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Student residences investors bet on Spain
01 August 2019 | Observatorio Inmobiliario

During the past 12 months, the student residence investment market outside Madrid and Barcelona represented 66% of all the operations registered in Spain, according to international consultant Savills Aguirre Newman, which highlights the segments’ investors interest in Spanish university cities over other European markets.

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These cities represent an average 5.10% in prime assets’ return surpassing the European average of 4.65%.

The consultant, which was last year advised operations totalling 150 million euro in Salamanca, Pamplona and Valencia, together with the Savills international team in charge of student residences, estimates investment will come close to 1.100 million euro in the coming years.

Demand from the leading suppliers within this segment is focused on terrains or buildings near university campuses or well connected to them. Pablo Méndez, real estate managing director at Savills Aguirre Newman, points out that «the goal is to develop a residence model close to the Anglo-Saxon model, with modern spaces and collaborative areas, advanced high end projects very similar to the coworking revolution, which has already started showing its appeal to users through projects which have already been completed».

According to data provided by the consultant, there are currently 50 ongoing projects in Spain with around 18.400 new beds projected. Nevertheless, Savills estimates that it will be necessary to multiply that number by four in the coming years so as to cover the potential demand within the majority of university cities.

«The increase in available beds in accordance with the demand is key for the sustainability of a market which in other countries is no longer alternative», remarks Méndez, who added that «Spain appears as one of the most important markets for international operators’ growth strategies as they see the potential of the appealing threshold returns and the scarcity of quality product. We provide advising throughout the entire value creation cycle, from the acquisition of the terrains to the setting of the project, construction, from raising the capital for new development vehicles all the way through to the exit strategy».

According to Savills’ last report, Global Student Housing, international investment in student residences reached 17.000 million dollars in 2018, registering for the third consecutive year, a total volume higher than 16.000 million dollars, in the aftermath of the significant increase that took place in 2015.