Student Housing in Spain - An outlook of a growing market in transformation April 2018 - JLL

 
Student Housing in Spain - An outlook of a growing market in transformation April 2018 - JLL
Student Housing in Spain
An outlook of a growing market in transformation

April 2018
Student Housing in Spain - An outlook of a growing market in transformation April 2018 - JLL
2   Student Housing in Spain | 2017
Contents
1. Introduction
2. Spain, a growing market
  2.1 Macroeconomic backdrop
  2.2 Spanish university system
  2.3 Student mobility
  2.4 Accommodation demand estimate
  2.5 Why Spain?
3. Student accommodation
  3.1 General outlook
  3.2 Privately rented accommodation
  3.3 Student residences
  3.4 Analysis of student accommodation supply in Madrid
  3.5 Analysis of student accommodation supply in Barcelona
   3.6 Analysis of student accommodation supply in other Tier 2 cities
   3.7 New developments
4. Investment in student accommodation
  4.1 Yields
  4.2 Main transactions
  4.3 Debt financing in the student housing sector
5. Challenges and trends
  5.1 Regulatory framework
  5.2 The students of the future
01. Introduction

4                                Student Housing in Spain | 2017
                       ResidencStStudent
Over the past two decades, the             the standard of living and the           estimates the current shortfall between
global student housing sector has          major tourist appeal. Moreover, an       existing supply and actual demand at
experienced rapid growth, fuelled by       increasing number of students are        380,000 beds.
favourable demographic trends. The         choosing to study at universities
rise in student numbers has created        located in a different province from     Very little purpose-built student
strong demand for student housing,         their family home. We estimate that      accommodation in Spain is of the
but universities across the globe          a total of 473,254 students sought       current generation of facilities that
were unprepared to react to the rise       accommodation in the 2016-2017           offer common areas where students
in enrolments and create adequate          academic year in Spain.                  can meet and work. Co-living, a new
student housing; while at the same                                                  concept that offers an entirely new way
time their existing on-campus facilities   The private sector responded to the      of living, is set to grow and become a
became outdated.                           strong demand, developing purpose-       real alternative to traditional housing.
                                           built accommodation aligned with         This new concept is becoming the
Spain is an attractive international       student needs. However, this has         preferred lifestyle choice many among
student destination for a number           been insufficient to cover the current   young, internet-savvy professionals,
of reasons, such as the wide range         shortfall and a sizeable number of       as it offers a new way to live, work and
of globally renowned degrees and           students in Spain are unable to secure   social under one roof.
master's programmes on offer,              a place at a student residence. JLL

Student Housing in Spain | 2017                                                                                            5
02. Spain, a growing market

6                                     Student Housing in Spain | 2017
                            ResidencStStudent
Socioeconomic                              taking the unemployment rate down to          The positive macroeconomic
                                           16.55%, down 2.09 points on the same          indicators and optimistic outlook for
background                                 quarter in 2016. The recent group of          2018 make Spain the ideal location
                                           graduates has registered the biggest          to attract both international and
Macroeconomic backdrop                     fall in unemployment, down 6 points           domestic capital.
                                           on the previous year.
The Spanish economy grew at a                                                            The outlook for Spain in 2018 is
healthy pace in 2017. GDP was up 3.1%      Thanks to the improved economic               positive and the country is set to
YoY, according to Oxford Economics,        situation and job creation, household         remain one of the fastest-growing
which is 6 basis points higher than the    wealth has recovered to pre-crisis            economies not only in Europe, but
EU average of 2.5% YoY.                    levels, following efforts to pay down         globally. However, the pace of growth
                                           debt. According to the Bank of Spain,         will be slower at an average of 2.9%
Domestic demand was the main driver        net household financial wealth in the         per annum, according to Oxford
of growth in 2017, up 2.9% versus 2016.    third quarter of 2017 stood at €1,332         Economics, due to a number of factors,
Private consumption remained strong,       trillion, a rise of 4.3% on the same          such as weaker household spending
up 2.4% YoY, whereas gross fixed capital   period in 2016.                               and political uncertainty in Catalonia,
formation rose 5.0% YoY, according to                                                    which will put downward pressure on
Oxford Economics.                          This growth and increase in demand by         growth prospects should it persist.
                                           households and companies comes against
The number of people in work grew by       a backdrop of moderate annual inflation of
2.65% YoY in the last quarter of 2017,     2.0%, thanks to low energy prices.

GDP, consumer spending and gross capital formation*, % YoY

                  8

                  6

                  4

                  2

                  0

                 -2

                 -4

                 -6

                 -8

                -10
                         2012      2013       2014         2015           2016          2017         2018

                                              GDP          Consumption            Investment

                                                                  Source: Oxford Economics. *Seasonal and calendar adjusted figures.

Student Housing in Spain || 2017
                            2017                                                                                                  7
Socio-demographic backdrop
The percentage of population
with higher education studies in
Spain is above both the European
Union average and that of certain
major European economies. Of the
population aged 25-34, 41% have
undertaken some sort of tertiary
education, including Advanced
Vocational Training and University
Degrees or equivalents. Of the total
population aged 25-64 in Spain,
35.7% have completed some sort
of higher education studies, which
is more than in France, Germany
and Italy. The adult population is
increasingly choosing to undertake
higher education courses, up from
22.7% in 2000 to 35.7% in 2016.

The population aged 18-24 is
expected to grow over the next few
years, reaching an increase of 11% in
2025 versus the 2018 figure, according
to INE data.

The ongoing improvement in
education levels, coupled with the
growth of the population aged 18-
24, will have a positive impact on
student accommodation needs and
demand over the next few years.

8                                        Student Housing in Spain | 2017
Percentage of the population with Higher Education studies, as % of total (2016)

                60%

                50%

                40%

                30%

                20%

                10%

                 0%
                           United Kingdom   Spain            France            Germany               Italy

                                                Aged 25-64      Aged 25-34

                                                                                    Source: Education at a Glance 2017, OECD

            Expected number of people aged 18-24 residing in Spain

               3.500.000

               3.400.000

               3.300.000

               3.200.000

               3.100.000

               3.000.000

               2.900.000
                           2017      2018   2019      2020       2021        2022      2023         2024        2025

                                                                                      Source: INE (National Statistics Institute)

Student Housing in Spain | 2017                                                                                                     9
Spanish University
System

The Spanish University System               at an average of 1.14 per year. The                In the 2016-2017 academic year, 58
(known in Spain as SUE), adapted            Autonomous Communities of Catalonia,               more Undergraduate courses were
to the European Higher Education            Madrid and Andalusia are home to the               taught compared to the previous year,
Area (EHEA) since 2017, is made up          highest number of institutions.                    although this increase is largely due to
of 1,051 centres of learning (schools                                                          a 3.9% rise in new courses at private
and faculties), versus 1,049 during the     The Spanish higher education system                institutions. The same pattern can be
previous academic year.                     consists of 3-4-year Undergraduate1                seen with Master’s and PhDs taught at
                                            programmes, 1-2 year Master’s                      private institutions, which increased
These schools and faculties belong to       programmes and PhDs.                               by 4.9% and 11.7%, respectively. The
82 institutions scattered across the                                                           number of Master’s courses taught at
length and breadth of Spain, 50 of which    In the academic year 2016-2017, the                public universities has fallen by 1.8%
are public and 32 private universities.     Spanish University System as a whole               versus the previous academic year,
The number of private institutions in       taught 8,3782 higher education courses,            while PhD courses grew by 2.3%.
Spain has continued to rise in recent       of which only 352 are available through
decades, increasing from 7 in 1995          distance learning universities and 40 at
to the current level of 32, opening         special higher education institutions.

