Spotlight Student Housing in Spain

Savills World Research
Student Housing
Spotlight
Student Housing in Spain
April 2015
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Spotlight | Student Housing in Spain
April 2015
Savills Research
Student Housing
Spotlight
Student Housing in
Spain
Economic outlook
The Spanish economy technically
came out of recession at the end of
2013 and registered continuous growth
through to the end of 2014, when the
y-o-y growth figure stood at 1.4%.
In European terms, according to the
latest data published by Eurostat Q2
2014, GDP growth in Spain (1.2%) was
above the Eurozone average (0.7%)
and above that of France (0.1%).
With regards to the labour
market, unemployment remained
uncomfortably high at 23.8% during
Q1 2015, though it has continued to
fall steadily since the end of 2013.
In addition, prices in Spain have
continued to fall in recent months,
which for the time being has translated
into increased levels of disposable
income for ordinary families and falling
costs for businesses. As a result,
for the first time since the recession
began, domestic demand has made a
positive contribution (2.2%) to growth
in GDP.
Economic indicators are therefore
pointing to more positive expectations
for the Spanish economy. Firstly, the
Consumer Confidence Index reached
the highest levels in its history during
the first three months of 2015 (99.6 in
January, 99 in February and 100.4 in
March). Secondly, various economic
bodies have been optimistic in their
forecasts for economic growth,
indicating growth in excess of 2% for
2015.
Demand profile. Main
characteristics
The young segment of the population
(aged between 18 and 34), which is
the main driver for future students,
has decreased in recent years. On 1
January 2014, young people in Spain
accounted for 20.3% of the country’s
total population, a marked decrease
compared to 28% in 2000. In absolute
terms, the number of young people in
Spain is now 9.5 million, i.e. 16% less
than the same figure for 2000. The
Spotlight
Student Housing in
Spain
April 2015
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SUMMARY
main reason for this decrease was the
continued fall in birth rate.
The university student
population continues to grow
60% of all young people in Spain
live in the autonomous communities
of Andalusia, Catalonia, Madrid and
Valencia.
With regards to entry into the jobs
market, there are significant differences
depending on the age range. While
almost 60% of people aged between
16 and 24 are without work, some
88% of these being students, the
figure falls to 9% for the 30-34 age
group.
According to the latest figures
published by INE, in the first quarter
of 2015, of the total number of
unemployed people, only 22% of
people with a university degree were
without work, compared to 78% of
those without university qualifications,
highlighting the importance of higher
education for entry into the job market.
■ The number of university students has risen by
1.7% since the beginning of the financial crisis.
■ The number of foreign students has doubled
over the past ten years, though significant room for
growth remains, given that they only account for
3.5% of all enrolments.
■ 2014 saw the first fall in the number of university
students requiring accommodation (-0.4%),
reversing the upward trend recorded over the
previous 15 years.
■ The economic upturn has led to the reactivation
of various projects that had been on hold for many
years.
■ The price of university accommodation varies
depending on a range of factors, such as the
facilities and services offered, whether the halls
of residence is publicly or privately owned,
accommodation type (traditional halls of residence
or apartments), etc.
With regards to the housing demand,
only 22% of people aged below 30 live
away from the family home, compared
to with 74% of the 30 to 34 age group.
Among those aged between 16 and
24, only 7% have moved away from
home, and this figure has fallen by
11% compared to the previous year.
■ However, competition occurs principally at a local
level, which means there can be notable differences
between halls of residence that display similar
characteristics but are located in different regions or
provinces.
GRAPH 1
Young people (aged between 18 and 34) with regards to the total
population
29%
28%
27%
25%
23%
21%
20%
19%
17%
15%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: INE
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02
Spotlight on | Student Housing in Spain
The fragile situation experienced by
young people in the labour market
combined with difficult conditions in
the housing market have meant that a
young person on an ordinary income
cannot possibly buy a house and finds
it difficult to rent.
