Flex living: The trend of flexible housing gains ground in Spain
In recent years, flex living has gained popularity in Spain as an innovative solution to the housing crisis and the growing demand for flexibility. This model, which combines short-term stays with the changing needs of modern society, addresses the limitations of the traditional real estate market and is starting to play a key role in major cities. In this article, we’ll explore what this trend really means, how it’s evolving in Spain, and the new opportunities it may offer to investors and developers.
What is flex living, and why is it on the rise?
The term “flex living” refers to a range of residential alternatives that provide temporary or flexible solutions for various types of users. These include short-term rentals, student housing, coliving, build-to-rent, and other options that blend the benefits of housing with the flexibility sought primarily by young professionals and digital nomads.
The recent expansion of flex living in Spain is driven by several factors. Chief among them is the rising cost of housing, especially in major urban centers, where purchasing a property or even securing a long-term rental has become unaffordable for many. Additionally, the pandemic accelerated the adoption of remote work—a trend that was already normalizing in some sectors and became more established in the years that followed.
The financing challenge and the role of alternative lending
One of the barriers facing flex living in Spain is access to traditional financing. Since this model is relatively new, commercial banks have been cautious, requiring metrics and a track record that are still in development. According to a recent report by Colliers, alternative financing has been the primary source of support for these emerging projects. It currently accounts for about 10% of the Spanish real estate market.
The growth of alternative financing has allowed developers to secure higher leverage, albeit at a higher financial cost, sometimes approaching double digits. However, given the returns that can exceed 15% for these projects, many investors are willing to take on these costs. As flex living continues to gain traction, it is expected that the market will generate the necessary metrics for traditional banks to offer more structured and affordable financing.
An example of the commitment to this business model is Oceánika, a project spearheaded by Urbanitae in Torremolinos (Málaga). Located in a high-demand area, this development transformed a former hotel into a flex living space—specifically, a complex of 180 rooms with a commercial area and various amenities. The goal of this Urbanitae-financed project is to attract both digital nomads and young professionals seeking a modern alternative to traditional rentals. This initiative not only highlights the sector’s innovative capacity but also underscores its appeal to investors.
Prospects and challenges for flexible housing
While the outlook for flex living is optimistic, the sector still faces several challenges. Access to financing is one of the most significant. However, as ongoing projects demonstrate their commercial viability, it is expected that banks will relax their requirements and increase access to loans with lower costs and more attractive leverage options.
Additionally, the lack of specific regulation for flex living has become another obstacle, particularly regarding its development on tertiary land. Legal uncertainty has been a challenge for many developers attempting to adapt non-residential spaces to this model.
Nevertheless, despite these issues, it’s worth noting that Madrid has captured the lion’s share of the market, with over 6,000 beds available and nearly 16,000 more in the pipeline. Meanwhile, Barcelona has 2,200 beds, with an additional 2,600 expected in the coming years. Other urban hubs with significant offerings include Valencia, Guipúzcoa, Málaga, and Vizcaya.
In summary, flex living has emerged as an innovative and versatile response to the housing crisis in Spain. Despite challenges related to financing and regulation, its growth is becoming increasingly evident, driven by the demand for flexible and affordable housing solutions.
Projects like Oceánika exemplify how this model can offer attractive returns for investors while meeting the needs of a new generation of urban residents. In the near future, we’re likely to see greater consolidation of this new housing model, supported by more structured financial offerings and clearer regulations to facilitate its expansion.