Amongst other themes of interest, the meeting approached the current situation of build to rent projects, its potential to boost the sector’s recovery and the impact the current crisis may have on the expansion of this business model.
«Even before the crisis started, build to rent had come to stay, benefiting from the predictable depletion of revenues connected to other investment formulas» stated Esther Escapa, Trading and Development Director at AXA Investment Managers. According to her, «we cannot rule out that many residential assets which were meant to be sold, will now end up as build to rent assets».
A similar opinion was offered by Andrés Horcajada, CEO at LOCARE and advisor and founder of Tectum, for whom «build to sell assets’ sales will slow down, which will, naturally, boost the build to rent segment». Locare’s CEO recalled that the current situation is radically different from that of 2008, «which makes it very likely for the build to rent to be the most resilient segment within real estate».
Andrés Pan de Soraluce, Acciona’s real estate Division managing director insisted on the same idea by stating that «the crisis will emphasize a more conservative trend, more favourable to renting a house rather than buying it». Acciona’s director is convinced that «this crisis will bring a change in terms of habits in favour of renting, with which we will reduce the gap in terms of ratios when compared to our European neighbours».
Need for regulatory stability
Regardless of their optimism, the three speakers did not hide the main obstacles facing the build to rent boom, caused, in particular, by a legal framework that suffers from vagueness, which gives a sense of legal insecurity. «Some of the more recent measures adopted by the Government lack a foothold on the real world, certainly due to the hastiness with which they had to be taken», stated Andrés Horcajada. In this sense, regulatory stability is key, according to Andrés Pan de Soraluce. «If there was, right now, a willingness from the Government to favour regulatory stability, this sector, and not only the build to rent segment, would shortly become the engine of the national economy’s recovery once again».
An opinion shared by Esther Escapa, for whom the uncertainty factor which is encumbering the development of alternative investment formulas such as the build to rent, «may have a very important impact on the investors’ trust, regardless of the sector’s foundations». In the words of Andrés Pan de Soraluce, «there is much latent liquidity and if we, as a country, are able to offer legal security, Spain will have a historical opportunity to attract it, in particular from institutional investors guided towards the build to rent segment».
In order to turn back this latent danger, it is necessary, according to the three speakers, a greater commitment from the relevant authorities, especially when it comes to discriminating between private investors and property owners, streamlining the issuing of licenses and terrain development.