For the 16 to 29 age group, to buy a
house would suppose destining 61.2%
of their salary to the payment of the
mortgage, while experts recommend
that it should not overcome 30% of the
total income. According this parameter,
only 10% of young people with
highest salary level might assume the
acquisition of a housing unit in Spain.
Enrolments
April 2015
“The over-30s age group has had a
significant impact on the increase in the
number of enrolments in response to high
levels of unemployment.” Isabel Abella, Savills
Research Spain
In addition, there is an ever-increasing
number of foreign students enrolled
in the Spanish university system.
Between the 2005-2006 and 20132014 academic years, the number
of international students doubled to
53,175, accounting for 3.8% of all
students.
By place of origin, students from
the Eurozone and Latin America-the
Caribbean represented the majority,
accounting respectively for 43% and
27% of the overall total. It should
also be mentioned that the greatest
increase over this period has been
seen in students from Asia and
Oceania, who have almost quadrupled
in number.
According to the latest figures from
the Ministry of Education, a total of
1.4 million of students enrolled for the
2013-2014 academic year. Of these,
27.1% were first-time students, the
highest percentage ever recorded.
Comparing these figures to the 19971998 academic year, there has been
a fall of 10.3%, though the number of
enrolments has actually increased by
1.7% since the recession began.
From 2008-2009 onwards, the number
of enrolments has grown steadily,
driven mainly by an increase in the
number of students over the age of 30
who have come back into education
since the beginning of the recession.
On the other hand, the number of
students under the age of 30 has
remained more stable.
The main destinations chosen by these
international students are Madrid,
which accounts for 28% of the total,
followed by Barcelona (15%), Valencia
(4%) and Alicante (3.5%). These
are also the provinces that have the
largest number of universities, halls of
residence and courses.
The, so called, Strategy for the
Internationalization of Spanish
Number of students and economic growth Demand
for higher education is counter-cyclical
GDP
6
Annual variation (%)
As regards the internal mobility of
domestic students, according to data
published by the Ministry for Education
more than 70% of students enrol in
the same autonomous community
where they completed their secondary
education. The students who display
the lowest levels of mobility are
those coming from the autonomous
communities of Madrid, Catalonia and
Andalusia, which are the regions with the
largest number of universities and the
broadest range of degree courses. At the
other end of the spectrum are La Rioja,
with 36.5% of students enrolling outside
the region, Castilla La Mancha with 43%
and the Balearic Islands with 46.4%.
The autonomous communities with the
GRAPH 2
Number of students
Universities, with a timescale that
runs through to 2020, includes the
proposal that one in every three
degree courses should be bilingual
or wholly in English, a plan that could
lead to an even greater increase in the
number of foreign students. At present,
bilingual courses or courses offered in
a different language account for only
20% of the total, though this rises to
100% at some universities.
4
GRAPH 3
Foreign students by nationality (2013 2014)
Rest of
Africa
2%
Asia and
Oceania
10%
North
Africa
9%
2
EU-27
43%
-2
-4
-6
Source: INE; Ministry of Education
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
-8
Latin
America
and
Caribbean
26%
USA and
Canada
1%
Rest of
Europe
9%
Source: Ministry of Education
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Spotlight on | Student Housing in Spain
April 2015
GRAPH 4
highest levels of domestic enrolments
from other regions are Navarra (33%),
La Rioja (30.3%), Castilla y León
(24.7%) and Madrid (24.6%).
Balearic Islands
Galicia
Extremadura
Andalusia
Catalonia
Community of
Valencia
Basque Country
Asturias
Castilla La
Mancha
Aragon
Source: Ministry of Education
For the first time since records began,
the market saw a slight fall in both
the number of beds (-0.4%) and the
number of halls of residence (-1.8),
due to the closure of several residential
colleges.
“The current stock of beds in student halls of
residence only covers 56% of potential demand.”
