Madrid, where new arrivals number 50,000 each year, making it the EU’s second largest metropolitan area with 6.7 million residents. Spain is the second most visited country worldwide

Spain’s foreign population has grown 20% over the past six years, with a corresponding increase in those buying property. Resident and non-resident foreigners now comprise 20% of the total market

Despite these statistics, investment in the Spanish residential and living sectors – co-living, student accommodation, senior living and build to rent – has been systematically underweighted. While investment in those sectors over the past five years totalled €33 billion in Sweden, €30 billion in the Netherlands and €26 billion in Denmark, in Spain it totalled just €16 billion.

The good news for investors is that this signals a market loaded with untapped growth potential. This low investment in emerging asset classes presents golden opportunities to build, reposition, manage and invest in these assets. Changing demographics and social mindsets are leading to altered housing requirements.

Take the examples of just two asset classes with a strong imbalance between demand and supply: Build to Rent and Senior Living. As longer-term projects with no immediate yield, these asset classes normally attract early-stage capital investors targeting high returns and, in the current environment with high inflation and high interest rates, high return strategies become more appealing to investors.

Build to Rent (BTR). Renting as a lifetime choice is on the rise Spain has recorded one of Europe’s highest increases in its rental market, rising from around 21% five years ago to 25% today. It’s a continuing trend that CBRE estimates will extend to over 5 million households by 2026, caused by sociocultural changes coupled with the financial difficulty of an increasingly stringent mortgage market. That adds up to at least 1 million rental homes required in the next decade, yet less than 20,000 are in the plans.

It’s a similar story with the Senior Living asset class, except here the supply is even more restricted. In the 30-year period from 2020, Spain’s population of those aged over 65 is set to increase by an estimated 5.7 million. That represents an increase of over 60%, significantly higher than percentage projections for Germany, UK, France and even Italy.

Senior living developments, attractive, good quality housing aimed at active seniors looking for an independent lifestyle rather than nursing homes providing medical care, are well established in the USA and countries across Europe. In Spain however, this is another living sector in its infancy. Globally, the number of over 65s is set to double over the next three decades and Spain has many of the attributes that this age group demand: a welcoming climate, an affordable cost of living and an easy-going lifestyle.

The evidence shows that these sectors will continue to grow at pace.

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