Breakdown of the number of universities by type and by either on-campus or distance learning

     On-campus public                               1 -     -       1 1 -
                                                                            1 2 -
     On-campus private                3 -   -                                         1 1 -
     Distance learning
                                                                            1 - 1
     and special universities
                                                                                              1 1 -       7 4 1
                                                           4 4 1

                                                                    6 7 1
                                                                                                                 1 -   -

                                                                                          5 3 1
                                                 1 -   -                    1 -   -

                                                                                       2 1 -
                                                                9 1 1

                 2 2 -                                                                                       47 27 8

                                    Source: Ministry of Education. Spanish University System, Data and Figures. Academic year 2016-2017

10                                                                                                          Student Housing in Spain | 2017
University System
                      in Figures

                                                                                   Undergraduate
                      32
                                            5
                 Private
             universities                                                                                   +1.5%       +3.9%                   2,781
                                  27
                                                     47

                                                           50
                                       21                  Public
                                                           universities

                                                                                   Master´s
                                                                                                             -1.8%               +4.9%      3,772
                                   Public universities
                                     On-campus
                                     Distance learning
                                     Special

                                   Private universities
                                       On-campus
                                                                                   PhDs

                                       Distance learning                                               +2.3% +11.7%                         1,105

                                                                                                   0       1000      2000      3000      4000
                                                                                                       Number of courses offered in Spain

                                                                                                       Public universities
                                                                                                        Private universities

                                                                          Source: Ministry of Education, 2017. Academic year 2016-2017.
                                                                          * This includes joint Undergraduate and master’s programmes

                                                                          1
                                                                           For the purposes of this report, the term “Undergraduate”
                                                                          includes all students holding post-Bologna Process degrees,
                                                                          as well as students holding Ciclo 1 & 2 certifications [the
                                                                          former diploma and bachelor’s degree levels] who began
                                                                          their studies before the Bologna reform. These students
                                                                          number 16,273 and represent 1.2% of the total.
                                                                          2
                                                                           These include Undergraduate, Master’s, PhDs and Joint
                                                                          Official Study Programmes at on-campus universities,
                                                                          distance learning and special institutions.

Student Housing in Spain | 2017                                                                                                                     11
Number of students in Spain
In parallel to the growth of the        during the 2016-2017 academic year,          PhDs account for a small part of the
academic offering, the number           up by 10,000 on the previous year,           total, this segment has registered the
of students enrolled in Spain           according to preliminary data issued         highest growth, up 20% on the previous
continues to rise. The total number     by the Ministry of Education. Although       academic year.
of students reached 1,558,685

Number of students enrolled in Spain

                                                        66,479
                                       184,745                                           Undergraduate programmes
                                                       4%                                Master´s
                                                 12%                                     PhDs

                                                              84%
                                                                        1,307,461

                                                         Source: Ministry of Education. 2016-2017 academic year. Provisional data

Growth in enrolment figures by level of study

               Undergraduate                           Master´s                                 PhD

                  +1.2%                                +8%                                  +20%
                                                                                     As regards the above results, the
                                                                                     growth in the number of students
                                                                                     enrolling in Master’s and PhDs
                                                                                     is worthy of mention. This trend
                                                                                     reflects students increased
                                                                                     specialisation to gain leverage
                                                                                     in the labour market.

                                                         Source: Ministry of Education. 2016-2017 academic year. Provisional data

12                                                                                                  Student Housing in Spain | 2017
Autonomous Communities with the highest number of Undergraduate, Master’s and PhD students

                                                     Madrid                             Catalonia                             Andalusia

                                                291,199                              248,172                               242,569
                                                                                           Source: Ministry of Education. Academic year 2016-2017. Provisional data

      Change in number of students (Undergraduate and Master’s)

                                                                                                                                                                  Number of international students
                             1.600.000                                                                                                                  120.000
Number of students (Spain)

                                                                                                                                                        100.000
                             1.550.000
                                                                                                                                                        80.000
                             1.500.000
                                                                                                                                                        60.000
                             1.450.000
                                                                                                                                                        40000

                             1.400.000                                                                                                                  20.000

                             1.350.000                                                                                                                  0
                                         2009-2010    2010-2011      2011-2012    2012-2013      2013-2014     2014-2015     2015-2016     2016-2017*

                                                       Spain (left axis)                           International students (right axis)

                                                         Source: Ministry of Education. 2016-17 academic year *Provisional data for on-campus and distance learning

     • The total number of students dropped by 4.9% between 2011-2012 and 2013-2014, mainly due to the economic crisis.
     However, the last academic year marked a turning point and this steady upward trend has continued into this year.

     • The shift to the Bologna Plan also triggered a further drop in student numbers between 2011-2012 and 2014-2015, due to the
     cut in the number of years of study from 5 to 4.

     • The number of international students has grown year on year, registering the sharpest rise in 2016-2017.

     Student Housing in Spain | 2017                                                                                                                                 13
Student mobility

There are currently around one and                          diversified range of courses taught         their home province, according to
a half million students enrolled at                         at centres located throughout the           JLL estimates.
Spanish universities, irrespective                          country. However, some students
of their home region or country,                            elect to study in another region of         Andalusia, Madrid, Catalonia, Valencia
studying Undergraduate, Master’s                            Spain, either to attend specialised         and Castilla & Leon are the regions
and PhD courses. In addition to                             courses that are not offered closer to      that receive the greatest number of
students enrolled at our universities,                      home or to attend universities with         students from other parts of Spain.
every year Spain also welcomes                              greater prestige and recognition.
students participating in international                                                                 All these regions, with the exception
exchange programmes, such as                                According to data issued by the             of Valencia, have seen the number
Erasmus. Although not included in                           Spanish University Rectors Association      of students from other parts of the
the aforementioned one million and                          (CRUE)3, 282,719 students residing in       country increase, a factor that reflects
a half students, they study at Spanish                      Spain enrolled at public universities       the strong interest of students in
universities for an average of between                      that were not located in their home         relocating to another part of Spain.
6-12 months.                                                province, representing 25% of the
                                                            total student body. In terms of private
                                                            institutions, this figure climbs to 28%
Enrolled students                                           (around 45,906 students)4.
Domestic mobility
                                                            A total of around 328,700 students
Like most developed countries, the                          residing in Spain enrolled at
Spanish university system offers a                          universities that were not located in

Number of students from elsewhere in Spain by Autonomous Community

                                                                                                                     2014 - 2015
                                                                                                                     2015 - 2016
                                       80.000
                                                    +5%
                  Number of students

                                       70.000
                                       60.000                       +17%
                                       50.000                                       +10%
                                       40.000                                                         -4%               +12%
                                       30.000
                                       20.000
                                       10.000
                                            0
                                                Andalusia        Madrid           Catalonia     C. Valenciana    Castilla & León

Source: JLL, based on the CRUE 2017 report and Ministry of Education data for 2016-2017 (Provisional data). Includes movements between
provinces located in the same Autonomous Community, as well as between Autonomous Communities

3
    Latest data available: 2015-2016 academic year
4
    Estimates compiled by JLL based on the CRUE 2017 report and Ministry of Education data for the 2016-2017 academic year* Provisional data

14                                                                                                                    Student Housing in Spain | 2017
Number of students (%)
studying at universities
not located in their home province

                                                 28%
                                          Private universities

                                                 25%
                                           Public universities

                                  Source: JLL, based on the CRUE report and Ministry of Education data for 2016-2017. Provisional data