Gema de la Fuente, Savills Research Spain
Salamanca for 39% of all beds in
Castilla y León, Valencia for 35% of all
beds in the Community of Valencia and
Seville for 60% of all beds available in
Andalusia.
As regards the number of beds by
province, Madrid offered the highest
number, with 180 halls of residence
and a total of 18,603 beds, followed
by Barcelona, Salamanca, Seville and
Valencia. These four cities combined
accounted for almost 50% of the
national total.
Of the leading provinces based on
market volumes, Barcelona accounted
for 82% of all beds in Catalonia,
In terms of size, 80% of university halls
of residence are classified as small,
with fewer than 99 beds. On the other
hand, there are large halls of residence
(offering more than 300 beds) in
Galicia, Madrid, the Basque Country,
the Community of Valencia, Catalonia
GRAPH 5
Evolution of number of beds in university
accomodations
Number of beds
y-o-y variation
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
and Castilla y León. At a provincial
level, more than 85% of university
halls of residence in Barcelona
and Salamanca are classified as
large, whereas barely 5% of halls of
residence are included in this category
in Madrid and Valencia.
Overall, the current standing stock
of university accommodation beds
would only cover 56% of the potential
demand, this being understood to
include foreign students and the
proportion of domestic students on the
first and second years of their course
who are expected to move between
regions. In total, almost 141,000
students are seeking accommodation
with little more than 90,000 beds
available.
7%
6%
5%
4%
3%
2%
1%
0%
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
-1%
2001
Source: DBK
Cantabria
Murcia
Community of
Madrid
Castilla y León
According to the most recent report
from DBK, at the end of 2014 the
university accommodation sector
(student halls of residence and
residential colleges) had a capacity of
90,125 beds in a total of 1,106 halls.
The small proportion of residential
colleges as a percentage of the total
number of student halls (17%) is
explained by the higher number of
beds offered per residential college,
an average of 128 beds per halls of
residence for residential colleges as
opposed to 72 per student halls of
residence.
La Rioja
35%
30%
25%
20%
15%
10%
5%
0%
Supply
Navarra
Ranking of autonomous community according to level of national
enrolments from other regions
At present, almost 90% of university
halls of residence belong to the private
sector. In this segment, the market
is more fragmented, and the most
common profile is that of a small
operator that is managing a single hall
of residence, though in recent years
there has been an increase in the
number of large operators as a result of
administrative concession agreements
with public universities.
According to the latest figures
published by DBK, only a few
organisations manage more than 1,000
beds. Of these, the majority are public
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Spotlight on | Student Housing in Spain
April 2015
GRAPH 6
and only three (RESA, Residencias
Campus and Campus Patrimonial) are
private.
Main private manager according to the ownership
Private Universities
Among private accommodation
managers, the private universities
themselves have gradually lost market
share to private operators. In 2003 they
accounted for 60% of the total, while
by 2013 this had fallen to 38%.
Number of institutions
RESA, Campus Patrimonial and
Residencias Campus have more than
50% of the total number of beds and
halls of residence managed by private
operators.
The principal geographical areas in
which they operate are Barcelona,
Madrid, Seville and Malaga. 45% of
RESA’s portfolio is located in Madrid
and Barcelona. 60% of the halls
of residence operated by Campus
Patrimonial are in Malaga and Seville,
while Residencias Campus operates in
secondary cities, with 54% of its beds
in Murcia and Albacete.
Occupation
Competition among the various
private operators has increased as
a consequence of the worsening
market conditions and the reduction in
domestic demand.
25
20
15
10
5
0
2003
2008
2011
Another highly attractive option, mainly
among students reaching the end of
their courses, is flat-sharing. According
to the ‘2014 Report on Flat-Sharing in
Spain’ (“Informe de pisos compartidos
en España 2014”) published by pisos.
com, more than half of the demand
for shared flats comes from young
students, with people aged between
18 and 25 accounting for 53.4% of the
total.
