Spain’s residential market continues to evolve as demographic, economic and housing access dynamics change. In this context, investment in operational residential has gained weight within the real estate sector. According to Cushman & Wakefield, investment volume in segments such as PRS, BTR and flex living reached €2.2 billion in 2025, representing year-on-year growth of 28%. That progress was driven especially by the momentum of affordable BTR, although flex living stands out as one of the typologies with the strongest growth in both supply and completions.
A market driven by lack of supply
One of the structural factors behind this momentum is the imbalance between supply and demand. Rental demand has grown in recent years for several reasons: more demanding conditions for access to homeownership, population growth, migration flows towards major cities and an increase in the number of households. Meanwhile, available supply remains limited, which continues to put pressure on rents.
In the main institutional products – BTR, PRS and flex living – rents continue to show a clear upward trend. Cushman & Wakefield puts year-on-year growth at around 10%, reflecting demand that continues to rise despite the increase in stock. This is compounded by a more demanding regulatory environment, with measures such as strained housing areas and the IRAV index, which are also shaping the residential rental market.
Flex living: the fastest-accelerating segment
Within the alternative living universe, flex living has become one of the most visible growth drivers. This flexible housing model, designed for mid-term stays and aimed at profiles such as young professionals, relocated workers or people with greater mobility, has gained prominence in recent years. Its logic fits with deeper shifts in urban lifestyles: greater labour flexibility, smaller households and demand for more adaptable residential solutions.
In 2025, flex living stock reached approximately 19,100 units in Spain, with around 7,100 new completions during the year. In addition, the pipeline totals 16,163 units, bringing projected supply to around 35,000 units. Growth has been especially intense in recent years: stock has increased from around 2,000 units in 2021 to nearly 19,100 in 2025, with growth of 60% in the last year alone.
BTR consolidates, although at a slower pace
Build-to-rent (BTR) also continues to grow, albeit at a somewhat more moderate pace than flex living. During 2025, just over 6,300 units were delivered, compared with approximately 7,800 in 2024, confirming a certain slowdown in the pace of completions. Even so, cumulative stock already stands at around 31,600 units, considering only private capital and excluding public housing.
For its part, the private rented sector (PRS) maintains a more stable position, with stock having moved for years between 26,000 and 27,000 homes, a sign of its established presence within the institutional rental market. Overall, the PRS/BTR segment continues to play a significant role in residential real estate investment in Spain.
Student housing: a market still lacking supply
Another segment that continues to attract capital is student housing or PBSA (Purpose-Built Student Accommodation). Spain remains a market with room for development: the gross provision rate stands at around 7%, highlighting supply that is still insufficient relative to demand. In addition, the country maintains strong international appeal and was the main destination for ERASMUS+ students in 2024, which reinforces interest in this type of asset.
This shortage is compounded by the fact that a significant portion of existing supply still does not meet modern quality standards, as it is promoted or managed by public institutions, religious organisations or under concession regimes. This leaves room for new developments and for further professionalisation of the product. At the same time, investment activity has been very intense: in 2025, PBSA investment volume reached €1.176 billion in assets alone and €1.811 billion including M&A, driven mainly by large portfolio transactions.
Senior living: structural demand and bed shortage
The ageing of the population is also creating opportunities in real estate. Spain has solid fundamentals in this segment thanks to its high life expectancy and demographic trends pointing to an increasingly ageing population. Cushman & Wakefield estimates that approximately 100,000 additional beds would be needed to maintain the ratio recommended by the WHO.
At present, Spain has around 6,000 care homes and an approximate capacity of 410,000 beds, in a market that remains fragmented, where the main operators account for around 25% of for-profit supply. Investment and development activity has been more moderate since 2023 due to higher financing costs and increased construction costs, but operators continue to report high occupancy levels and rapid absorption of new facilities.
Stable yields in a transforming market
From a financial perspective, the market shows relatively stable returns. In the case of PBSA, prime yield stands at around 4.40% in Madrid and Barcelona, following the compression seen in 2025. In senior living, prime yield is around 5.40%-5.50%, especially in high-quality, efficient assets operated by established platforms.
Overall, the growth of institutional rental housing and alternative living reflects a deep transformation of the Spanish real estate market. Lack of supply, demographic growth and changes in lifestyles are driving new residential formulas adapted to different needs. In this context, segments such as flex living, student housing and senior living are becoming increasingly important parts of the real estate ecosystem, with the ability to attract capital and respond to long-term structural trends.
