Student accommodation, a focus for investors
A recent analysis by CBRE highlights that student accommodation across Europe faces a significant mismatch between supply and demand. This has made PBSA (Purpose Built Student Accommodation) assets an attractive investment opportunity. “The sector’s ability to withstand market fluctuations, its high occupancy rates, and rental growth potential position it as one of the most viable options for investors in today’s real estate landscape,” the consultancy states in its report European Student Housing.
In Spain, public and private universities are attracting a growing number of students, both from within the country and abroad. However, the available accommodation for this demographic is not increasing at the same pace as demand, with bed provision still low (6.7%).
Bed shortage in student residences
The Spanish student housing market faces a shortfall of 450,000 beds, underscoring the urgent need to expand supply. According to CBRE’s analysis, 14,500 new beds are expected to be added by 2026, bringing the total to 130,000. However, despite this growth, much remains to be done.
Spain currently has 115,000 operational beds, but many are outdated, with 60% of existing facilities requiring renovation. This deficit, coupled with a lack of supply in key cities, has made these assets increasingly attractive for real estate capital. The figures confirm this trend: by the third quarter of 2024, investment had reached €415 million (17% of total investment in the living segment). Particularly noteworthy is the interest from both domestic and international investment funds.
By location, Madrid and Barcelona have historically been the epicenters of this sector. However, the Catalan capital has solidified its position as the leading destination for student housing investment. Barcelona accounted for most of the national investment in these assets, reaching €219 million in the first half of 2024—a 68.5% increase compared to the same period last year. Meanwhile, Málaga has experienced a significant increase in demand for student housing, driven by the arrival of students from around the world. Yet here, too, supply remains insufficient to meet market needs.
Renting rooms in shared flats
Renting rooms in shared flats is another common choice for students and continues to thrive despite rising prices. According to the real estate platform Idealista, the supply of shared flats increased by 20% year-on-year during the third quarter of 2024. In its study “Shared Housing in Spain in 2024,” Fotocasa reports that the average cost of a room in Spain is €488 per month, representing a 57.3% increase over the past five years and an 89.4% increase since 2015.
The platform also notes that renting rooms offers a 9.3% return, compared to 6.1% for full-property rentals. “The returns from renting rooms remain the highest in the market, far exceeding other financial products, with great stability and long-term growth potential. Renting by room offers 34% higher profitability for landlords compared to full-property rentals. This model has grown exponentially among property owners following the enactment of the housing law, as it bypasses restrictions on this rental type,” explains María Matos, Director of Studies at Fotocasa.
Co-living, a trend among students
As an evolution of room rentals, other accommodation models such as co-living have emerged. This concept, which combines community living with a shared accommodation approach, appeals to students seeking to enhance their social experience during university.
Co-living is part of new flexible housing solutions in which Spain is a leader. According to Atlas Real Estate, flex living operators in Spain currently manage 11,885 operational beds, with plans to double that number by 2027. Most of these will be co-living units, projected to reach 14,824 beds.
JLL reports that a large portion of these beds are in Madrid, with over 6,000 currently available and 16,000 more planned. Barcelona is the second densest city, with 2,200 beds and 2,600 more projected. Valencia ranks third, with 1,100 beds and 880 more expected in the coming months.
Many companies have recognized the opportunity represented by university students and have developed specific co-living solutions for them. Examples include Flaternity, which specializes in promoting this model among international students, and Live4Life, which recently launched a co-living line for younger demographics.