Monday, 29 march 2021 | Brenda Rodríguez López
Buying or renting? It is a question that usually has a clear answer, at least in Spain. This country has always been a “country of owners”. Spaniards continue to opt for buying houses as their first option, nevertheless, things are beginning to change. Many of them no longer want, or have the option to, bet on this alternative and, logically, that is being reflected in the real estate market. One of the changes that can now be observed is the growing trend of the build-to-rent formula. What exactly does this term mean and why do you need to know about it?
Spaniards have once again borrowed an Anglo-Saxon expression which derives its meaning from its literal translation: the construction of buildings that will eventually be used for renting. On the one hand, this formula makes it possible to facilitate access to housing for people who have more difficulties to buy or have different preferences and circumstances from those who choose to own a home. On the other hand, it is a profitable and low-risk alternative for those who bet on it as an investment.
Build to rent is a trend that has its origin in the United Kingdom and that is attracting more and more investors (many of them international) in Spain. In fact, Antonio Díaz-Barceló, President of Euroconsulting Asesores Financieros and director of our Advanced Program in Innovation and Management of the Real Estate Business, pointed it out, in one of our latest interviews, as one of the business opportunities in Spain at this moment:
In Spain, the percentage of the population that owns a home compared to those who rent is higher than the average for the rest of the surrounding countries. And there is a tendency to rent in the new generations, the millennials who are now becoming independent. Residential REITs are offering smaller housing products for these young people who prefer to rent rather than buy. I see potential for the future there
Real estate developers, investment funds and public administrations are also turning their attention to this commitment to the professionalization of rental. Build-to-rent is an alternative that helps them to satisfy the expectations and unmet needs of tenants in order to arouse their interest.
These are properties mainly designed for long-term rental. They tend to be smaller than the traditional ones and to make up for this aspect they have common areas such as swimming pools, gardens, gyms, laundries, coworking spaces, etc. Likewise, it is common for them to have more complete and complementary services than the ones that are rented by individuals, such as maintenance, cleaning or 24-hour private security services.
Build to rent also opens up the door to a new vision of housing. For example, it is related to another phenomenon which we already talked about previously in the blog: coliving, a model in which residents share life and professional experiences.