Build to rent in Spain: the new trend boosting the Spanish property market

The post-covid socio-economic environment has contributed to the growth of the ‘build to rent’ (BTR) sector in Spain, an alternative that concentrates millionaire investments due to the good prospects of this type of offer. The population of Spain is increasingly interested in renting, which also responds to a social change, as nowadays owning a home is no longer a priority for many, not to mention the increasing difficulty to access mortgages thanks to rising interest rates. These factors mean that the build to rent business is in its golden age in Spain. This is everything you need to know about the new trend boosting the Spanish property market, with the help of Pablo Balea from aProperties. 

Build to rent boosting housing investment in Spain

Congestion in the housing market is a reality in large cities in Spain. In this context, the main national and international investment funds are betting on building new homes for rent, in order to respond to the new needs of the Spanish society.

The growth of this business model is directly related to the purchasing power of young people, for whom it is easier to access a rented flat as opposed to buying. Rising interest rates and high house prices have made renting the best option for many in Spain, and, in addition to economic issues, we must not forget that new constructions are more attractive as they offer increasingly better features.

Large investment funds are looking for new ways to break into a market that undoubtedly has a promising future, taking into account that renting a property is the most viable alternative for a large part of clients, especially the new generations. The shortage of product and the lack of development of new supply contribute to a complex situation in Spain, and the forecast is that prices will continue to be under pressure in the country’s main cities in the last part of the year, as well as at the beginning of 2023.

Build to rent in Madrid, Barcelona and Valencia

Madrid, Barcelona and Valencia are the cities that have seen the greatest development of build to rent in recent years and where there is most investor appetite for this type of product. These are usually well-connected properties, located around the main towns, with surface areas ranging between 60 and 80 m2, and from 1 to 3 bedrooms, with well-kept communal areas. Moreover, as they are new buildings, they are being built taking into account sustainability criteria, in line with the Sustainable Development Goals (SDGs), to ensure maximum energy efficiency and minimise emissions.

In short, the current macroeconomic scenario favours renting and, therefore, build to rent, but if interest rates stabilise in the medium term, the current dynamic could reverse. In any case, if the situation does not change significantly, we could end 2022 with a 5% increase in rental prices compared to the previous year.

Build to rent in Europe

In Europe, Germany leads the way in investment in this type of asset, followed by the Netherlands and Switzerland. Spain is making progress, but there is still a long way to go to reach the levels of other countries with a longer tradition in the rental sector. In Spain, three quarters of the population still lives in a home they own, although there is already a change in trend, especially among the youngest, who want to become independent. We are facing a golden moment for renting, to which the main players in the sector must contribute, as it is a key segment for the real estate sector and for the dynamisation of the economy.

Increasing investment in the build to rent sector will contribute to increasing the current supply of housing, responding to the new demands of society, which will be positive for the market and for the end customer interested in this type of product.