Investment in the residential rental market in Spain has exceeded 530 million euros during the first quarter of 2021. In this way, investment maintains the positive trend in one of the most resilient segments of last year, when 1.700 million euros were registered, in line with the 2019 figures, according to data from Savills Aguirre Newman.
The operations registered in the first three months of the year will mean the start of more than 2.000 new homes, in addition to the approximately 5.300 units planned in Build to Rent projects started in 2020.
Madrid and Barcelona, together with their metropolitan areas, have constituted the main focus of interest for investment in this market, with 73% of the total volume in the period from 2020 to the end of the first quarter of this year.
According to Savills Aguirre Newman, some of the institutional funds that have been most active in this market have been Ares Management, Hines, AXA IM, Aberdeen SI, Patrizia, DWS, AEW or Vivenio (APG). All of them focus on the Built to Rent in the two large cities mentioned, although they are open to analyzing those markets in which the forecast of the increase in houses is greater among the different spanish cities.
Regional markets
The search for higher returns and new opportunities is driving the investor beyond the two main residential markets. The same reasons that, in recent years, have made renting growth in Madrid and Barcelona, have driven other markets.
Malaga, Alicante, Valencia, Murcia and the Balearic Islands represent the main regional focus, followed by other markets to take into account in the future development of projects for Built to Rent, according to the consultancy.
Regarding yields, the company points out that the net profitability rate is close to 3% for stabilized prime assets. For new projects under development, investors are looking for a gross yield (on cost) between 5.50% and 6.0%, depending on the market. Once these projects are stabilized, their yield will be adjusted to levels close to 4.50-5.50%.
