The student residences are rising business. The mismatch between supply and demand, together with the lack of an operational product of institutional quality, continue to drive the promotion activity of the sector. This is evident in the Student Residences report . Confidence in the future and opportunities for expansion prepared by JLL Spain, which estimates the investment made in the first half of the year at 140 million euros . The result represents an increase of 137% compared to the same period in 2020.
“More and more investors and operators specialized in student residences, attracted by their different characteristics compared to other mature markets, enter the Spanish market fostered by a high national and international demand for accommodation,” says the JLL report.
The consulting experts predict that 543,000 students have been likely to need accommodation during the 2019-2020 academic year, which represents an average annual growth of 4.5% since the 2015-2016 academic year . Faced with this demand, there were only 97,300 places available in student residences during the 2019-2020 academic year, which again reflects the great potential of the sector in the short and medium term “, explains Juan Manuel Pardo, director of Living at JLL Spain.
This mismatch between supply and demand is what fuels investor interest in this segment, as well as the growing interest of investors from different origins in increasing their exposure to the Living sector .
It is estimated that, although by the end of 2022 there will be a total residential capacity of 111,000 beds (14% more than in 2020), the supply will continue to be out of line with the demand. In addition, INE forecasts indicate that the population of age with university studies between 18 and 24 years old will increase by 13% by 2031.
All of this takes place at a time when universities have had to adapt at full speed in order to continue imparting their knowledge despite Covid-19, with remote and semi-face-to-face formulas, or reorganizing their spaces to ensure prevention measures .
Even so, in 2020 the number of beds available in residences and colleges increased in 2021, being Madrid (22.3%), Catalonia (15.7%), Andalusia (14.3%) and Castilla y León (12, 4%) the communities with the highest concentration. There are currently 60 projects under development (2021-2023), which implies 20,802 new beds.
“The offer is not only concentrated in Madrid and Barcelona, but there are an interesting number of smaller cities that have a consolidated university sector, benchmarks in the sector, which also have a shortage of quality offer, such as Pamplona, Malaga, Valencia and Seville, among others, “adds Juan Manuel Pardo. Regarding investment, the Living sector and, in particular, the PBSA (Purpose Built Student Accommodation) market, have demonstrated their strength in the face of the health crisis, with direct investment which doubled its weight over total real estate investment in 2020 and that, by 2021, the upward trend is expected to continue, supported by strong investor appetite.
Thus, PBSA investment in Spain grew by 37% in 2020 to reach close to 280 million euros . Even so, the consolidation process in which the main platforms are located suggests a continued growth of these volumes in the coming years. Regarding the investor profile, it is above all international and focuses on both stabilized assets, plus Core, and profiles plus Value Add that assume certain promotion risks. From JLL they foresee that the new quality product that is being developed will give entry to more capital with a Core profile , with long-term investment horizons.
Madrid and Barcelona are the cities in which investment in student residences has been most concentrated , during 2020 and the first half of 2021, followed by other Andalusian cities (Granada, Malaga and Seville), close to renowned universities.
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