Student Housing in Spain | 2017                                                                                                    15
International mobility                                        undertaking higher education courses in        campus universities has grown at a
Higher education is becoming an                               Spain. The latest figures are testament        steady pace, increasing by 7% over the
increasingly global business, with                            to this: in the 2016-2017 academic year,       past 8 years. Change (%) in the number
figures of international students                             98,741 students enrolled at Spanish            of international students enrolled in
expected to grow from 2014 figures of                         on-campus universities were from               Undergraduate and Master's courses
4.1 million, to over 7 million by 2020,                       abroad, representing 7.5% of the total
reflecting a weighted average annual                          student body at these institutions.            The largest percentage of international
growth rate of 11%.                                           Breaking these figures down, 4.8%              students are from other European
                                                              of students studying Undergraduate             countries (43% of the total), followed
                                                              courses were from abroad. For Master’s         by Latin America and the Caribbean.
A number of factors make Spain a very
                                                              and PhDs, the figures were even                Spain has become the country
appealing destination for international
                                                              higher, standing at 20.5% and 24.3%,           of choice for young wealthy Latin
students. In fact, the number of
                                                              respectively.                                  American students. The growth of
foreign students is expected to be
even greater in coming years.                                                                                students from Asia and Oceania is also
                                                              The total number of international              worth pointing out. They now account
                                                              students has grown by 10.2% versus             for 13% of international students and
Number of international students
                                                              the previous academic year.                    this figure is only expected to rise in
enrolled at Spanish universities
                                                                                                             the future, now that Asian countries
There is undoubtedly growing interest                         The total number of international              are the largest outbound markets of
among international students in                               students enrolled at Spanish on-               international students globally.

Growth in the number of international students in Spain versus the previous academic year

                                     Undergraduate                           Master´s                                  PhD

                                        +11.4%                              +5.2%                                 +16.2%
                                                                                   Source: Ministry of Education. 2016-17 academic year. Provisional data

Change (%) in the number of international students enrolled in Undergraduate and Master's courses

                                                                            CARG**: +7 %
                            60.000
       Number of Students

                            50.000

                            40.000

                            30.000

                            20.000

                            10.000

                                0
                                     2009-2010   2010-2011    2011-2012    2012-2013    2013-2014    2014-2015     2015-2016    2016-2017*

                                                              Undergraduate            Master´s

                                          Source: Ministry of Education. 2016-17 academic year. Provisional data. ** CAGR: Compound Annual Growth Rate.

16                                                                                                                          Student Housing in Spain | 2017
Total number of international students (Undergraduate, Master’s and PhD)
at on-campus universities by place of origin

             7,503     1,698

    12,702
                                                          Europe
                                         41,997           LatAm and Caribbean
                                                          Asia and Oceania
                                                          Africa
                                                          USA & Canada
         34,841

Year-on-year growth (%) of international university students by nationality
  Europe          USA & Canada            LatAm and Caribbean      Africa         Asia and
                                                                                  Oceania
  12.7%              14.4%                        5.7%             10.9%           14.1%

                       Source: Ministry of Education. Academic year 2016-17. Provisional data

It can therefore be concluded that the mobility of both domestic and
international enrolled students is on the rise at both public and private Spanish
universities year after year.

Distribution of the total number of students at public and private universities
by origin

  100%                            6.6%                             13.5%
   90%
   80%                            24.5%
   70%
                                                                   27.7%
   60%
   50%
   40%
                                  68.9%
   30%                                                             58.8%
   20%
   10%
    0%
                         Public universities               Private universities

             International students
             Students from other Spanish provinces
             Students from the same province

  Source: JLL, based on the CRUE 2017 report and Ministry of Education data for 2016-2017.
                                                                         Provisional data

Student Housing in Spain | 2017                                                                 17
Erasmus students                               Total inbound Erasmus students in Spain
The European Union celebrated 30
years of the Erasmus Programme
in 2017. In recent years, Spain has                Spain
become a leader in the number of
inbound and outbound Erasmus
students, led by Universidad
de Granada and Universidad                      Germany
Complutense de Madrid.

Spain topped the ranking last year once
again as the preferred destination for
                                          United Kingdom
Erasmus students, an enviable position
it has held since 2001.

In the 2015-2016 academic year, Spain
welcomed a total of 45,813 students               France
through the Erasmus Programme, ahead
of Germany, the UK, France and Italy.

The number of inbound Erasmus                       Italy
students received by Spain has grown
at a compound annual growth rate of
4.4% since the 2007-2008 academic
                                                            0

                                                                  10,000

                                                                           20,000

                                                                                    30,000

                                                                                             40,000

                                                                                                      50,000
                                                            0

                                                                 10000

                                                                           20000

                                                                                    30000

                                                                                             40000

                                                                                                      50000
year until 2015-2016.

                                                                Source: European Commission, 2015-2016 academic year.
                                                                            Erasmus Students and those on placements

18                                                                                                       Student Housing in Spain | 2017
Total number of visiting Erasmus students in Spain
     Number of students

                                                                          CARG*: 4.4 %

                          2007-2008   2008-2009   2009-2010   2010-2011    2011-2012   2012-2013   2013-2014   2014-2015   2015-2016

                              Source: European Commission. Erasmus Students and those on placements *CAGR: Compound Annual Growth Rate.

Student Residences in Spain | 2017                                                                                                     19
Accommodation demand estimate

           After conducting research into the movements of domestic and
     international students enrolled at Spanish universities, as well as students
        that receive grants to undertake courses in the country – such as the
       Erasmus Programme –, JLL estimates that some 473,254 young people
      will need student accommodation. There is also a body of students that
       relocate within their same province to attend university who also need
     accommodation, although exact figures in this area are harder to come by.

      To meet this demand, there are currently only 93,600
     purposes built student beds in Spain, which translates
            into a major shortfall of 380,000 beds.

20                                                                             Student Housing in Spain | 2017
Number of students
                                                relocated outside
                                    of their home province

                                       Potential demand for accommodation
                                    Total: 473,254 students relocated

                328,700                               98,741                                             45,813

         Displaced Domestic                          International                                        Erasmus
                    Students                             Students

                                     Enrolled                                                          Non-enrolled
                                     students                                                            students

              Source: Own information based on Ministry of Education data, as well as from the CRUE report and the European Commission

Student Housing in Spain | 2017                                                                                                     21
Why Spain?

       As we have seen earlier, Spain has become an exceedingly attractive global
       destination for international students. It is therefore worth asking why they
     choose Spain from the wide array of possible destinations. There are clearly a
      number of decisive factors when it comes to choosing Spain. Taken together,
     these factors have successfully positioned Spanish university towns and cities
                            among the best locations to study.

22                                                                                Student Housing in Spain | 2017
Student Housing in Spain | 2017   23
Two Spanish locations
           among the Best Student Cities

           Two Spanish cities are among the leading European urban
           destinations for international students according to the QS Best
           Student Cities 2017 ranking. The ranking takes into account factors
           such as student diversity, the attractiveness of the facilities, the
           affordability of the fees and business activity. Barcelona and Madrid
           are ranked eighth and twelfth, respectively, among the top rated
           European cities.

     Best urban destinations for international students in Europe
     Ranking     City         Ranking            City           Ranking        City
     1           Paris        6                  Vienna         11             Dublin
     2           London       7                  Edimburgh      12             Madrid
     3           Berlin       8                  Barcelona 13                  Milan
     4           Munich       9                  Manchester     14             Glasgow
     5           Zurich       10                 Prague         15             Lyon

                                                          Source: QS Top Universities, 2017

           Spanish,
           the world’s second most spoken language

           Spanish is in fashion. The language is spoken by almost 572 million
           people around the world and is the second most important
           native tongue for a number of speakers. It is also the second most
           important language in terms of international communication.