GRAPH 7
Number of beds by university accommodation and
region
Residential colleges
Students halls of residence
20,000
16,000
12,000
8,000
Source: DBK
Cantabria
La Rioja
Balearic Islands
Asturias
Murcia
Canarias
Extremadura
Navarra
Aragon
Basque Country
Galicia
Castille La Mancha
Community of Valencia
Andalusia
Castilla y León
Catalonia
Community of Madrid
4,000
-
2012
2013
Source: DBK
Regarding levels of occupation, the
majority of halls of residence located
in the main university cities were
100% occupied during the current
academic year. In addition, with a view
to ensuring high levels of occupation,
some halls of residence also offer
Following the onset of the financial
crisis, levels of disposable income
among university students and their
families fell, meaning that cheaper
options such as public institutions
benefited from an upturn in demand.
Private Operator
30
places to post-graduate students,
university professors and other
people without a university affiliation.
Another common practice is to keep
the halls of residence open over the
summer to cover the accommodation
requirements of students who enrol for
summer courses.
New developments
Following the period of contraction
experienced by the student
accommodation sector in recent years,
we seem to be seeing the start of a
period of growth.
Notable new build halls of residence
include four in Madrid and one in
Barcelona, all of which are private.
All the halls of residence in Madrid are
the result of refurbishment projects:
three residential buildings converted
into student accommodation
(each one operated by a different
private company) and the complete
refurbishment of a former residential
college, Santa María del Estudiante,
which now forms part of RESA’s
portfolio.
RESA will manage the new
development that was delivered in
2014 in Barcelona. Lasalle Campus
Residence located in the city’s SarriáSan Gervasio district resulted from
an agreement between the largest
university accommodation provider
and the La Salle religious organisation.
Two more RESA halls of residence
are scheduled to open in September
2015. These are the two student halls
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Spotlight on | Student Housing in Spain
April 2015
GRAPH 8
in that it allows students to enjoy
greater privacy at a lower price with
the advantage of being completely
immersed in the university atmosphere.
Average price of traditional university
accommodation in the main regions
Public
Private
Generally speaking, halls of residence
that are managed by public
organisations offer lower prices, as
they have subsidies for some students,
depending on family income scales
and academic results. La Laguna
University and the University of
Santiago offer the lowest prices at
€400 and €286 per month respectively.
1,000
€/month
800
600
400
200
Madrid
Catalonia
Andalusia
Community of
Valencia
Castilla y
Leon
Source: Savills
of residence acquired by Azora from
the Ministry of Defence in 2013, one
in Madrid and the other in Barcelona.
They are both currently undergoing
extensive modernisation.
In addition, Knightsbridge, a British
company that specialises in this sector,
is planning to open several halls of
residence. Work will be completed
in September 2016 on two projects
in Madrid (in Plaza Cristo Rey and
Calle San Bernardo) and another in
Alcalá de Henares (Madrid). Two new
halls of residence are also planned for
Barcelona, with opening scheduled for
September 2017 and September 2018.
Some projects that had been halted for
some time would seem to have been
restarted, such as the student halls of
residence at Barrio Llamosí in Valencia
and the new student halls of residence
in Gijon, located between the Escuela
de Marina Civil and the Escuela
Politécnica’s “edificio polivalente”.
Other projects, however, remain at a
standstill, generally due to a failure
to reach agreement with the local
government, as is the case with the
conversion of the former barracks in
Pontoneros (Zaragoza) and the student
halls of residence in Camí de l’Ángel in
Tarragona.
Cuts in public budgets and a lack
of interest among companies in the
private sector are the main reasons
for the lack of progress in other cases,
such as the Juan de la Cosa hall of
residence in Santander (Cantabria) and
the new student halls of residence at
the University of Cartagena (Murcia).
Fees
Prices vary on the basis of a range
of factors, mainly associated with
the facilities and services offered.
