“The rental price intervention is going to destroy the supply.” This is the main warning that the real estate sector has been making for some time regarding the price cap approved in the context of the housing law. Its omens have already been transferred to the market with the first sale of a portfolio of rental apartments by a fund and in the sector they hope that “more will come out in the coming months.”
Furthermore, they warn that all these homes that are now for rent, once they change hands “they will be expelled from the rental market and will be sold individuallysince with price intervention they are no longer profitable.”
The first to take the step was Patrizia, who has put 542 homes for sale spread across some towns in Barcelona affected by the cap on rental prices. According to different sources in the sector, elEconomista.es The German manager has decided to divest this portfolio “at a loss” since With the rent limit these homes “are no longer profitable”.
This is only “the first of the operations of this type that are going to come to market due to rental intervention”warn the same sources.
In 2022, Patrizia acquired a portfolio of 1,500 apartments that belonged to the Catalan developer BeCorp, to which she paid 600 million euros. Some of them were already leased and another was in the process of construction. Now, the firm has hired JLL to divest just over a third of these units in a transaction that will be around 150 million euros.
What is the reason for selling these homes that are rented and generating a profit? “The rent ceiling”, since the apartments are located in towns such as Sant Just Desvern, Badalona or Abrera, which are part of the list of the 271 municipalities that the Generalitat of Catalonia declared between March and October as stressed areas.
“Every time one of those floors is empty due to tenant turnover or a contract with the current tenant must be renewed, The rent is automatically reduced, since the rental price index begins to be applied and Therefore they are no longer profitable assets. They do not meet the objectives set when the fund acquired the homes,” the same sources point out.
The sector also assures that the sale of this portfolio will surely mean the expulsion of these apartments from the rental market, since ““The norm is that the investors who buy them will do so and then sell them individually, so more than 500 rental homes will be lost.”
At the time, when Patrizia closed the purchase agreement for these homes, she highlighted that “Barcelona, like all the cities in which we invest, offers stable profitability and long-term capital growth.” However, what the manager did not expect is that the Generalitat of Catalonia would put new construction buildings, which were supposedly going to be granted a five-year moratorium, into the bag of the rent cap.
“In terms of connectivity and innovation alone, Barcelona is at the top of the table in our Patrizia European Living Cities report, which analyzes more than 100 cities in terms of accessibility and liquidity, and which helps our clients to have portfolios “Despite this, the city is not well supplied nor does it have enough attractive build-to-rent projects,” highlighted the German manager, pointing to the shortage of rental housing that exists in the city and in the surrounding area. metropolitan of the Catalan capital.
Investment plummets
This lack of housing can worsen given that “capital no longer looks to Barcelona to invest in rentals. It is off the map,” they say in the sector. The latest data published by the consulting firm CBRE confirm these statements.
Of the 1,500 million that have been allocated to the real estate sector in Barcelona, only 377 have been transacted in the Living segment29% more than the same period last year. Although, of these276 million correspond to student residences. “This increase is largely explained by the rise of student residences” which have moved “more than double the total capital allocated to these assets in 2023, when operations with a volume of 130 million euros were closed,” notes CBRE.
The remaining 101 million, would correspond to rental projects, which in the sector is known as Build to Rent (new construction rental projects) and Flex Living. Thus, the consultant points out that the Build to Rent and Flex Living sectors “have fallen compared to last year’s figuresa trend contrary to the national one, where Flex Living continues its expansion and exceeds 974 million euros until the third quarter.”
In just four years, the number of beds made of this type of product has quintupled, going from 2,000 to around 10,000 currently in Spain. In addition, over the next three years it is expected that 18,000 beds will be added.
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