Investors and developers have embarked on developing coliving, 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 new developments to build social housing. rental and the long duration of the contracts, with limits also on the updating of 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 rental housing (build to rent or BTR) no longer necessary. not be profitable.
“The profitability of flexible accommodation is higher because it is a new asset type, and there is no history of its performance or difficulties. “Investors see more risk and demand more return,” acknowledges Stefano Somoggi, director of flexible residential at CBRE. According to the consulting firm's own data, building rental housing in urban locations provides a profitability of 3.8% in Madrid and 4.0% in Barcelona.
For José Ramón Zurdo, director of the Rental Negotiation Agency, the rise of coliving is due to the fact that “they are rentals with less intervention than traditional long-term rentals” so that they provide “more profitability with less risk” to investors and developers.
Thus, the number of beds in these flexible accommodations has multiplied by four in the last three years, up to 10,000 units, and there are projects underway that foresee this number doubling in 2025, according to data from the consulting firm CBRE. Until September 2023, the firm points out, it has attracted investments of 306 million euros, 13% of institutional investment in residential, which adds to the 600 it attracted last year. “Mostly foreign funds and groups invest, because it is a very common modality in the United Kingdom or the Netherlands, but there are already local operators considering investing,” says Olga Beltrán, associate director of the residence area at CBRE Barcelona.
According to the legal experts at the Uría Menéndez law firm, coliving is not a housing lease, one of those regulated by the Urban Leases Law (LAU) because it does not satisfy the permanent need for housing, and must be governed by the Civil Code, which gives freedom agreed to by the parties, as a temporary room rental or as a lodging contract, if other services are provided to the guest (such as cleaning or laundry).
One of the key factors in the flexliving boom is the possibility of building it on land with different urban qualifications: residential, but also tertiary (which allows hotel and commercial use) or facilities, although in each case the accommodation is different.
According to CBRE, coliving 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 large complexes with many common areas and services. Other formulas on the rise, also on tertiary land, are vacation residences or Vacation Living, in coastal or rural areas. On equipment land, however, residences can be built for vulnerable groups, as the City Council has done 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 these accommodations are also booming in areas that attract a high volume of floating population, such as Valencia, Malaga and Vizcaya.
Esteve Almirall, co-founder and general director 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, “despite what it seems, it is not just accommodation for young people.”
The largest number of projects underway focus on corporate residential or Corporate Living since, according to CBRE estimates, more than 80% of the demand for this type of accommodation comes from young professionals who find employment in another city or displaced by their own company, as well as digital nomads or freelancers who have to serve a client in another city.
This type of profile is also the one that can afford 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 ranges ranging from 600 euros in shared rooms to 1,500 euros/month in Madrid and between 700 and 1,500 euros/month in Barcelona.
They are high prices, although they do not include only accommodation but also supplies, bedding, cleaning and leisure options "so the stays are naturally short, for people who, when they know more about the city and make friends, move to an apartment shared,” says Somoggi.
Node, which manages 4,000 rooms throughout Spain, points out that its buildings have an average occupancy of 95%, with a “long” stay (more than six months). “Our accommodations are one more option to solve the housing problem in big cities,” says Almirall.