           Spanish is also competing with French and Mandarin Chinese for the
           second top spot as the world’s most studied language after English,
           with over 21 million learners around the world. The greatest interest
           in learning Spanish lies in English-speaking countries, especially the
           United Kingdom, which considers it the most important language
           for the future, and the United States, where it is the most studied
           foreign language at all educational levels5.

                                   5
                                       Spanish: a living language, Instituto Cervantes, 2017.

24                                                             Student Housing in Spain | 2017
Robust
      university offering

      Spain has a long-standing university tradition, with a wide variety of quality
      courses. The QS World University Ranking features 21 Spanish universities,
      10 of which are among the 500 best institutions.

      This is in addition to the post-graduate programmes in Spain, which are
      held in high regard, especially in the area of business and management. The
      ranking compiled by leading business daily the Financial Times features three
      Spanish business schools among the European top ten: IE, IESE and ESADE.

Best business schools in Europe
 2017 Ranking        Business School                            Country
 1                   London Business School                     United Kingdom
 2                   HEC Paris                                  France
 3                   IE Business School                         Spain
 4                   University of St Gallen                    Switzerland
 5                   Insead                                     France
 6                   SDA Bocconi                                Italy
 7                   IESE Business School                       Spain
 8                   ESADE Business School                      Spain
 9                   Rotterdam School of Management             Holland
 10                  IMD                                        Switzerland

                                                         Source: Financial Times, 2017

Student Housing in Spain | 2017                                                          25
A benchmark
           in terms of tourism

           The wide array of leisure options offered by Spain makes it one of the
           main inbound tourist markets in the European Union for non-Spanish
           nationals, registering 294 million overnight tourist stays in 20166. Spain
           is ranked third in terms of international visitor figures (75.3 million)7.

           Top global tourism destinations (millions of tourists)
           1# France - 82.6 M
           2# United States - 75.6 M
           3# Spain - 75.3 M
                                                           Source: World Bank data, 2016

     Top 5
     European tourist destinations 2016
     Ranking      Country          Millions of overnight
     1            Spain                     294
     2            Italy                     199
     3            France                    123
     4            Austria                    83
     5            Greece                     80
                                        Source: Eurostat, 2016

           Standard
           of living

           Spain leads the ranking in terms of the best experience for expats. It is
           also the European leader and second globally in terms of lifestyle. Most
           of the foreign nationals living in Spain (56%) moved here to improve
           their standard of living. This data is reflected in the opinions of expats
           living in Spain, as compiled by HSBC in its Expat Explorer report.

                                                                           6
                                                                            Eurostat, 2016
                                                                 7
                                                                     World Bank data, 2016

26                                                          Student Housing in Spain | 2017
A welcoming
    culture

    The culture, making friends and integration are the factors highlighted
    most in terms of the experience of expats living in Spain, all of which have a
    bearing on the decision to move here. This data is also reflected in the HSBC
    ranking, which positions Spain in second place globally and first in Europe
    under the “People” category. According to the HSBC study, 73% of expats
    living in Spain enjoy their cultural immersion in the country, compared to
    the global average of 61%. They also stress how easy it is to integrate into
    the local population (75%) and the improved social life (51%).

Top 10 countries
globally in terms
of experience
                                    Global                               Ranking              Ranking
 Country
                              Experience Ranking                         Lifestyle            People
 New Zealand                          1                                      9                    1
 Spain                                2                                      1                    2
 Portugal                             3                                      2                    3
 Singapore                            4                                      10                   4
 Australia                            5                                      4                    8
 Norway                               6                                      5                   11
 Canada                               7                                      8                    6
 Turkey                               8                                      16                  12
 France                               9                                      3                   22
 Austria                              10                                     6                   18

                                                                                     Source: Expat Explorer 2017, HSBC

Student Housing in Spain | 2017                                                                                    27
03. Student accommodation

28                                 Student Housing in Spain | 2017
                                 StStudent
General outlook                             to compete with those looking to         university or public or private body
                                            rent long-term for their permanent       own the freehold of the building or the
                                            residence. Many of these properties      land on which it is built. The actual
When it comes to looking for                cannot be let on a seasonal basis and    residence itself is managed by a private
accommodation, the decision is often        the rents are often more expensive.      operator through a management
dependent on factors like household                                                  contract or long-term lease (normally
budget, location and the quality of         An alternative that has emerged          for a term of between 40 and 75 years).
the services offered. When it comes to      in recent years in renting a room        The remaining residences are managed
choosing accommodation, students are        in a private flat through platforms      directly by private operators on their
faced with two main options: the first is   specialising in these kinds of           own land and buildings.
to turn to the private rental market and    lets, such as Uniplaces. These
rent a flat on their own or with others     companies provide end-to-end rental      The majority of public universities
through property rental platforms; the      management services, offering the        offer accommodation in the vicinity of
second option is to reserve a place at      tenant a comprehensive package           the campus, however the facilities are
a student residence or colegio mayor        and greater ease and flexibility         often obsolete and in need of major
[residence offering additional cultural,    when it comes to finding the right       investment to refurbish them. The
academic, religious and sporting            accommodation option.                    typical budget constraints imposed
activities], which are either run by the                                             on the public sector open the door to
universities themselves, religious orders   Lastly, student residences and student   private investors, which are attracted
or private operators.                       halls (colegios mayores) complete        by the compelling yields offered
                                            the student accommodation offering.      by these assets, coupled with the
Students turning directly to the rental     Some of these work as a concession       consistently more sophisticated and
market, either for their own use or to      or surface right over the land – very    demanding requirements of users.
flat-share with other tenants, have         common in Spain –, whereby the

Student Housing in Spain | 2017                                                                                            29
Privately rented
accommodation

One of the leading student                  In general terms, in large cities with high    data. It is worth pointing out that rising
accommodation options is the private        student populations, rental prices have        residential rental prices have a direct
rental market, aimed at those who do not    grown at an exponential rate over the          and positive effect on the cost of student
need the same level of services, security   past two years. In Madrid for example,         housing, driving prices upwards.
and sense of community as those offered     rental levels have grown by 11% versus
by student halls of residence or student    2016, while in Barcelona prices are up         In parallel to this, platforms such as
halls (colegios mayores). This option       by 8%. The rent for a small apartment          Uniplaces provide a wide variety of
becomes all the more relevant given         or studio has reached €812 per month           accommodation options, offering the
the short supply of places in student       in the centre of Madrid, whereas similar       possibility of renting beds, bedrooms
residences, which forces many students      flats in Barcelona’s L'Eixample district can   or entire apartments during
to seek alternative accommodation.          command €830, according to Idealista           academic term times. They also

30                                                                                                       Student Housing in Spain | 2017
verify current availability and the         a system of guarantees and coverage        simplifying the management of their
validity of the conditions under offer,     that cannot be equalled by the direct      accommodation.
giving greater peace of mind to the         rental market, offering greater security
tenant. These platforms, which are          for both owners and students.
predominantly used by international
students (87.5%, according to               Data from Uniplaces shows that
Uniplaces), allows tenants to reserve       students prefer reserving individual
accommodation from their home               rooms in three-bedroom apartments
country or city in their own language,      over sharing a room or leasing an
without having to physically visit the      entire apartment. They also prefer
property beforehand. They also offer        the tariff offered to include utilities,

Percentage change in residential rents in Madrid and Barcelona

Rental Levels
     (€/sqm)
                                                                                                                  +8% YoY
           20                                                                              +19% YoY                 2017
           18                                                                                2016
           16
           14
           12                                                                                      +13% YoY      +11% YoY
           10                                                                                                       2017
                                                                                                     2016
            8
            6
            4
            2
            0
                       2008       2009    2010     2011        2012     2013       2014     2015       2016       2017

