Barcelona will add 5,500 student accommodations in two years

Over the last five years, international real estate investors' interest in Barcelona has multiplied exponentially, to the point of accounting for more than 80% of the total invested in the city in some years. With great activity in the office and residential sectors, in recent times there is an asset that is very attractive to capital: student residences.

Buildings intended to house national and international young people studying in Barcelona have become a safe haven for investors ---and even more so now in times of rising interest rates--- because they obtain higher returns compared to other markets such as offices, industry, logistics, or residential.

Thus, this real estate segment is defensive and counter-cyclical for investors for several reasons. Among the main ones, the existing gap between supply and demand allows the real estate manager to pass on price increases due to inflation to tenants and obtain very high operating margins with high cash generation, assures Carlos de la Torre, director of Real Estate Investment Banking at CBRE Spain.

The high structural demand has led international operators to intensify operations in cities like Barcelona ---cosmopolitan capitals with an attractive educational offer, good climate, and location--- since 2015, indicates Francisco López, director of Living at BNP Paribas Real Estate and director of its office in Catalonia.

It is estimated that the number of operational accommodations, among about 25 existing university halls and student residences, is about 11,000 or 12,000 beds, to which another 4,000 will be added in the next two years. This latter figure is raised by other sources in the sector to between 5,000 and 5,500, despite which the ratio will be far from optimal levels.

Reaching about 18,000 available places, and considering that the province of Barcelona hosts between 160,000 and 180,000 students per course between the private and public education system, and that half of them seek accommodation, the proportion would be 15 enrolled students per available bed, or in other words, there is one free place for every four students looking for residence.

Barcelona only has one free accommodation place for every four students looking for residence

The sector warns that the incorporation of new real estate assets, although significant, will not solve the underlying problem because the market will remain strained.The regulation by the Barcelona City Council has compromised investment in projects that do not have a license, limiting new assets in the medium term, to which is added the lack of available land since not all locations are valid for student residences that seek proximity to educational centers," states Juan Manuel Pardo, Living Director at JLL Spain.

In Barcelona, new constructions only find large plots of land in 22@, Marina del Prat, and the Sagrera area where the PEUAT has regulated the number of residences, size, and distance between them, adds Pardo, so municipal regulations also compromise the viability of already available land that does not have a license, thus affecting the structural problem of beds that the city is experiencing.

In this same vein, Francisco López, head of BNP Catalunya, confirms that the lack of land has caused the main market operators to be unable to fulfill their expansion business plans and extend their search radii to more secondary cities. "But the lack of product is not only noticeable in Barcelona and capitals like Madrid, it is already a reality in other university cities like Malaga, Bilbao, or San Sebastián, among others," specifies López, adding that another important factor is "the increase in construction costs that has generated high interest in already built and operational assets," provided they have good locations.

Developers prefer to erect new constructions in line with quality standards and demand needs

However, this option requires significant investments in rehabilitation because "the objective is to develop efficient projects in line with the new standards, qualities, and services implemented in residences. In some of them, the existing construction has even been demolished to develop greenfield," determines the BNP executive. Generally, investors retain ownership of the building but sign management contracts with operators specialized in this type of accommodation.

Taking into account that the urban use of a property intended for student residence will be for public facilities (equipment), while in the case of offices it is conceptualized as tertiary, the rent level for the manager varies greatly depending on the locations, the type of tenant, and operating expenses. JLL analysts point to a comparison: an office in a new building in 22@ could ask for 23 euros per square meter per month, while a student residence could ask for 900 euros per month for a room.

Planned projects in Barcelona

• Vita Group

Improvements in the sector will already be noticeable next September. The initial kick-off will be given by the English operator Vita Group andthe Aparto group, the student accommodation platform born in the United Kingdom and responsibility of Hines. Vita Group has chosen Barcelona as its first venture in Europe with a new model of residences that has already proven its success in the United Kingdom, where the company manages 22 student residences.

The group's first residence, Vita Pedralbes ---designed by the architectural firm Batlleiroig--- will open in September 2022 with an offer of 274 places at number 102 Avenida d'Esplugues, where the most important universities and business schools in Europe are located, such as IESE, ESADE, UB, and UPC. The total budget, considering land acquisition, construction, and furniture, is significantly higher than 30 million euros, according to company sources.

