Student residences has become one of the star assets in the real estate market
This type of property has attracted the interest of international investors, as shown by the large number of funds and specialised operators that have landed in our country in recent years. So much so that investment in Spain has shot up to 1,246 million, almost three times more than a year ago, with a growth of 14% in the market in the last five years.
Another example of the hunger of capital for this type of asset is the purchase of Resa – a company with 43 student accommodation facilities spread across 21 Spanish cities – by the Dutch pension fund PGGM for more than 800 million. This transaction stands out as one of the largest registered in Spain so far this year.
Keys to the attractiveness of student residences
The lack of quality product has also led to a boom in new projects and over the next three years, 19,600 new beds are expected to be added to the existing portfolio. Despite being a defensive asset in times of crisis, student accommodation facilities is not immune to the current uncertainty, nor to the ghosts that haunt the real estate market.
Increased restrictions on access to finance and high alternative borrowing costs can be a barrier to new development.
Investors are much more cautious about making purchases and demand discounts to achieve the required returns and require discounts in order to achieve the required returns.
This reluctance, together with the lack of large portfolios for sale of Resa’s size, will prevent a repeat of the investment volumes of 2022 in the medium term, but will not hinder the closing of new transactions once the market stabilises.
If you are interested in investing in the real estate market, you should know that the legal and tax formalities involved in the purchase of a property can be complicated and costly, but they are much better handled and resolved with the help of professionals. At Imont Legal Services, we have lawyers specialised in International Real Estate Law, who can advise you in a professional manner.