To date, about 1.4 million students are enrolled in higher education programs (bachelor's and Master's degree) in Spain. 588,000 people are studying in provincial educational institutions, while they are not natives of these regions. They came there temporarily to get an education. We are talking about both students who are natives of Spain and foreigners who came to study under the Erasmus program.
This creates a huge demand for affordable and comfortable housing, primarily rented, in these regions. But with such demand, the supply of real estate in the provinces of the country is quite small. According to the consulting company JLL, in the current academic year (approx. 2021-22), students had access to just over 102,000 student housing facilities. Those to whom such an option was not available were forced to enter a large market and look for noticeably less profitable offers. At the same time, only 20,000 housing units are under construction.
Juan Manuel Pardo points out that the situation with the imbalance between the supply and demand of real estate is the same throughout the country and at all levels. It also resembles the situation that developed in the UK 12 years before. According to the data available to Pardo, in Spain, only 7.3% of students have the opportunity to live in student housing or a dormitory, and this is 0.6% less than five years earlier. For comparison, the UK boasts an indicator of 32.2%, France — 14.9%, and Germany — 11.4%. At the same time, the demand from students in Spain is growing annually by 3.5%.
Large international investment funds have already noticed the current situation with the deficit and decided to use it to develop business in the country. Investment volumes are still small, but investors plan to develop steadily within this market. It is worth noting that at the moment 57.5% of residential premises (approx. beds) in the country are owned by colleges, government agencies and religious organizations. At the same time, most of this real estate is already obsolete.
Newcomers to the market — private international companies — have a lot of work to do to revitalize this segment of the real estate market. Of the big names interested in Spain: the Dutch pension fund PGGM, the management company Stoneshield, the Temprano Capital fund, the Spanish Moraval Group and the EQT fund.
As you might guess from the above, one of the strengths of the student housing market is its geographical prevalence. It is not concentrated only in large cities like Madrid and Barcelona, or popular tourist areas of the country. Small towns, provincial capitals and the province itself all offer a wide range of opportunities for investors. Nevertheless, so far the largest players are concentrating their deposits in the markets of Madrid, Granada, Bilbao and Malaga.