                                                   Barcelona          Madrid

                                                                                                            Source: Idealista

Student Housing in Spain | 2017                                                                                                 31
Student accommodation

The student accommodation market            installations and a wealth of technology-   An ever-growing market
has undergone a significant change          based features. They are also more
over recent years in response to            “tech savvy”, using social media and the
the increasingly demanding and              internet to search for accommodation.       In terms of specific market figures,
intricate requirements of the student                                                   at 2017-year end Spain had 1,148
population. This has led to heightened      A rise in the number of domestic            student residences and student halls
competition between operators as            and international students against          (colegios mayores) offering a total
they attempt to ensure that their           the limited availability of student         of 93,653 beds. Student residences
accommodation stands out from the           accommodation is driving the                are the most prominent type of
rest, as well as to grow their businesses   development of new high-quality             accommodation – 963 residences
and meet new expectations.                  projects at competitive prices by           offering 70,590 beds – versus 185
                                            existing operators and new players          student halls (colegios mayores) with
The students of today are consumers         created to cover the shortfall in demand.   23,063 beds.
who have high demands when it
comes to university life, including first
class accommodation with modern

Type of student accommodation in Spain in 2017

                       Student                                                          Student
                      residences                                                          halls

             Number of accommodation units: 963                              Number of accommodation units: 185
                     Number of beds: 70,590                                         Number of beds: 23,063

                                                                                                 Total
                                                                               Number of accommodation units: 1,148

                                                                                        Number of beds: 93,653

                                                                               + 2.3% Number of beds 2016/2017
 Source: DBK, 2018

32                                                                                                  Student Housing in Spain | 2017
The bullish trend witnessed over                     years. However, growth has                  extremely concentrated insofar as the
previous years continued into 2017                   been overwhelmingly positive                five leading entities hold 15.5% of the
with 14 new accommodation units                      in the case of privately managed            beds available in the market.
(all student residences) offering an                 accommodation not connected to
additional 2,149 beds. This growth                   public or private universities.             By region, Madrid has the most number
is expected to persist thanks to the                                                             of accommodation bedst for students,
development of new projects estimated                With regard to privately-owned              accounting for 22.6% of the total
to increase capacity by 1,5% and 6,2%                accommodation in Spain, many units          number in Spain, followed by Barcelona,
in 2018 and 2019, respectively.                      are operated by small entities which        with 12.4%. In fact, five new residences
                                                     manage just a single residence or           with a total of 719 places were opened in
The number of beds available                         student hall (colegio mayor). However,      Madrid in 2017, the region with the most
at accommodation owned                               there are also a handful of companies       openings that year.
by public universities has                           and groups which manage several
significantly reduced over recent                    units. Along these lines, supply is

Growth of student accommodation in Spain

                       110.000
                                                                                      100,936*
                       106.000
                                                                        95,031*
                       102.000                            93,653
      Number of beds

                        98.000
                                            91,504
                        94.000                                                    F
                                 90,410
                        90.000

                        86.000

                                                                                                            Source: DBK, 2018 *JLL estimate
                                     2015     2016           2017         2018          2019

Student Housing in Spain | 2017                                                                                                         33
Madrid

     Analysis of student accommodation supply

34                                              Student Housing in Spain | 2017
Analysis of student
accommodation supply in
Madrid
Availability

Madrid is the city which welcomes        mayores) in the region of Madrid.             with 18.2% of total places.
the most number of students and has      More than 85% of beds are located in
the greatest supply of purpose built     areas within Madrid city limits (71%),        With regard to the capital’s sub-
student accommodation with 142           Alcalá de Henares (9%) and Villanueva         markets 8, Ciudad Universitaria has the
residences and student halls (colegios   de la Cañada (6.2%). If we break down         most supply of beds (5,769), reaching
mayores) spread across the capital.      the city of Madrid by district, Moncloa       32.9% of the total, closely followed
                                         has the greatest number of places,            by the city centre and periphery,
At present, there are 17,509 beds in     representing 47.8% of those available         comprising 31 and 30.8%, respectively.
residences and student halls (colegios   in the capital. Next up is Chamberí,

Number of students per university

    University                                           Status                                Total no. of students
    Complutense de Madrid                                 Public                                        72,738
    Rey Juan Carlos                                       Public                                        47,476
    Politécnica de Madrid                                 Public                                        36,694
    Autonoma de Madrid                                    Public                                        29,285
    Carlos III de Madrid                                  Public                                        19,232
    Universidad de Alcalá                                 Public                                        17,983
    Europea de Madrid                                    Private                                        11,421
    Camilo José Cela                                     Private                                        9,916
    San Pablo-CEU                                        Private                                        8,640
    Alfonso X El Sabio                                   Private                                        6,854
    Antonio de Nebrija                                   Private                                        6,057
    Pontificia Comillas                                  Private                                        4,555
    IE Universidad                                       Private                                        4,151
                                                          Total                                        275,002

                                                             Source: Ministry of Education. Academic year 2016-17. Provisional data

8
    Distribution of sub-markets by JLL

Student Housing in Spain | 2017                                                                                                  35
Breakdown of number of beds by Madrid municipalities

                                                                                    rid
                                                                       ad
                                                                      M
                                                                  7
                                                        10

                                                             3                          2
                                                                              1

                                                             4
                                                                      6

                                                                          5

                                                                                    9

        1   Madrid: 12,436                   6    Leganés: 307

        2   Alcalá de Henares: 1,582         7    Pozuelo de Alarcón: 234

        3   Villanueva de la Cañada: 1,083   8    Others*: 209

        4   Villaviciosa de Odón: 696        9    Aranjuez: 157

        5   Getafe: 692                      10   San Lorenzo de El Escorial: 113

                                                                                            * ”Others” include Cercedilla, Hoyo de
                                                                                                    Manzanares and Guadalajara.
                                                                                                                      Source: JLL

36                                                                                                  Student Housing in Spain | 2017
Breakdown of number of beds between Madrid sub-markets

                                 7.000
                                                 5,769
                                 6.000                                       5,385
                                                                                                          4,967
                Number of beds

                                 5.000
                                 4.000
                                 3.000
                                 2.000                                                                                              928
                                 1.000
                                    0
                                              Ciudad                     Perifery                    City centre            Cantoblanco
                                            Universitaria                                                                      (UAM)

                                                                               Madrid Sub-markets

                                                                                                                                                                                Source: JLL
Number of beds by district and municipality in the region of Madrid

                        Fuencarral - El Pardo

                                                                                                                                                                                           Barajas

                                                                                                                                                          Hortaleza
                                                         Tetu‡n

                                                                                         Chamart’n

    Moncloa - Aravaca

                                                                                                                                                                          San Blas - Canillejas
                                                                  Chamber’                                                     Hoyo de Manzanares
                                                                                                                                          Ciudad Lineal

                                                                                              Salamanca
                                                                                                                     Villanueva
                                                                                                                     de la Ca–ada                                     Alcal‡ de
                                                                                                                                                                       Henares
                                                                                                                                      Pozuelo
                                                                                                                                                Madrid          Coslada
                                                                                                                     Villaviciosa de Od—n

                                                                                                                                                LeganŽs
                                                    Centro                                                                      M—stoles           Getafe        Number of beds
                                                                                                                                                                                100
                                                             Madrid                                                                 Fuenlabrada
                                                                                                 Retiro                                                                         225
                                                                                                                                                                                350