Some of the differences are also due
to who owns the operator that is
managing the halls of residence and
the accommodation type offered at
the halls of residence. The traditional
model implies that the private space
is only the room and the bathroom
(although in some occasions it can be
shared) and the rest of facilities are
common areas. In the latest years, the
appartment concept is getting more
relevance, it is a studio/room rooms
includes a bathroom and a little kitchen
(with fridge, microwave and, even in
some occasions, washing machine).
However, competition in
accommodation prices occurs
principally at a local level, which means
there can be significant differences
between halls of residence that display
similar characteristics but are located
in different regions or provinces.
As a general rule, rooms that follow
the apartment model are generally
cheaper in both private and public
halls of residence. It is increasingly
common for new developments to
follow this model, which emerged
in response to the competition
generated by flat-sharing. This is an
option that falls halfway between
finding accommodation in traditional
halls of residence and flat-sharing,
Halls of residence that are managed by
private operators charge the highest
prices, though these vary according to
the facilities and services offered, the
layout of the accommodation itself and
the meals provided (accommodation
only, half-board or full-board).
Average prices at private halls of
residence are 24% higher than those
at public institutions.
In an analysis of the traditional halls of
residence, which account for 80% of
the sample, the Community of Madrid
heads the regional price table, both for
public (€950 per month) and private
(€1,050 per month) halls of residence.
Second position is held by Navarra,
with an average of €880 per month,
followed by the Basque Country in
third place with €833 per month.
Investment Market
At the end of 2013, the first signs of
an economic recovery and improved
forecasts put Spain back on the
investment map for international
GRAPH 9
Average price by type of university
accomodation
Apartment
Traditional
900
800
700
600
€/month
1,200
500
400
300
200
100
Public
Private
Source: Savills
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Spotlight on | Student Housing in Spain
April 2015
“Apartment-type accommodation is now
becoming the most popular choice among
most people seeking accommodation. It
offers intimacy in university surroundings at
a highly competitive price” Gema de la Fuente,
Savills Research España
investors, which provoked a continuing
increase in cross-border activity in the
commercial property market.
In addition to the usual investment
segments (offices, retail, hotels and
industrial-logistics) other niche markets
have gradually been added, such as
service stations, health facilities (clinics
and nursing homes) and student
accommodation.
As regards this last category, the lack
of transparency in the market makes
it difficult to ascertain the true level
of activity, given that, as mentioned
earlier, the sector is still dominated
by small private operators that both
own and manage one or more halls of
residence.
The fragmentation of the market and
its high level of obsolescence have
been perceived as an opportunity
for small investors who have seen
the refurbishment of existing halls
of residence as a way of increasing
their value and thus satisfying an
increasingly demanding clientele.
Many agreements are completed
without third-party mediation, which
again makes it difficult to measure
the true extent of the market. These
sometimes involve the acquisition of
old student halls of residence, while
other cases result from projects to
refurbish ordinary residential buildings.
The most readily available information
generally relates to corporate
transactions (share purchases) or the
acquisition of halls of residence by
international operators.
The most recent transactions
include the agreements reached by
Knightsbridge Student Housing for the
development of five new student halls
of residence, two in the city of Madrid,
one in Alcalá de Henares (Madrid) and
two in Barcelona. This marks a further
expansion of the British firm’s business
operations in Spain, which began in
2012, with the purchase of the Galdós
student halls of residence close to
the campus of Madrid’s Complutense
University.
It is not the only international operator
that has entered this market. At the
end of March 2015, The Student
Hotel (headquartered in Amsterdam)
purchased two Barcelona student halls
of residence leased under a long-term
agreement to the operator Melon
District for a total that could amount
around €41.5 million.
