MARKET CONTEXT
- Spain’s growing population (49.15M) and lack of housing development (c.100K units/annum) is creating tension.
- A decline in Euribor has boosted transactions, which rose 20% year-on-year, to mid-2025.
- Active institutional investment, particularly in Affordable Housing and Flexliving.
- Rental regulation is increasing, with stressed zones and the introduction of the IRAV index for rent updates on contracts signed after May 2023.
- Rental demand continues to exceed supply, reinforcing upward pressure on rents.
OCCUPIERS AND OPERATOR TRENDS
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PRS / BTR / Flex Living:
- Strong rental demand persists, driven by limited access to homeownership, affordability constraints and a structural shortage of available rental supply.
- The BTR market is entering a new phase, with slower delivery of new product and an increasing tendency towards privatization (the break-up and sale of the units to private owners).
- PRS remains stable, with stock standing at approximately 27,000 units, reflecting the maturity and resilience of the segment.
PBSA:
- 7% provision rate of beds in relation to total student population in Spain.
- Increase in international students due to educational quality and lifestyle.
- Fragmented market; top operators represent <45% of total.
- Strong investor start to 2026 with over €100m in assets transacted.
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Nursing Homes:
- Ageing population and high life expectancy drive demand.
- Fragmented market; top 10 operators control only 25%.
- Focus on sustainable developments in new locations.
- Operational costs, especially wages, placing pressure on operators that must comply with increasingly onerous regulation.
TRANSACTIONS AND YIELDS
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PRS / BTR / Flex Living:
- Transactional activity recorded strong growth in Q1 2026, with total BTR/PRS/Flex Living investment reaching €2,060M, driven mainly by two stand-out portfolio transactions (Fidere and Avalon).
- Prime net yields currently stand at 3.85%–4.10% in central Madrid and Barcelona, while the best decentralised product ranges between 4.15% and 4.40%.
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PBSA:
- Strong market reactivation with large-scale transactions.
- Highlight: CPPIB acquires Livensa Living portfolio (9,000 beds) from Brookfield for €1.2B (value allocation 900M Spain, 300M Portugal).
- Prime yield currently 4.40%.
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Nursing Homes:
- In 2026, transaction activity has commenced slowly with two deals in Lugo and Alicante involving institutional cross-border investors. Although CPI's Alicante deal is a development, it's included in the investment analysis due to a long-term operating agreement with Emera.
- The market is poised to see more strategic M&A consolidation, with institutional capital actively seeking high-quality assets and portfolios.
- Prime yields stand at approximately 5.4%, although some purchasers are securing better returns when acting quickly with own funds.