The residence will feature common areas, kitchens, sports facilities, a swimming pool, high-speed Wi-Fi, breakfast service, cleaning, free-to-use bicycles, study areas, social hubs, and programmed activities. "Vita Student is committed to an innovative model that not only offers a room to the student but also aims to accompany them throughout their university journey with complementary services and greater social and community involvement," also open to students from the city, the company assures.

The British firm argues its interest in Barcelona because in the last five years the city has received a stable average of 170,000 students per year, and 24% are international. However, only 6% of these students have access to accommodation specifically designed for them.

Therefore, starting in the 2023/24 academic year, Vita Pedralbes will be accompanied by another residence at the opposite end of the city, in 22@. Specifically, Vita Poblenou is under construction at number 2 Sancho d'Àvila street, designed by G3 tecnics and JPAM Architecture & Urban Design. It is expected to open in early 2023 with 349 places.

Vita Group is interested in having between four and five student residences in the Catalan capital, as part of an expansion plan in Spain to reach 5,000 beds, with available resources of 350 million euros in planned investment.

Vita Group's initiative is not an isolated one. In Barcelona, it is a clear expansion bet for international student residence brands such as Xior, Livensa Living, The Student Hotel, Micampus, Youniq, or Aparto, among others.

• Aparto Barcelona

The new Aparto Barcelona accommodation will open next September, in the heart of the 22@ district, with an offer of 743 places for students. The residence is governed by a flexible model between double, single or studio rooms, for medium and long-term stays, from a few months to a whole year, and with ratesall-inclusive.

It also has underway another project on Cristóbal de Moura street, which will have 350 beds for students, and which will be adjacent to a 3,600 square meter office building that Hines is also developing. Construction of the property has already begun and is expected to be completed by mid-2023.

• Xior Collblanc

Xior Collblanc is a new construction for student residencewith capacity for 223 people, on Doctor Jaume Ferran i Clua street, 14, in L'Hospitalet de Llobregat. Xior Collblanc is part of a network of student accommodations with more than fifteen years of experience in Belgium, the Netherlands, Spain, and Portugal. Xior residences are spread across more than 30 cities, with over 130 accommodation buildings.

• Livensa Living

Brookfield Assets Management in Spain, under the Livensa Living brand, plans two macro student residences in Barcelona. The Canadian asset management company will build two buildings at numbers 25 to 37 of Paral·lel Avenue and at number 149 of Riera Blanca Street, in the Sants neighborhood, border with L'Hospitalet de Llobregat, facilities that will be added to those it already has in 22@, on Pallars street, with Marina Livensa Living.

• Micampus Barcelona

The new residenceMicampus Barcelona, on Ramon Llull street, 495, has 382 beds distributed in single and shared rooms.It has common areas with free access for all students: study rooms, leisure areas, cinema room, landscaped patio, meeting rooms, gym, outdoor rooftop pool, self-service laundry and parking. The company Micampus, belonging to the fund manager Stoneshield, which has nearly 6,000 operational beds under management, distributed throughout Spain.

• Youniq Barcelona

Between Maresme and Pallars streets, in the Sant Martí district, Youniq Barcelona, owned by Corestate Capital Holding, will open. In that case, services also include a cinema room. The building, designed by the architecture studio Lluís Tejero Arquitectos, will havea clean rentable surface of 4,550 square meters and will offer 257 apartments with 265 beds. The company already manages four other centers in Spain under this brand, among which is its first student residence project in the country, with 206 rooms in the Moncloa district, in Madrid.

• Bcome Meridiana

Syllabus, Urbania International's student residence subsidiary, manages its projects under the Bcome brand and will enter Barcelona with the construction of a residence on the 21,000 square meter plot located at Meridiana, 339-347which will also have access from Concepción Arenal street, just in front of Plaza del Canòdrom. The municipal special plan foresees a maximum of ground floor plus six in height on the Meridiana side and ground floor plus five in height on the rest of the land.

• THS Poblenou Provençals

The Amsterdam-based operator, developer and investor, The Student Hotel (TSH), will open Barcelona Provençals.The 300-room residence will offer the full range of TSH brand services, including its Collab coworking space, the largest in Europe with more than 3,500 square meters.The other two properties the group has in Barcelona are TSH Campus Poble Sec and TSH Campus Marina.