           Latina                                                                                                                                   Moratalaz                   500 Vic‡lvaro

                                    Arganzuela

Madrid Sub-markets
     Centre                          Ciudad Universitaria                    Periphery                    Universidad Autónoma

Student Housing in Spain | 2017                                                                                                                                                                   37
Type of accommodation                                                                                    13%

With regard to the type of residences                                                                          20%
and student halls (colegios mayores)
, 67% are mixed, 20% are female only
and 13% male only. Single-sex student                                                                                                    Mixed
halls (colegios mayores) are generally                                                                                                   Female
operated by religious orders.                                                                                                            Male

In turn, student accommodation
managed by private sector operators is
usually mixed.
                                                                       67%
                                                                                                                                                  Source: JLL

                                                                                                Number of beds
Main operators                                                                              0    500   1,000 1,500 2,000
                                                                                                                                         Private operator
                                                                                   RESA
In Spain, student residences and                                                                                                         Public university
student halls (colegios mayores)                          Nexo Residencias
                                                                                                                                         Private university
are mainly operated by private                     U. Carlos III Madrid
                                                                                                                                         Religious orders
companies, the universities
                                                        Alfonso X El Sabio
themselves or religious orders. RESA
operates the highest number of beds                                             U. Alcala
in Madrid (1,771), representing 10.68%     U. Complutense De Madrid                                                                  Top 3
of the total. Around 30% of beds are                                                                                                 Private operators
managed by the top 10 operators,                                              Agustinos
including public universities.                   Europea De Madrid                                                                   1. RESA
                                                                          Mi Casa Inn                                                2. NEXO Residencias
                                               Agustinas Misioneras                                                                  3 . Mi Casa Inn

                                                                                                                                                  Source: JLL

Average prices*                             Average rates of accommodation managed by private operators €846 per month

If we compare student accommodation
rates in Madrid by district, the average                              1.000
cost of a single room is approximately                                 800
€857 per month in Ciudad Universitaria,
                                                Price per month (€)

while in the city centre, this figure                                  600
stands at €752 per month. Conversely, if
                                                                                     857                 794                   752                 670
we solely focus on the accommodation                                   400
managed by private operators, the
                                                                       200
average price rises considerably to
€846 per month due to the quality and                                    0
services they offer.                                                              Ciudad               Perifery            City centre       Cantoblanco
                                                                                Universitaria                                                   (UAM)
                                                                                                       Madrid Sub-markets
                                                                                                                                   Source: JLL
                                                                              Average price* per room includes only accommodation and 10% VAT.

38                                                                                                                            Student Housing in Spain | 2017
Student Housing in Spain | 2017   39
New openings

     New openings in Madrid
       Mi Casa Inn Moncloa

40                            Student Housing in Spain | 2017
Opened recently, Mi Casa Inn Moncloa, located next to Ciudad Universitaria, has 250 beds offering optional catering at
prices ranging from €625 to 1,300 per month, as well as a gym, solarium, common rooms and shared kitchen.

    Mi Casa Inn Moncloa

          Number of beds: 250

          Accommodation offer: Full board (optional)

          Price range: €625-1,300 per month

          Operator: Mi Casa Inn

Student Housing in Spain | 2017                                                                                          41
New developments

     New developments in Madrid
     Cuesta San Vicente (La Imprenta)
            Collegiate Aravaca

42                                      Student Housing in Spain | 2017
Cuesta San Vicente (La Imprenta)

The Student Hotel will open its doors in Q3 2019 with 300 beds under its hybrid model imported from the Netherlands,
merging a hotel and student accommodation offering co-working areas, a restaurant, study rooms and a gym. Prices for
students range between €1,000 and 1,200 per month.

Collegiate Aravaca

WP Carey and its partner Grupo Moraval are developing a new high-quality student residence in Aravaca. The new
residence will be operated by Collegiate, housing over 200 studio apartments and amenities such as a gym, study areas,
games room, café-bar and private dining room. It is expected to open in summer 2018 with monthly fees ranging between
€900 and €1,110.

The Student Hotel

The Student Hotel is expanding quickly    the best in class and most innovative       expand in the main Spanish cities and
in Spain, other European cities and       student housing / co-living / co-working    create 3,000 rooms in Spain in the next
further afield. It will open 300 rooms    Student Hotel hospitality concept in        four years
in Q3 of 2019 in this prime location in   Spain. The Madrid project is in line with
the city centre of Madrid, showcasing     The Student Hotel’s strategy to quickly                          Jules Choukroun,
                                                                                                       Investment & Business
                                                                                                       Development Manager,
                                                                                                           The Student Hotel

Student Housing in Spain | 2017                                                                                             43
Barcelona

     Analysis of student accommodation supply

44                                  Student Housing in Spain | 2017
Analysis of student
accommodation supply
in Barcelona
Availability

Barcelona lies in second place in        Eighty-eight per cent of these places can      beds (5,769), reaching 34% of the total,
terms of the number of inbound           be found in the city of Barcelona (65%)        followed by the periphery.
students and the number of beds          and Bellaterra (23%). If we break down this
available, with 77 units across the      data by district, Sarrià-Les Corts has the
Catalan capital.                         highest number of places, representing
                                         close to 28% of the total supply.
At present, there are 9,517 beds in
residences and student halls (colegios   With regard to the sub-markets, Ciudad
mayores) in the region of Barcelona.     Universitaria has the greatest supply of

Number of students per university

 University                                               Status                                Total no. of students
 Universidad de Barcelona                                  Public                                        53,422
 Autónoma de Barcelona                                     Public                                        37,517
 Politécnica de Cataluña                                   Public                                        30,245
 Pompeu Fabra                                              Public                                        19,156
 Ramón Llull                                              Private                                        15,007
 Internacional de Catalunya                               Private                                        3,492
 Abat Oliva                                               Private                                        1,569
                                                           Total                                        160,408

                                                              Source: Ministry of Education. Academic year 2016-17. Provisional data

Student Housing in Spain | 2017                                                                                                  45
Breakdown of number of beds by Municipalities within Barcelona Province

                                                               Barcelona

                                                                6

                                                                    3
                                                                          9
                                                                        4
                                                                          10
                                                                        2

                                                                           1
                                                           7    5

        1   Barcelona: 6,227           6    Manresa: 110

        2   Bellaterra. 2,193          7    Vilanova: 65

        3   Terrassa: 306              8    Montgat: 50

        4   Sant Cugat: 297            9    Sabadell: 50

        5   Castelldefels: 187         10   Cerdanyola: 32

                                                                                                 Source: JLL.

