In Spain, rental housing is living a great moment even though Spanish people have traditionally preferred to buy rather than to rent a house. Might we assume that there has been a change of trend in the Spanish real estate sector? If we analyse the facts and figures we can state that this is possible. What we can definitely affirm is that in the previous years small and medium investors have bet heavily on rental housing. The annual growth regarding rental housing in Spain shows a nearly 4% increase ( 3,7% to be exact ). The re-emergence of rental housing is due to several key results. For instance, the bursting of Spain´s housing bubble which led to bank constraints in credit. These circumstances influenced investors to look for new markets regarding housing.
MADRID AND BARCELONA EXCEL
In Spain, rental housing appeals not only to tenants but also to investors. This fact can be seen in great cities such as Madrid and Barcelona where rental housing can be highly profitable. It is estimated that in these two cities more than 40.000 rental contracts are signed yearly which is by far the highest in all Spain. Rental housing in Madrid is around 24%, whereas in Barcelona it is even greater as it accounts for about 36%. However, it is estimated that these figures will increase due to the fact that rental housing in Spain is on the rise. Because of this new trend, this niche market is a challenge to real estate professionals who have not yet offered this type of product. If we compare facts and figures throughout the last twenty years, the rise is considerable. In 2001, rental housing accounted for 18%. This figure has increased three percentage points placing it above 21% according to figures dated in 2015 and 2016. Moreover, if we only look at Barcelona and Madrid it is 24%.
STILL FAR AWAY FROM EUROPE
Even though rental housing has increased in Spain, we are still far away from the rest of Europe. In the European Union, rental housing is above 33% which is more than the 21% of Spain even if it rises to 30% in the next five years which is the most optimistic prediction carried out by experts. If we compare Spain with France or Germany there is a skyrocketing difference as they surpass 50% in rental housing. We are also a long way from them regarding the price. In 2016, in Madrid and Barcelona the price per square meter of rental housing was above 13 and 15€ respectively. If we pay attention to some expensive European cities, there is an enormous difference: London 30€ per square meter, Geneva 29€ per square meter, Zürich 26€ per square meter, Stockholm 25€ per square meter, Paris 24€ per square meter, Helsinki 23€ per square meter… and we come to Munich which is the tenth most expensive rental housing in Europe with 17€ per square meter. All signs point to the fact that price in rental housing in Spain, especially in Madrid and Barcelona, will increase in the next years.