institutions throughout Spain, both public and private, and this is a significant part of our success,” says Resa CEO Marta Sánchez. “We’re not property investors, we’re operators of student accommodation,” he defends.

Sanchez also talks about the concentration of the sector. “This is a very fragmented market, with independent managers over 60% and large international operators entering.”