The build-to-rent has a new impetus. If, in 2019, the investment exceeded 1,500 million euros, the forecast for 2020 points to a capital volume of more than 2,000 million, far above from the commercial sector.
The purpose-built block of rental homes is a common phenomenon in other countries such as Germany or the United States, but they are a new upcoming asset in Spain. The switch from building for sale to building for rent has become a reliable long-term income flow against more traditional systems in places that suffers a housing crisis.
The residential markets of Barcelona and Madrid, the two main hotspots, have begun to adapt to this new reality with a future prevision of 100,000 new homes in the upcoming months. Although, beyond the housing crisis, we also have to consider that build-to-rent is able to answer and propose better solutions to issues like energy efficiency, safety, location, and other quality issues such as design.
The user experience
And this is, precisely, one of their main strengths. Just to put an example, in the United Kingdom, most of the planned new buildings have gardens and have an urban design to accommodate office buildings, leisure places such as theatres or football pitches, primary schools, or health facilities. Because the primary intention of build-to-rent is to put the person in the centre of the housing experience. The capability to satisfy its needs, flexibly and accurately, to establish a strong relationship with the user experience, that tends to be young professionals.
In this context, investment funds have found build-to-rent a great opportunity to create new rental homes adapted to the current needs of the future tenants, as a solution to the real estate demand that does not want o cannot afford to buy a home. As a consequence, the residential rental market in Spain has increased to reach almost 25% of buildings, but still less than 5% of rental homes belong to professionalized companies. A space plenty of opportunities.
New opportunities, new threats
In the short term, not only the type of property, the square meters, the common areas, or the quality services are going to be meaningful to keep growing for the build-to-rent. It also has to face some new issues that represent a new reality: the impact of teleworking or the location and connections of the area is going to be key elements to take into account in order to keep growing.