46                                                                             Student Housing in Spain | 2017
Breakdown of number of beds between Barcelona sub-markets and the Universidad Autónoma de Barcelona campus

                                                    3,753
                                   4.000
                  Number of beds

                                   3.000
                                                                               2,193
                                   2.000
                                                                                                          1,806
                                                                                                                                   1,097
                                   1.000                                                                                                                    688

                                       0
                                                City centre                 Bellaterra              Sarrià / Sant                   Other               University
                                                                              (UAB)                   Gervasi                      perifery              quarter

                                                                                            Barcelona Sub-markets

                                                                                                                                                                                                Source: JLL

Number of beds by district and municipality in Barcelona
                                                                                              Badia del
                                                                                               Vallès
    Terrasa

                                                                                                                                Ripollet
                                             Sabadell                                                       Cerdanyola
                                                                                                             del Vallès

                                                                                                                                                Montcada
                                                                                                                                                 i Reixac

                                                                        Sant Cugat
                                                                         del Vallès

                                                                                                                                                              Santa Coloma
                                                                                                                                                              de Gramanet
                                                                                                                                                                                     Badalona

                                                                                                              Horta-Guinardó                                         Sant Adrià
                                                                                                                                                                      de Besòs

        Molins de Rei
                                                                              Sarrià-Sant Gervasi                         Gràcia
                                                                                                                                                            Sant Martí

   Sant Vicençe                                                                                                                                                                   Number of beds
    dels Horts
                                                                                                                               Eixample
                                                                                                                                                                                          100
                                                                                        Les Corts
                                                                                                                                           Barcelona                                      225
                                    Sant Feliu de           Sant Just
                                     Llobregat              Desvern                                                                                                                       350
                                                                        Esplugues de
                                                                          Llobregat                                                                                                       500

       Santa Coloma                                                                                                  Sants-Montjuïc
        de Cervelló                            Sant Joan
                                                 Despí

Barcelona sub-markets
     City centre                               Sarrià / Sant Gervasi                    Periphery                         Zona Universitaria                   Bellaterra

Student Housing in Spain | 2017                                                                                                                                                                         47
1%         7%
Type of accommodation
With regard to the type of residences and
student halls (colegios mayores) , the vast
majority are mixed (92%), with just 7%
                                                                                                                                                     Mixed
female only and 1% male only. Single-
sex student halls (colegios mayores) are                                                                                                             Female
operated by religious orders.                                                                                                                        Male

                                                                                     92%                                                                       Source: JLL

                                                                                                                  Number of beds
Main operators                                                                                          0   500    1,000 1,500 2,000 2,500
                                                                                                                                                     Private operator
                                                                                                RESA
Once again, RESA operates the highest                                                                                                                Public university
number of beds in Barcelona (2,245),           Universidad Autonoma de Barcelona
                                                                                                                                                     Private university
representing close to 27% of the total                    Universidad de Barcelona
                                                                                                                                                     Religious orders
across the Catalan capital. Around
                                                                                                 TSH
60% of beds are managed by the top 3
operators, including public universities.                                           Residencia Sarrià
                                                                                                Onix
                                                                                                                                                  Top 3
                                                                                                                                                  Private operators
                                                                                            Erasmus
                                                                                            Unihabit
                                                                                                                                                  1. RESA
                                                                                                Cett                                              2. TSH
                                               Instituto Hnos. de Escuelas Cristianas                                                             3 . Residencia Sarrià

                                                                                                                                                               Source: JLL
Average prices*
If we compare student accommodation
rates in Barcelona by district, the average
cost of a single room is approximately
€760 per month in Sarrià-Sant Gervasi,
while in the city centre, university quarter
and periphery, such figures stand at €753,              Average rates of accommodation managed by private operators: €778 per month
€674 and €529 per month, respectively.
In the town of Bellaterra, where the
Universidad Autónoma de Barcelona’s                                                 800
main campus and a large number of                                                   700
                                                              Price per month (€)

accommodation places can be found, the                                              600
average price is lower than the rest of the
                                                                                    500
sub-markets (€501 per month), although
                                                                                    400
it should be noted that all units in this                                                     760                 753               674           529            501
sub-market are owned and managed by                                                 300
the aforementioned university. Conversely,                                          200
if we solely focus on the accommodation                                             100
managed by private operators, the average                                             0
                                                                                          Sarrià / Sant       City              University       Other        Bellaterra
price rises considerably to €778 per month
                                                                                            Gervasi          centre              quarter        perifery        (UAB)
due to the quality and services they offer.
                                                                                                                     Barcelona Sub-markets
                                                                                                                                               Source: JLL
                                                                                          Average price* per room includes only accommodation and 10% VAT

48                                                                                                                                           Student Housing in Spain | 2017
Student Housing in Spain | 2017   49
New openings

     New openings in Barcelona
           The Loft Town

50                               Student Housing in Spain | 2017
The Loft Town

          Number of beds: 146

          Accommodation offer: Full board

          Price range: €750-1,540 per month

          Operator: The Loft Town

Student Housing in Spain | 2017               51
New developments

     New developments in Barcelona
                   Nexo
          Finestrelles, Collegiate

52                                   Student Housing in Spain | 2017
Nexo

With two projects under development and set to open in 2019, Nexo’s commitment to the continual expansion and
improvement of high-quality student accommodation in Barcelona is more than assured. The Residencia Garbí, next to the
Sants train station, will have 370 beds, whereas the Residencia Universitaria Aleu, in the heart of the Universidad de Barcelona
campus, will house around 500 students. Both units will offer full board accommodation in addition to other amenities such
as a gym and study room.

                                                    Residencia Garbí                                            Residencia Aleu

Finestrelles, Collegiate

A WP Carey and Temprano Capital Partners joint venture will see the 2019 delivery of a top quality student residence in
Esplugues de Llobregat, 5 minutes from the Zona Universitaria of Barcelona. The accommodation will comprise 372 studios as
well as a gymnasium with panoramic views, roof top swimming pool, cinema room, dinner party room and games room. The
property sits above the Finestrelles Sur shopping complex, currently under construction, which is due to open in 2018 and will
provide shopping and restaurants for the students on their very doorstep.

Student Housing in Spain | 2017                                                                                               53
Other Cities

     Analysis of student accommodation supply

54                                          Student Housing in Spain | 2017
Valencia
Availability

Valencia is third in terms of the number   the areas of Benimaclet and Algirós,          also appealing due to their proximity
of students welcomed to the city to        as well as the city centre. The coastal       to the sea.
experience university life, with 2,655     areas of Malvarrosa and Norte del
beds at present in 24 units located in     Cabanyal to the north of the city are

Number of students

 University                                                            Status                        Total no. of students
 Universidad de Valencia                                               Public                                48,131
 Universidad Politécnica de Valencia                                   Public                                 27,983
 Universidad Católica de Valencia San Vicente Mártir                   Private                               11,120
 Universidad Cardenal Herrera-CEU                                      Private                                8,406
 Universidad Internacional de Valencia                                 Private                                5,099
 Universidad Europea de Barcelona                                      Private                                1,451
                                                                        Total                               102,190

                                                               Source: Ministry of Education. Academic year 2016-17. Provisional data

                    Number of                                Number of                                       Student
                      beds                                     units                                        residences
                        2,655                                     24                                            45%

Price Valencia: € 526 per month

Average price per room includes only
accommodation and 10% VAT.                                 Student halls                               Student to bed ratio
                                                        (colegios mayores)
                                                               55%                                              38:1

                                                                                                                         Source: JLL

Student Housing in Spain | 2017                                                                                                   55
Projects

     Future projects in Valencia
        Collegiate Marina Real

56                                 Student Housing in Spain | 2017
Collegiate Marina Real

New high-quality student residence developed by Princeton Investments and WP Carey, housing 350 studio apartments, a
swimming pool, solarium, gym, cinema, private dining room, games room, café-bar and study room. Opening in 2019 with
rates of €775 to 920 per month.

Student Housing in Spain | 2017                                                                                        57
Granada
Availability

Granada’s supply of student residences      three campuses belonging to the city’s         Fuentenueva and Campus Cartuja.
and student halls (colegios mayores)        only university, Universidad Públic de         There are currently 2,876 available beds
can be found in the vicinity of the         Granada: Campus Centro, Campus                 across 34 accommodation units.

