Opportunities abound in the Barcelona student property market: the current situation and prospects for growth

It is high time to invest in Barcelona student property: the number of international students in the city is growing and demand for residential property exceeds supply threefold.

Studying in the universities of Barcelona is increasingly attractive with each year: in 2015, the capital of Catalonia came sixth both in the QS “Top European Cities to Get an Education” ranking and on the Reputation Institute “Top Cities of the World” list.

Experts at Tranio.com share some insights on how the popularisation of education in Catalonia has increased the number of students, as well as demand for property in Barcelona.

Demand: international students on the rise

The total number of students in Barcelona shrunk by about 10% between 2010 and 2015 to 170,000, a trend which characterised the whole of Spain. The total number of students in the city is decreasing due to the outflow of Spanish students who come mostly from Barcelona. This has occurred for three reasons:

— the population of Barcelona has shrunk (by 1% between 2010 and 2015)

—the number of Spaniards aged 18 to 34 has decreased (between 2000 and 2014 it fell by 16%)

— the population of Europe in general is ageing (the percentage of young people declined from 28% of the total in 2000 to 20% in 2014).

At the same time, the number of international students in the region increased, having grown from 2005 to 2015 by factors of 2.1 in Spain and 2.5 in Barcelona. The percentage of international students in the Catalonian capital is small (less than 5%, or 8,000 people) in comparison with the same figure in the largest cities of the UK, Germany, the Netherlands and France (10–20%). This means that Barcelona still has a potential for growth in the number of international students.

In spite of their paucity, the international students affect the general demand for residential property in Barcelona: for instance, as of 2015, about 33,000 students, approximately a quarter of them international, applied for places in local residence halls.

In the future, the number of Spanish students will keep decreasing due to demographic changes, but the number of international students will continue growing, largely thanks to the governmental 2015-2020 “Strategy for the Internationalisation of Spanish Universities”. The programme’s objective is to attract as many international students as possible to Spanish universities through a set of measures, including easing the visa regime for international students and bilinguilisation of courses (increasing the percentage of bilingual courses from 20% to 100% in many universities).

Barcelona comes second in popularity with foreign nationals after Madrid. Many universities popular with students from abroad are in Barcelona. Therefore, a significant portion of the newly arrived international students will stay in this very city. In addition, the Catalonian capital attracts a great number of young people who come to study in the Erasmus international student exchange programme, as the University of Barcelona is the main programme coordinator in Europe.

An additional factor of growth in the number of international students in Barcelona is the affordability of local education as compared to that of other Spanish and European cities. To study in Barcelona is on average 20% cheaper than in Madrid, 20–30% cheaper than in Amsterdam or Paris and twice or thrice cheaper than in the big UK cities. Along with that, Spanish higher education institutions, including the universities of Barcelona, will become more popular in the near future thanks to the national economic recovery and a decline in the youth unemployment rate.

Barcelona’s universities

Top universities. Barcelona is home to eight university campuses: five of the higher education institutions are public and three are private. Four of them make the QS 2015/16 World’s University Rankings:

Languages. The languages of instruction are Spanish and Catalan. There are also courses and programmes in English.

Tuition fees. As reported by QS, the average tuition for an international student at one of Barcelona’s universities is about €2,350 per year. According to Espanarusa.com, the tuition depends on the university, major and the cycle of education. For example, bachelor’s degrees in business administration, English philology and tourism cost from €1,500 to €10,000 per year. Master’s degrees in bioinformatics, political science, business administration or tourism and hospitality management cost from €3,500 to €14,000. The cost of Ph.D. studies starts from €750 per year.

Supply: not enough student accommodation for all

Most students in Barcelona live in residential halls. There are about sixty of them there. The total room capacity is 11,000, 85% of which accounts for large dormitories (over 300 places).

Given the total number of places available (11,000) and the number of students needing accommodation (33,000), it becomes clear that only a third of the students in Barcelona can be accommodated. The nationwide student housing provision rate is 56%. At the same time, in Barcelona, the problem of student property shortages is especially acute: according to Savills, the residence occupancy rate is 100% during the academic year.

Almost all the residence halls offer single or small double rooms. Some of them have shared kitchens and bathrooms. In some cases, Barcelona apartments are merged into three, four, or five-bedroom flats with shared kitchens and bathrooms. Some residence halls offer studios, duplexes, and rooms with separate bathrooms and kitchens, as well as spacious double rooms.

The average residence rental rates are around €600 per month, but they can vary depending on the following:

— the dormitory type (public are on average 25% cheaper than private)

— the policies of a certain dormitory (e.g. accommodation in Vila Universitària costs €300-400 per month, while in Barcelona Diagonal Residence Hall the prices start at €1,000)

— the number of roommates (single rooms are on average 20% more expensive than double ones)

— the rental term (when renting for a short term (one to three months), the monthly rental rate is on average 20% more expensive in comparison with long-term rentals (the whole academic year))

— the service package (most dormitories include cleaning in the rental price, some include meals or offer them as an additional option).

Average residence rental prices in Barcelona, EUR per month

Source: Residence halls’ websites

Only the two largest of Barcelona’s universities — the University of Barcelona and the Autonomous University of Barcelona — have residence halls of their own. The rest of the universities work with residence halls under cooperation agreements, while the halls themselves are owned by private companies. The best-known of them are Melon District, Onix Residence, RESA and Residence San Marius. RESA also manages its own properties.

The main alternatives to residence halls are rental flats and rooms offered by private companies. Due to the unavailability of housing, many students rent flats jointly. According to the Spanish real estate website Pisos.com, 53% of the requests for flat-sharing in Spain come from students. The main problem that the students coming to Barcelona encounter, according to HFB Benchmark, is that they have to find flats and rooms provided by private firms, given the lack of places in residence halls.

Another homesharing opportunity is getting accommodation in exchange for taking care of elderly people as part of the Viure i Conviure programme. The University of Barcelona, for example, offers such an option.

The number of places in the residence halls of Barcelona is unlikely to increase significantly in the near future, and, due to the limited supply, jointly renting accommodation in the private sector will grow in popularity. As of early autumn 2016, the prices for single rooms range from €150 per month in the district of Gràcia and the neighbourhoods of Navas and El Clot to €400 per month in the high-end district of Eixample.

Taking into account that there are about 33,000 students in Barcelona who need accommodation and the total residence room capacity is only 11,000, the demand exceeds the supply almost threefold. This situation will favour the growth of residential property rental rates, which may further encourage the developers to carry out new student-housing construction projects. This is the reason that the investors find the segment attractive.

Yulia Kozhevnikova, Tranio.com