Despite the interest shown by these
international companies that specialise
in other parts of Europe, RESA, as
part of the Azora team (the parent
of the SOCIMI Hispania Activos
TABLE 1
Investment deals International investors taking positions in university accommodations
Year
Buyer
Vendor
2007
Victoria Hall
REUSA
2008
EBM Alisma
2011
Lazora
2012
2013
Kinghtsbridge
Student Housing
Lazora
Metrovacesa
Asset
Location
Price*
(€ m)
Galileo Galiley
Valencia
N/A
several locations
1.7
several locations
150
Madrid
21.70
N/A
14.91
Madrid and Barcelona
16.00
44% of shareholding in Campus
Patrimonial (managment company)
17 shareholders incluing Catalunya Caixa,
Portfolio (25 stundent halls) licence
NovaCaixa Galicia, Catalana Occidente,
to manage the halls for a period
Caisse des Depot (RESA's shareholders)
of time
N/A
Corporación Financiera Alba
Residencia universitaria Pérez
Galdós
18.25% at Lazora Alojamientos
licence to manage two halls
2013
En Campus (Azora)
Minsterio de Defensa
(Vallehermosos en Madrid and
Mateo Calabro en Barcelona) for
50 years
Moncloa - Princesa
2014-2015
Kinghtsbridge
Student Housing
San Bernardo
N/A
Madrid,
Alcalá
de
Alcalá de Henares
Henares (Madrid) and
Barcelona 1
Barcelona
N/A
Barcelona 2
2015
The Student Hotel
BBVA
Melon District Poblesec
Melon District Marina
Barcelona
41.50
Source: Savills / *estimated
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Spotlight on | Student Housing in Spain
Inmobiliarios), remains the strongest
operator in the domestic market.
April 2015
other segments of the commercial
property market. Prime yields would
stand at between 5.75% and 6% with
secondary product at around 7%.
Yields
The lack of transparency in the market,
as mentioned above, and the absence
of comparables, make it difficult to
establish true yield levels. Based on
market sentiment, we believe there
has been an adjustment of 100 basis
points as compared with the levels
recorded in 2012 (the last time the
report was updated), which would
also be in line with developments in
Prime product covers halls of
residence located within the urban
boundaries of the main cities that have
one or more important universities with
which agreements have been reached,
that attract international students, are
well served by transport links and offer
a wide variety of services and leisure
activities. ■
GRAPH 10
Regional distribution by students halls beds,
potential demand (size of bubbles) and GDP growth
3.0%
GDP Growth (2014)
Canary Islands
La Rioja
1.5%
Extremadura
1.0%
Navarra
Asturias
0.5%Cantabria
0.0%
-2,000
-0.5%
Aragon
-1.0%
Galicia
4,000
6,000
Madrid
Castilla y Leon
Basque Country
2,000
Cataluña
Community of
Valencia
Andalusia
8,000
10,000
12,000
Slight growth in the university
accommodation supply
■ Implementation of the internationalisation plan
for Spanish universities, which aims to see 50%
of degree courses offered bilingually or wholly in
English, would act as a stimulus for a continuing
increase in foreign students coming to study in the
Spanish university system.
■ The forecast for enrolments among domestic
students is also positive. The competitive
advantage offered by a university degree in the
jobs market may act as an incentive for young
people who aspire to improve their professional
prospects.
■ The nascent growth in the economy could
stimulate and increase assistance and study
grants, which would help young people without the
necessary financial resources to begin or resume
their university studies.
2.5%
Balearic Islands
2.0%
OUTLOOK
14,000
Castilla La
Mancha
■ The strong links between growth in the number
of beds and growth in the economy offer strong
grounds for forecasting an expansion in the
university accommodation market, together with
the forecasts of economic expansion over the
coming years.
■ According to the most recent report published
by DBK, the number of beds is expected to grow
by 0.6% to 2016, with business volumes expected
to grow by 2.4%.
-1.5%
Number of places
Source: Research compiled from INE and DBK data
Savills teams
Please contact us for futher information
Marcus Roberts
Student Housing
+44 (0) 20 7016 3799
[email protected]
Alejandro Sanchez-Marco
Investment Spain
+34 913 10 10 16
[email protected]
Gema de la Fuente
Research Spain
+34 913 10 10 16
[email protected]
Isabel Abella
Research Spain
+34 913 10 10 16
[email protected]
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