Number of students

 University                                                             Status                         Total no. of students
 Universidad de Granada                                                  Public                                 52,247

                                                                 Source: Ministry of Education. Academic year 2016-17. Provisional data

 Number of                Number of                  Student                 Student halls              Student to bed
   beds                     units                   residences            (colegios mayores)                ratio
     2,876                   34                         37%                        63%                         18:1

The average price* in Granada is €421 per month.
* Average price per room includes only accommodation and 10% VAT

                                                                                                                           Source: JLL

                                         Future projects in Granada
     Projects

                                         Due to its popularity among Erasmus students and the notable disparity
                                         between supply and demand, Granada has become an attractive university
                                         city for domestic and international investors and developers alike.

                                         JLL has identified several potential future developments in Granada which,
                                         should they come to fruition, would push supply over the 2,000 beds mark.

58                                                                                                       Student Housing in Spain | 2017
Bilbao
Availability

Bilbao’s supply is highly concentrated         UPV campuses. More central areas of the       beds in 12 accommodation units.
in the district of Deusto, specifically        city such as the historic quarter are also
the area of Sarriko, home to one of the        popular. The Basque capital has 1,182

Number of students

 University                                                                Status                        Total no. of students
Universidad del Pais Vasco (UPV)*                                          Public                                23,401
Universidad de Deusto                                                      Private                                9,374
Mondragón Unibertsitatea                                                   Private                               4,639
                                                                            Total                                37,414
                                                                         *Estimate for Campus in Bilbao, excluding Álava and Guipúzcoa
                                                                   Source: Ministry of Education. Academic year 2016-17. Provisional data

          Number of                  Number of                  Student                 Student halls             Student to bed
            beds                       units                   residences            (colegios mayores)               ratio
                                                                                            46%
             1,182                        12                       54%                                                    32:1

The average price* in Bilbao is €512 per month.
* Average price per room includes only accommodation and 10% VAT

                                                                                                                             Source: JLL

                         Future projects in Bilbao
                         Property developer and construction firm Amenábar is building a mixed-use
                         development comprising a shopping centre, hotel and student residence in the
                         heart of Bilbao city centre, next to the Engineering Faculty of UPV/EHU and San
                         Mamés stadium. The development will have room to house 400 students and is
                         expected to open in 2020.

Student Housing in Spain | 2017                                                                                                       59
Seville
Availability

Seville is another preferred             accommodation supply is of poor                 total, Seville has 28 accommodation
destination and lies fourth in           quality and disjointed, albeit the vast         units offering 3,053 beds.
terms of the number of students          majority of residences are located in
welcomed to the city. However, the       the most central part of the city. In

Number of students

 University                                                           Status                         Total no. of students
Universidad de Sevilla (US)                                            Public                                60,862
Universidad Pablo de Olavide                                           Public                                11,467
Universidad Loyola de Andalucía                                        Public                                2,344
Universidad Internacional de Andalucía (UNIA)                          Public                                 272
                                                                       Total                                 74,945
                                                               Source: Ministry of Education. Academic year 2016-17. Provisional data

 Number of                Number                   Student                  Student halls                Student to
   beds                   of units                residences             (colegios mayores)               bed ratio
     3,053                   28                      80%                         20%                         25:1

The average price* in Seville is €499 per month.
* Average price per room includes only accommodation and 10% VAT
                                                                                                                         Source: JLL

                                      Future projects in Seville
     Projects

                                      While Corestate is heading towards the completion of its first student
                                      residence in Spain – in the heart of Madrid’s Ciudad Universitaria area –,
                                      the developer has also acquired a plot of land next to the Sánchez-Pijuán
                                      stadium in Seville where it plans to build a new 413-bed residence expected
                                      to open in 2020 with the support of its own operator, YOUNIQ. The residence
                                      will be divided into single rooms in “cluster” format, as well as housing a gym,
                                      swimming pool, solarium, bicycle shed and gardens.

60                                                                                                     Student
                                                                                                       StudentHousing
                                                                                                               Housingin Spain | 2017
                                                                                                                       inSpain
Student Housing in Spain | 2017   61
New developments

The growth of the student
accommodation market in Spain
has triggered the development of
new projects and attracted foreign
investment, with the clear aim of
transforming the landscape in the
medium term.

62                                   Student Housing in Spain | 2017
Number of accommodation units and beds in Spain’s main student cities

   Number of residences
   Number of beds

                                                                  Bilbao
                                     Gijón                           1   400
                                        1    250
                                                                              Pamplona
                                                                                1    200

                                                                                                      Barcelona
                                                                                                        6 1,810*

                                        Salamanca
                                          1    400
                                                          Madrid
                                                            9 2,554*

                                                                                       Valencia
                                                                                          2     792

                                  Sevilla
                                    1     400*
                                                                Granada
                                                   Málaga         4    862*
                                                     2    877

* Data on the number of beds at certain units is not available.

** Only projects at a more advanced stage are included, i.e. those in possession of a construction permit

Student Housing in Spain | 2017                                                                                    63
04. Investment in student accommodation

64                                              Housing in Spain | 2017
                                        StudentResidents
                               ResidencStudent
Investment in student accommodation         to single asset acquisitions and new        attractive returns and the development
increased more than eleven-fold last        developments, bringing new student          opportunities presented by the supply-
year from €50 million in 2016 to €560       beds to a market driven by an ever more     demand mismatch for modern student
million in 2017. In fact, the 1120% hike    demanding consumer. Nonetheless,            accommodation.
was mainly driven by two deal portfolios,   consolidation amongst operators and
Erasmus and Rio, operated by RESA and       the trading of operational portfolios can   According to JLL Research, current
Nexo respectively. The two companies        be expected over the medium-term.           pipeline developments in top University
have a combined 11,000 beds in Spain                                                    cities around Spain will add an additional
(approximately 12% of the market total).    Furthermore, the sector is experiencing     10,000 beds to the existing market stock
                                            an influx of new players attracted by       by 2020.
The main focus in the Spanish student       the Spanish student housing market’s
housing market for 2018 has turned          compelling metrics, comparatively

During 2018 we expect to see                the PEUAT, as well as a better
increased activity in the development       understanding of the aforementioned
of new student accommodation                markets and their underlying metrics.
schemes, not only in Madrid and
Barcelona, but also in other locations,     These new developments will be
particularly in Valencia, Granada,          driven primarily by capital seeking
Malaga and Seville. This is driven          development exposure to reach high
by a lack of development sites              target returns, as well as the major
in the capital and the restrictive          established operators and their                     Nick Wride
urban planning regime brought               expansion plans.                                Head of Living &
into legislation in Barcelona with                                                             Alternatives

Student Housing in Spain | 2017                                                                                                 65
Investment in Student Accommodation and Land in 2017 (€M)

                                   30

                                                            560

                                   Students accomodation          Land

                                                                                Source: JLL

66                                                                       Student Housing in Spain | 2017
Yield levels
Prime yields in each sector as at Q4 2017

               Retail High Street: 3.15%                             LC Hotels: 4.50%

               Offices: 3.75%                                        MC Hotels: 5.00%

               Housing: 3.75%                                        Logistics: 5.50%

               Retail Shopping Centres: 4.25%                        PBSA (Student accommodation): 5.25%

Prime student housing yields for Spain have sharpened by 50 bps from Q4 2016, yet they still offer more attractive returns than
all other major real estate sectors other than logistics.
                                                                                                                   Source: JLL

Major deals
Land

1.Imprenta (Cuesta San Vicente 27, Madrid) *
  a. Buyer: The Student Hotel
  b. 300-bed student residence and hotel, as well as a co-working area.
  c. Seller: Threesixty Developments
  *Transaction advised by JLL

2.Avenida Comandante Franco 8, Madrid
  a. Buyer: Urbania
  b. Land for public use, suitable for the development of a 262-bed student residence of up to 4,650 sqm.
  c. Seller: Private

Student Housing in Spain | 2017                                                                                              67
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