Investors and promoters have started to develop co-housing, flexliving and other forms of collective and temporary accommodation to avoid the rigidities imposed by the new Housing law: the need to allocate up to 40% of the land in the new developments to build social housing for rent and the long duration of the contracts, with limits also in updating rents. The new formulas also have smaller units and add services, which makes it possible to increase the profitability of the projects at a time when the rise in interest rates has made building housing for rent (Build to rent or BTR) already not be profitable.
“The profitability of flexible accommodation is higher because it is a kind of new asset, and there is no history of performance or difficulties. Investors see more risk and demand more return”, admits Stefano Somoggi, director of flexible residential at CBRE. According to the consultancy’s data, building housing for rent in urban locations provides a return of 3.8% in Madrid and 4.0% in Barcelona.
According to José Ramón Zurdo, director of the Agencia Negociadora del Alquiler, the boom in co-housing is due to the fact that “they are rentals with less intervention than traditional long-stay rentals”, so they provide “more profitability with less risk” to investors and promoters
Thus, the number of beds in these flexible accommodations has quadrupled in the last three years, up to 10,000 units, and there are projects underway that foresee the number doubling by 2025, according to data from the CBRE consultancy . Until September 2023, the firm points out, it has attracted investments for 306 million euros, 13% of institutional investment in residential, which are added to the 600 it captured last year. “Mostly foreign funds and groups invest in it, because it is a very common modality in the United Kingdom or the Netherlands, but there are already local operators considering investing in it”, says Olga Beltrán, associate director of CBRE Barcelona’s residence area .
According to the legal experts of the Uría Menéndez firm, co-housing is not a housing lease, of those regulated by the Urban Leasing Law (LAU), because it does not satisfy the permanent need for housing, and must be governed by the Code Civil, which gives the parties freedom of agreement, as a temporary room lease or as a hosting contract, if other services are left to the guest (such as cleaning or laundry).
One of the key factors in the flexliving boom is the possibility of building on land with different urban qualifications: residential, but also tertiary (which allows for hotel and commercial use) or facilities, although in each case the accommodation they are different
According to CBRE, co-housing is built on residential land in urban areas, with few common areas, while on tertiary land, on the outskirts of cities, corporate living is being built: corporate residences, for young professionals, in complexes of large size with many common areas and services. Other booming formulas, also in tertiary land, are vacation residences or vacation living, in coastal or rural areas. On equipment land, on the other hand, residences can be built for vulnerable groups, as the City Council has built in Barcelona, ??or in the case of private developers, for the elderly, with senior living projects.
According to CBRE, currently 75% of operational beds are located between Madrid and Barcelona, ??although such accommodation is also booming in areas that attract a high volume of floating population, such as in Valencia, Malaga and Biscay.
Esteve Almirall, co-founder and general manager of Node, a company specialized in promoting and managing flexible housing spaces, points out that the common characteristic of its residents is “that they are in a moment of transition: because they change cities, for studies or work , or because they have separated or because they are in the process of renovating their home”. For this reason, he points out that “despite what it seems, it is not just accommodation for young people”.
The largest number of projects underway is focused on corporate living or corporate living because, according to CBRE’s estimates, more than 80% of the demand for this type of accommodation comes from young professionals who find work in a another city or are displaced by their own company, as well as digital nomads or freelancers who have to serve a client in another city.
This kind of profile, moreover, is what can face the high prices of this type of accommodation. According to CBRE data, the average monthly rental rate for a room is 922 euros in Madrid and 967 euros in Barcelona, ??with prices ranging from 600 euros in shared rooms to 1,500 euros/month in Madrid and between 700 and 1,500 euros/month in Barcelona.
These are high prices, although they include not only accommodation but also supplies, bedding, cleaning and leisure options, “so the stays are naturally short, from people who, when they know the city more and do friends, they move to a shared flat”, notes Somoggi.
Node, which manages 4,000 rooms throughout Spain, points out that its buildings have an average occupancy of 95%, with a “long” stay (of more than six months). “Our accommodation is another option to solve the problem of housing in big cities”, points out Almirall.